A substantial pay rise for NHS staff in England battling the coronavirus pandemic would cost the exchequer only a fifth of the headline price tag and boost Britain’s struggling economy, according to a report.
Setting out the economic case for raising the wages of England’s 1 million nurses, midwives, health professionals and NHS support staff, researchers from the London Economics consultancy said 81% of the cost of a 5% or 10% pay rise would be recovered by the government.
The study argues that if pay was increased, the Treasury would receive more in taxes paid by these workers and their employers, and staff would spend more in local businesses, helping Britain’s economy to escape the deepest recession in 300 years and bringing in still more taxes. Ministers would also, it found, save money on future recruitment and retention costs.
While the cost to the exchequer of a 10% pay increase would be £3.4bn this year on paper, the report, commissioned by NHS trade unions, found that these wider benefits would take the actual cost down to just £660m.
For a 5% increase, costing an upfront £1.7bn, the ultimate price tag would only be £330m – less than the figure once printed on the side of the Brexit campaign bus, which Boris Johnson claimed could be added to the NHS’s weekly budget if the UK were to leave the EU.
The report was published on the deadline day for submissions to the NHS pay review body, which makes recommendations to the government, ahead of a decision for the 1 million workers on its Agenda for Change pay system, which covers all NHS staff except doctors, dentists and most senior managers.
The chancellor, Rishi Sunak, has exempted NHS staff from a pay freeze for public sector workers this year. However, there are concerns the government may only allow a limited NHS pay rise as the chancellor prepares for a tightened March budget in response to record public borrowing caused by thepandemic.
Despite promising a pay rise to reflect the challenges on the frontline of the pandemic, the health secretary, Matt Hancock, has told the NHS pay review body that any increase should still “take account of the extremely challenging fiscal and economic context”. But the report from London Economics said that if affordability was important, ministers should also take account of the knock-on benefits for the Treasury.
Sara Gorton, head of health at Unison, said a pay rise now would help exhausted health staff feel their efforts were appreciated. “Staff will spend any pay rise locally, giving struggling retail, hospitality, leisure and entertainment venues a much-needed boost as lockdown eases.”
In a joint letter sent to Boris Johnson on Monday, the heads of Unison, the Royal College of Nursing and Royal College of Midwives said a pay rise was vital when hospitals were stretched to the limit. The unions are demanding a significant pay rise to reflect this strain, and to repair the damage from a decade of austerity that has left wages 10% below 2010 levels for most staff, and as much as 15% down for long-serving workers.
Dame Donna Kinnair, chief executive and general secretary of the Royal College of Nursing, said: “The figures speak for themselves – the real cost to the Treasury of doing this would be a fraction of the money paid out at the outset, and deliver huge benefits in the NHS, in terms of much-needed recruitment and better retention.
“The pandemic must mark a watershed moment when ministers begin to respect our people and pay them fairly.”
A spokesperson for the Department of Health and Social Care said: “There are record numbers of doctors and nurses working in our NHS, and our dedicated NHS staff will rightly be exempt from the temporary pause on pay rises for public sector workers.
“Over 1 million NHS staff are currently benefiting from multiyear pay deals, agreed with trade unions. These have delivered a pay rise of over 12% for newly qualified nurses.
“We continue to listen to our valued staff and trade unions so everyone is rewarded fairly and, when we receive them, we will consider the recommendations of the independent NHS pay review body.”