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Press release: NHS Employers says next year's NHS pay award should be no more than 2%

02 Nov 2007

NHS Employers has advised the pay review bodies that next year's pay award for doctors, dentists, nurses and other healthcare staff should not place undue cost pressures on NHS trusts.

In its evidence to the pay review bodies released today, NHS Employers said that anything more than 2% would place additional cost pressures on trusts which would impact on services and lead to necessary cost savings elsewhere.

Alastair Henderson, Deputy Director of NHS Employers, said:

"NHS Employers has listened to what organisations in the NHS have said and is recommending a pay uplift of up to 2% for all staff groups next year. In terms of what the NHS can afford, anything more than this will put undue pressure on trusts will only cause problems. 

"While trusts are committed to rewarding their staff for the contribution they make, they need to ensure that, in rewarding their staff, they don't tip the balance which could result in savings having to be made elsewhere. A pay award that that ensures stability is in the interests of all staff.

"Although many trusts may be in surplus this year this should not be seen as a stable or recurrent source of funding for pay awards. Trusts now have to find efficiency savings of 3% before they can begin to spend their resources or any of the additional money made available by the Government in the Comprehensive Spending Review. The pay bill also has to cover the cost of the annual increments which most staff receive."

Eighty per cent of employers who responded to NHS Employers' survey indicated that they would support a longer-term pay arrangement if it was at an affordable rate. Employers also indicated that they want to see the same level of pay uplift for all staff groups.

Responding to the trades unions comments on morale in the launch of the staff side evidence to the NHS Review Body earlier this week, NHS Employers said that, whilst the morale and motivation of staff is crucially important to the NHS, employers do not believe that the issues around morale are directly related to pay.

Alastair Henderson said:

"Whilst employers would be concerned by any deterioration in levels of morale amongst their staff, we do not believe that the solution to problems of low morale will be found in simply giving a higher pay award. Indeed a pay award which trusts find unaffordable will only cause further problems that will impact adversely on morale such as reductions in posts, vacancy freezes and failure to meet healthcare and financial targets.

"We must also recognise that the Healthcare Commission Staff Survey - by far the largest single survey of staff opinion - continues to show that overall staff satisfaction in the NHS remains high and staff continue to have a positive view of working in the NHS."

NHS Employers has based its evidence on the views and experiences of 40% of NHS organisations in England gathered through an on-line questionnaire and on detailed financial modeling with a group of NHS organisations.

Notes for editors

Below is a summary of the key points made in our evidence:

Affordability

• Employers were strongly of the view that further cost pressures through un-funded pay increases would impact on services and lead to necessary cost savings elsewhere.
• The NHS is forecast to deliver a surplus at the end of 2007/08 with 6% of organisations expected to be in deficit.  This resource is not available for pay uplift.
• The CSR recently announced a 4% increase in real terms, around half of the growth in funding over recent years.  We have taken note of public sector pay policy which restricts headline increases to 2%.
•  Affordability is linked to the tariff and PCT allocations, which have not yet been announced.  A detailed piece of work with a group of trust Finance directors forms a key part of our evidence.
• This shows that a headline pay uplift of up to 2% would be affordable while requiring organisations to deliver efficiency savings above the levels indicated in the Government's spending review (3%).  

Equity

•  Employers favour a generic percentage increase
• Phasing of annual pay awards creates a 'hidden' recurrent cost pressure against future years funding and is demoralising for staff.
• That the supplement payable to General Practice Registrars be reduced from 55% to 50%.

Stability

•  Talks on a multi-year agreement have been taking place over the past month for AfC staff. 80% of employers supported this if at an affordable rate.
• Employers report that recruitment and retention has been generally stable. There is no support for any new national recruitment and retention payments.
• Time is needed to allow Agenda for Change to settle down and for the service to realise the benefits of the new pay system. There is no support for changes to the structure of the pay system
• All hospital doctors and salaried dentists have access to pay scales with increments which range from an average of 4% for consultants, between 5 and 9% for staff and associate specialist grades and between 4 and 6% for doctors in training.  These increases need to be factored into decisions about the recommended level of uplift.
•  Employers report that recruitment and retention has been generally stable with no shortage of applicants for vacancies in most specialities.

Contact details

The press office provides a comprehensive service to keep journalists informed about the work of NHS Employers.

If you have a media enquiry, please contact the press office team:

Emma Robinson 0207 074 3307 or emma.robinson@nhsemployers.org

For out of hours media enquiries, please contact the duty press officer on 07880 500726.

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