Exclusive: Hancock demands “affordability” must determine size of NHS covid pay rise

In his letter, dated 18 December and sent to NHS Pay Review Body chair Philippa Hird, Matt Hancock, said he was formally beginning the review body process for all NHS staff on the Agenda for Change pay scale. He wrote that, despite a pause in pay awards for the “majority of the public sector”, the government recognised “the uniquely challenging impact coronavirus is having on the NHS” and wanted to reward staff as a result.

However, Mr Hancock then devotes the bulk of his letter to setting out the economic context facing the country and the need for any pay rise to be influenced by this factor.

He told Ms Hird: “We expect these recommendations to take account of the extremely challenging fiscal and economic context, and consider the affordability of pay awards.

The health and social secretary acknowledged the pay levels were important to attract and retain staff, but he again stressed the need to make the pay rises affordable ”given the NHS budget is set until 2023-24” and in light of ”the significant financial and economic pressures that have resulted from the covid-19 pandemic both within the NHS and wider public finances.”

Mr Hancock continued: The evidence that I will provide in the coming months will support you in your consideration of affordability and I request that you describe in your final report what steps you have taken to take account of affordability, the need for workforce growth and making best use of the funds available to deliver the best care for patients.”

The health and social care secretary’s letter also states that covid-19 has ”supressed earnings growth and increased redundancies in the private sector”. It added that public sector staff had ”been shielded from the pandemic’s economic effects” and that their average pay ”was already 7 per cent ahead of the private sector”.

The letter continues: ”According to ONS Average Weekly Earnings data, in the six months to September, the private sector has seen a pay cut of nearly 1 per cent compared to last year, yet public sector earnings were up by almost 4 per cent. Since March, the number of people in employment in the UK fell by 782,000, whilst over a similar period of time public sector employment increased.”

Healthcare workers, not including doctors and dentists, whose pay is negotiated separately, are nearing the end of the three-year Agenda for Change pay deal agreed in March 2018. A new deal was expected to have been secured by the end of this year, but the pay review process was delayed by the pandemic. 

Mr Hancock’s letter said the government was looking to “expediate the process as much as possible… and would welcome [the pay review body’s] report in early May 2021”.

In the Spending Review last month, chancellor Rishi Sunak said public sector workers earning less than £24,000 would receive a pay uplift of either £250 or the National Living Wage increase, depending on which is higher.

Mr Hancock said NHS staff with salaries below this threshold “should expect to receive pay increases no lower than this level and we would expect your recommendations to be made within the context”.

Over the summer 14 healthcare unions called on the government to start discussions as soon as possible for a “fair and early” pay rise for all NHS staff, including catering workers, security guards and other support staff working for private contractors.

In response to the news the government has asked the pay review body for its report in early May, Unison head of health Sara Gorton said:

“It’s cruel to make staff wait until next summer to learn what their pay rise will be. The chancellor and prime minister must do the right thing and fund a decent wage increase now. This would give exhausted staff a morale boost and get services fit for the year ahead”.

The situation for NHS managers is still unclear. HSJ understands very senior managers are likely to be treated the same as non-NHS public sector workers.

A Department of Health and Social Care spokesperson said: “Our hardworking and dedicated NHS staff will rightly be exempt from the temporary pause on pay rises for public sector workers.

“Over one million NHS staff are currently benefitting from multi-year pay deals, which we agreed with trade unions. These have delivered a pay rise of over 12 per cent for newly qualified nurses and will increase junior doctors’ pay by 8.2 per cent.

 “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 and Doctor and Dentist’s Review Body which will take into account the challenging economic context.”