NHS staff pay: past, present, and future

Authors: Tom Moberly 

Publication date:  09 May 2017

A new report on UK health spending from the Institute for Fiscal Studies looks at how pay in the health service has changed over the past decades and how staff costs may change in the future

Rising staff costs to 2011

From 1985-86 to 2010-11 overall costs for the UK NHS rose by an average of 4.7% a year. This was faster than the rate of inflation across the economy as a whole over this period, which was 3.1%. The reason NHS costs rose more quickly was largely because staff costs rose more sharply than non-labour goods and services over this period, and staff make up a large part of healthcare costs. Between 1985-86 and 2010-11 healthcare staff costs rose by an average of 5.7% a year.

Real terms falls in staff costs since 2011

Between 2011-12 and 2014-15 spending on healthcare staff rose by 0.6%, while inflation across the economy as a whole was 1.7%. “This represents an average annual fall of 1.1%, relative to economy-wide inflation, in NHS labour costs over this three-year period,” the Institute of Fiscal Studies’ George Stoye says in the report. “Public sector pay restraint has helped NHS inflation to stay below economy-wide inflation since 2011-12,” he adds.

Future cost of pay rises

“Pay restraint may be hard to continue going forward,” Stoye argues. Increasing NHS pay in line with the consumer price index from 2017-18 to 2019-20 would cost around £2bn more in 2019-20 than it would by increasing pay by 1% each year in cash terms, the institute calculates. “This funding would require either additional funding for the NHS or reductions in other (non-staffing) parts of the NHS or DH budget,” Stoye says.

Research and training

Between now and 2020-21, funding for NHS England is set to increase at a quicker rate than overall Department of Health spending. As a result, the institute says, overall spending on departmental activities that sit outside the remit of NHS England will fall between now and 2020-21. These include administration, funding for public health initiatives and medical research, and training of medical staff.

“Spillover” effect

The fall in funding for health department activities outside the remit of NHS England may have “spillover effects” on the NHS in England, the institute says. This would happen if the reduction in funding of public health initiatives led to a need for more NHS services, for example, or if hospitals found it harder to recruit staff, it says.

Find the Institute for Fiscal Studies report at [Link] .

Tom Moberly UK editor BMJ Careers


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