Responding to the Summer Budget, Nuffield Trust Chief Executive Nigel Edwards said:
Curbing public sector pay may make it even harder for the Government to realise some of its totemic pledges, such as seven-day working and reducing reliance on temporary staff.
Nigel Edwards, Nuffield Trust Chief Executive
“It is welcome that the Chancellor has today reaffirmed his party’s manifesto commitment to increasing spending on the NHS. As NHS England’s Five Year Forward View makes clear, this money is needed simply to keep spending per person flat once the growing and ageing population is taken into account. It will be needed each year, and the Government must keep the promise to bring this funding in steadily in their Spending Review.
“The flip side of the additional money pledged is the sizeable efficiency savings that the NHS must make by 2020. In the last parliament, the bulk of efficiency savings were achieved by holding down staff pay. Today’s announcement that public sector pay is to rise at just 1% a year throughout the parliament equates to a further real-terms cut in staff pay, suggesting that the Government hopes curbs on pay will deliver a significant chunk of the £22bn savings needed from the NHS.
“But holding down pay indefinitely is likely to be a false economy, especially as private sector wage growth picks up. For most doctors and nurses whose wages will be cut in real terms, low morale and the pull of the global marketplace will make it ever harder to fill posts. We are already seeing a spiralling bill for agency staff within the NHS, driven in large part by growing problems with recruiting and retaining permanent staff. In reality, therefore, curbing public sector pay may make it even harder for the Government to realise some of its totemic pledges, such as seven-day working and reducing reliance on temporary staff.
“The Chancellor’s surprise pledge to raise the minimum wage to £9 per hour by 2020 will help the health service’s lowest paid staff. But it will mean costs for these staff rising faster than 1%, and will have a knock on impact right up the pay scale. In social care, a growing wage bill at a time of deep cuts may mean council budgets can pay for even fewer vulnerable people to receive help.
“The reality is that containing the NHS’s costs to a historic low by 2020 is going to be a tall order, whichever way you look at it. With deep cuts affecting other public services – not least social care – any investment in the NHS is of course welcome. But we should be under no illusions about the scale of the efficiency challenge ahead."