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NHS pay

Nurses and most other NHS staff were “offered” a 1% pay rise by the government. But how are decisions about NHS pay made?

NHS lanyard and close up of money

Nurses and most other NHS staff were “offered” a 1% pay rise by the government – to the fury of many staff, Her Majesty’s Opposition, and indeed some Conservative MPs. The reality, however, is appreciably more complex. For this “offer” is in fact the government’s submission to the NHS Pay Review Body, which also receives evidence from the unions, from NHS employers and others – before making a recommendation to government.

What is a pay review body?

There are currently eight pay review bodies. They cover respectively most NHS staff, doctors and dentists, the armed forces, prison staff, teachers, the police, the National Crime Agency, and senior salaries. The latter embraces judges, senior civil servants, senior armed forces, senior police officers, and the most senior NHS managers.

The review bodies are advisory non-departmental public bodies, their secretariat being run through the Office of Manpower Economics. Between them they cover 2.5 million workers – around 45% of public sector staff – and a pay bill of around £100 billion.

What is their history?

Most – certainly the NHS ones – were born out of conflict, with the aim of preventing future conflict. The oldest is the review body on Doctors and Dentists Remuneration (DDRB), the newest being the National Crime Agency which began operation in 2013.

In the early days of the NHS, there was a bitter dispute over GPs’ pay which the British Medical Association argued had been pitched far too low as the NHS came into existence. The 1945–51 Labour government referred the dispute to a High Court judge for arbitration. In 1952, the judge, to the consternation of the then Conservative government, came down entirely on the BMA’s side, producing a massive, back-dated, pay bill. As a future secretary of the BMA put it, “Never again would a government agree to submit a claim from the doctors to arbitration by a High Court judge!” Some other mechanism had to be found.

With pay settlements causing repeated friction between doctors and the government, the eventual outcome was the creation of a doctors’ pay review body which first reported in 1963. All sides submitted evidence. The presumption was that the government of the day would accept the recommendations, although it retained, inevitably, an override.

The Nurses Pay Review Body came into existence after 1983, following a rancorous 18-month long pay dispute that involved most NHS staff other than doctors and dentists. It started with one-day stoppages that increased in length and intensity. Those who went on strike included porters, key maintenance staff who normally kept the NHS running, and some nurses. But the Royal College of Nursing, which was part of the dispute and which represented a majority of nurses, had a no-strike policy – which held. The RCN’s reward, once the dispute was settled, was the creation of a nurses’ pay review body to mirror one that doctors and dentists already had. By 2004, unions representing other NHS clinical professions – for example, therapists and pharmacists – judged that having a pay review body had, over the long term, served doctors, dentists and nurses better than their own more direct negotiations with government.

So as part of a big pay restructuring known as Agenda for Change, the nurse review body became the NHS Pay Review Body with its remit extended to include those clinical groupings. It was then extended again in 2007 to all NHS staff, other than doctors, dentists and the most senior managers, including, for example, maintenance staff, porters, secretaries and most managers. It now covers more than one million employees.

Review bodies deal with pay, not contracts. Contracts are negotiated directly with government. New contracts, as with Agenda for Change, and for GPs and consultants in the 2000s, can significantly re-set pay. The review bodies’ role is to recommend what then follows on, although occasionally they are asked to help set the pay rates that result from the new contracts.

So does the government always accept pay review body recommendations?

No. The tendency – only a tendency – has been for the government of the day broadly to accept. But there have been plenty of occasions when the government has modified recommendations or staged them, or occasionally refused them, usually citing economic conditions.

There has been the odd really big bust up. The doctors' review body resigned en masse in 1970 when the then Labour government massively reduced its recommended award – the current doctors’ and dentists’ body being its recreation in 1971.

There have of course also been times when the government of the day has pretty much over-ridden the mechanism entirely by imposing public sector pay caps or even freezes. The most recent of these was a two-year pay public sector pay freeze from 2010 for all but lower-paid staff and awards limited to an average of 1% between 2013 and 2017. Plus, of course, the current freeze for all public sector staff earning more than £24,000, with those earning less than that receiving £250. NHS staff are the exception, with the government’s “offer” of 1% increase – although, as already noted, that is the government’s submission to the pay review bodies.

