Magazine article Public Finance

Pay Rise Reality

Magazine article Public Finance

Pay Rise Reality

Article excerpt

Since the election, there has been a chorus of calls for the cap on public sector pay to be lifted, including from within the cabinet. So far, the chancellor has been reluctant. It's not hard to see why - the NHS pay bill is more than £50bn a year (by far the largest item in the Department of Health's £117bn revenue budget), and holding down pay is one of the few levers a government can pull to control public finances.

However, once that lever has been pulled, you would hope it wouldn't stay locked in position for nearly a decade. Yet that is exactly what has happened since former chancellor Alistair Darling introduced the cap in 2009. Th ere is growing recognition that the NHS Pay Review Body was right when it said "we are approaching the point when current public sector pay policy is no longer sustainable for the NHS".

Since the recession, public sector pay been frozen (in 2011-12 and 2012-13) or capped at 1 % (from 2013-14) for all but the lowest-paid workers. This arrangement is not due to end until 2020-21. Th e value of staff pay packets has decreased significantly as the cost of living has risen. For example, band 5 nurses have seen the value of their pay fall by 7 % between April 2010 and April 2016 compared to the consumer price index, and by 11 % against the retail price index.

The chancellor has said public sector pay policy must be "fair to public sector workers but also fair to taxpayers". The number of unpaid hours NHS staff work, despite years of declining pay value, may suggest the taxpayer is getting a good deal and that we are at risk of further eroding our social compact with NHS staff .

So the government has some difficult choices. Does it keep pay capped until 2020-21? Does it award pay rises for certain roles or the whole public sector? Does it increase both pay and staff numbers, or trade these off?

The NHS view is clear. …

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