More than a third of extra NHS money spent on pay

More than a third of the extra money being pumped into the NHS is being soaked up in higher pay for existing staff, the Department of Health has disclosed.

Nigel Crisp, the chief executive of the NHS, said in his annual report that 38 per cent of the £5.3bn added to the health budget in the last financial year went on pay for existing staff. The figure will worry the Treasury, which wants the new money to improve frontline services and is keen to avoid a public-sector pay hike.

Mr Crisp said: "Staff costs account for 60 per cent of our total spend and clearly fair pay is needed to recruit, maintain and motivate our people."

Forty per cent of the extra cash went on additional staff, drugs, supplies and other plans to improve services, while 14 per cent was invested in building up future capacity, for example, through training and new technology. The other 8 per cent went on price rises, primarily on drugs, and negligence costs.

In his report, which was published on Tuesday, Mr Crisp warned ministers that staff were under pressure as they struggled to cope with the Government's health reforms. He insisted that the NHS was getting better but hinted that more money would be needed on top of the £40bn being injected over the next five years.

After trade union criticism that the Government had not done enough to support and reward NHS workers, Mr Crisp praised staff for ensuring that the extra cash had reduced waiting times and helped patients benefit from new drugs and being treated closer to home and in the community.

"These achievements have been due to the many people in the NHS – and its partner organisations – who have worked extremely hard to maintain and improve services," said Mr Crisp. "These achievements have not been easy and make the improvements all the more impressive. The success last year relied too much on sheer hard work within a pressurised system."

To make further steps forward, he said, the NHS needed to expand its capacity fast. "We need more staff, more facilities and more equipment."

It also had to focus on priorities because "we can't do everything at once and mustn't spread our efforts too thinly." The health service also needed to "learn to work differently" to improve services and reduce pressure, he said.

"I, like everyone else working in the NHS, know we have a long way to go. But the momentum is there and real progress has been made thanks to the efforts of very many people. The NHS is starting to change ... we must make sure it continues to do so.

"We need to continue to use the extra money wisely to support clinical teams throughout the country to improve their services; introduce more choice for patients and more say in how services are designed and run and invest in new facilities and equipment."