So where are we now?

The pay picture is more complex than the headlines, not least because the NHS has pay bands which staff normally move up annually until they reach the top of them. Further increases then depend on the annual pay settlement or on promotion. The government does not appear to be proposing to abandon those annual increments which create what is known in the NHS jargon as “pay drift” – even in the absence of an annual award the pay bill increases, although usually not by a huge amount.

For the annual settlement, however, the government’s evidence to the NHS Pay Review Body is for 1%, although on top of that it says it will honour an increase of around 0.7% in the pay bill for these staff that is the last stage of a three-year deal agreed for Agenda for Change employees in 2018/19. That increase affects changes around pay bands – which means some staff will gain from the 0.7%, but others will not.

The two biggest unions covered by the NHS Pay Review Body are the Royal College of Nursing and Unison. The RCN, with a membership of around 450,000, most of whom work in the NHS, is arguing for a 12.5% increase. Unison, which has approaching 500,000 health care staff covering a huge variety of jobs, has a more complex claim for a minimum of a £2,000 increase. The joint staff side evidence from all the health service unions in January argued for a “substantial” increase. Whichever way those submissions are analysed, it is clear that up against 1% there is a large gap to bridge.

The political and media focus to date has been on staff covered by the NHS Pay Review Body, most particularly nurses. But the government’s evidence to the Doctors and Dentists review body is also for a 1% increase. Although, as with the Agenda for Change hangover, there are wrinkles. There is a multi-year deal for doctors in training that runs until March 2023, and new contracts are due to take effect shortly for speciality and associate specialist doctors if they are approved in a ballot. The BMA is seeking an annual award “much higher” than current inflation and one which “will go some way to addressing the real terms pay erosion doctors have faced over the past decade”.

An additional piece of perhaps crucial background is that – pre-pandemic – the settlement around the NHS Long Term Plan of 2018 budgeted for a 2.1% pay increase for the coming year, as Sir Simon Stevens, the NHS chief executive, has confirmed.

What happens next?

The NHS review bodies will weigh all sides’ evidence and make recommendations in the spring. The one thing that is pretty much certain is that the recommendation is likely to be more than just 1% – and the government already seems braced for that. But that will just be the beginning.

The questions are likely to be how much more than 1%, and shaped in what way? Will the government then accept that? If it does, will it then fully fund the award? Or will it, depending on its size, leave some of it to be found from existing planned increases in NHS budgets?

If it does not accept the recommendations, or amends them significantly, what then follows? The Royal College of Nursing has set aside a £35m industrial action fund – it formally dropped its no strike policy in 1995. Setting up a fund, however, remains several steps away from strike action. The history of NHS strike action, particularly when on the rare occasions that doctors and nurses have been involved, is that huge initial public sympathy rapidly dissipates once the effects are seen. The junior doctors’ contract dispute of 2015–16 is the most recent, and classic, example of that.

So will the review body system work?

Given the pandemic, the fiscal and economic circumstances, staff feelings, public sympathy and the government’s submission, the system is facing a serious test. And given that there was originally provision for a 2.1% increase, much may turn on the review bodies' interpretation of their remit, which these days requires them to take "affordability" into account. Over the years, both sides have toyed with abandoning the pay review body approach, although on the union side that has chiefly been the British Medical Association. Indeed, in September last year, the BMA’s annual representative body voted to withdraw, given the limited impact the review bodies were able to have during the pay pauses of the 2010s.

To date, however, unions have recognised that, in direct negotiations, the government has the money and holds the whip hand – given the ultimate unpopularity of health service staff going on strike, not to mention the ethical objections of an unknown proportion of their members. Governments have recognised that while they may indeed hold the whip hand, it is equally unethical, and not in the long-term interests of a well-functioning health system, to over exploit that – along with the fact that health service strikes can wreck the reputation of a government as patients’ conditions worsen, and deaths result.

For all the frustrations – recommendations higher than the government of the day would like, lower than the unions desire, the times when recommendations have not been implemented in full – the independent review body system, has, to date, served both sides if not well, then well enough. Born out of conflict, it has, by and large, prevented conflict. This is, however, one of its bigger tests, and possibly its biggest yet.

NHS Health
Institute for Government

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