How can Boris Johnson resolve the NHS pay dispute?

The government’s plans for a 1 per cent pay rise for NHS staff have been widely derided by nurses, unions and MPs. But with funds in short supply, Sean O’Grady considers what can be done to resolve the dispute

Boris Johnson will have to balance fiscal probity with the demands of public opinion (AFP via Getty)

You might not believe it by the long-running and often vicious arguments about the incomes of junior doctors and nurses, but the issue of NHS pay was supposed to have been taken out of politics long ago. The NHS Pay Review Body dates back half a century and was designed to bring a rational, fact-based approach to arbitrating annual pay awards, with the aim of avoiding industrial action, which all concerned agree would have some detrimental effect on patient care. The heat was to be taken out of the arguments by delegating them to experts. It hasn’t always happened.

The concept is a typically corporatist one, and made into reality through a tortuous bureaucratic procedure. This has the disadvantage of being complicated and cumbersome; yet it has the great advantage of being flexible enough to allow for the shifting positions of government, health trusts and the unions to be accommodated in the process of agreeing an eventual messy compromise.

Thus, all interested parties involved submit a “recommendation” about a pay increase to the Pay Review Body around now. (This is all the government’s “offer” of a 1 per cent rise represents – the very first stage in a long rigmarole. It may be an “insult”, but it is not the final insult.) Similar pay review bodies operate for the police, armed forces and civil servants.

These annual submissions substitute for the traditional pay claim from unions and the pay offer from employers in the normal method of free collective bargaining, to use the antique phrase. Some learned people then digest all the evidence and come up with a figure, taking into account all the clinical, economic and financial evidence. This is then recommended back to the various parties, who may or may not accept it, though there is some pressure on them to do so, to avoid strikes and the like. In particular, the government has the choice as to whether to implement the award. The Pay Review Body has no power to enforce any settlement, though it carries some authority.

The NHS Pay Review Body is deliberately low profile. It is chaired by Philippa Hird, who has enjoyed a long career in HR. The other board members, all names unfamiliar to the public, are: Richard Cooper, Patricia Gordon, Neville Hounsome, Stephanie Marston, Karen Mumford, Anne Phillimore and Professor David Ulph. Formally, their remit requires them to make “recommendations on the pay of all staff paid under the Agenda for Change (NHS staff pay and grading system) and employed in the NHS, with the exception of doctors, dentists and very senior managers”.

This year, matters are made both more complicated and more emotive by the pandemic, and the outpouring of public thanks to the NHS “heroes”. The problem is that while the pandemic has hugely strengthened the moral arguments of the doctors and nurses, Covid has also hugely weakened the economy, and thus the public finances and the affordability of an across-the-board pay rise.

The government says that 1 per cent is all it can offer, while the opposition say that the nurses and others were promised 2.1 per cent in the NHS plan last year, and that they now deserve to get at least that. Jonathan Ashworth, the shadow health secretary, has called the government recommendation “morally obnoxious”. The chief executive of NHS England, Simon Stevens, has confirmed that the figure of 2.1 per cent is in the NHS plan, but also that the NHS budget for the next financial year has not been published. The Royal College of Nursing is recommending to the Pay Review Body a 12.5 per cent rise; Unite is looking for 15 per cent; and Unison want to see all NHS staff given a pay rise of at least £2,000, which would be proportionately bigger for lower-paid staff.

The lowest minimum full-time NHS salary is £18,005, for such roles such as new drivers, housekeeping assistants, nursery assistants and domestic support workers. Newly qualified nurses start at £25,907 and there are supplements for London and other places with high living costs. In 2018, a three-year deal delivered a total rise of 12 per cent for newly qualified nurses, and 8.2 per cent for junior doctors, albeit after a long period of restraint and generally low pay. The Pay Review Body will also take into account the benefits of the NHS final salary pension, rates of staff retention, the impact of new migration levels in the wake of Brexit, the government’s recruitment targets, productivity trends and the likely course of price inflation.

In May, after tempers have cooled, at least temporarily, the Pay Review Body will come back with its own conclusions and the government will then have to decide whether to implement them, given the political sympathy for frontline staff. The unions will also have to weigh the costs and benefits of strike action.

A possible resolution is suggested by the way the Scottish government is approaching the problem. They are giving NHS staff an interim rise of 1 per cent, plus a one-off £500 “thank you” payment, with further pay talks left until the summer.

Treating a pay bonus as another extraordinary one-off pandemic cost to the NHS might be a more palatable way forward for the government. Ministers might then feel as though they were balancing fiscal probity with the demands of public opinion and a possible backbench rebellion. They would also be seen to be reasonable and open to negotiation. That would make the unions look more extreme, and there are few other groups of staff who will see a 12 or 15 per cent rise this year. The government will still argue, as Matt Hancock has, that most other public sector workers will have a pay freeze, while many in the private sector will lose their jobs and almost their entire income as the furlough scheme is wound up.

It would be helpful if the Pay Review Body came up with such a formula of a small rise plus a bonus when it reports back in May. Realistically it might be seized on by both sides. It would certainly be a pretty sorry end to the pandemic to see the NHS carers out on strike, running picket lines in front of hospitals. They might not get as many claps for doing that.