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More government funding needed to lift pay rises above 1% cap, warn NHS leaders

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NHS leaders in England have warned that extra cash would be needed to boost staff salaries, in the wake of Jeremy Hunt’s revelation yesterday that the 1% cap on NHS pay rises had been “scrapped”.

The chief executive of NHS England and NHS Improvement cautioned that it would be hard to find the money for pay rises “internally” from existing health service budgets.

“It’s very hard to imagine how that kind of payroll would be internally financed”

Jim Mackey

Their comments came on Tuesday afternoon after the health secretary had said earlier in the day that the government’s pay restraint policy had been dropped, as it was “no longer sustainable”.

Mr Hunt told MPs that pay restraint had been necessary to allow the health service to recruit thousands of additional nurses and doctors, but he accepted the cap could not continue indefinitely.

The health secretary, who was being quizzed by MPs in the House of Commons, stated that “the pay cap has been scrapped”, but stressed that any remuneration change would be tied to productivity.

However, appearing before the Commons health select committee as part of an inquiry on the work of their respective bodies, Simon Stevens and Jim Mackey told MPs that if the cap was lifted the NHS would need additional government funding.

“The review bodies will be asked to give their advice, but ultimately policy is set by the government”

Simon Stevens

Mr Stevens suggested that, while the independent NHS pay review body would still be formally expected to issue recommendations on staff pay, Mr Hunt’s comments ultimately held sway on the issue.

He said: “The secretary of state has said earlier today, in a sense, the pay cap has been lifted, so the review bodies will be asked to give their advice, but ultimately policy is set by the government.

“We have said from the get go that over time it will be necessary for NHS staff to get rates of pay that are consistent with the rest of the economy,” he said. “But that does need to be funded.”

In addition, Mr Mackey told the committee it was “hard to imagine” that the kind of spending increase required to universally boost staff salaries could be funded internally by trusts.

Mr Mackey said due to the efficiencies the NHS had already made in recent years, any rise would need to be funded.

Jim Mackey

Jim Mackey

Jim Mackey

“It’s my view that that needs to be funded,” he said. “The NHS has given serious levels of efficiency – it’s very hard to imagine how that kind of payroll would be internally financed.”

Their views reinforce calls for extra funding made yesterday by unions, think-tanks and organisations representing NHS trusts, following the revelations on pay made during Commons’ health questions.

Meanwhile, Mr Stevens also hinted that more cash would be needed in the chancellor’s autumn budget next month to sustain the NHS over the next few years.

The NHS England chief executive said: “Decisions on 22 November will determine the shape of the NHS next year and the year after.

“The budget position for funding currently pencilled in for the NHS for next year and the year after looks extremely challenging and, if not mended, I think it is going to be very hard for the NHS to do all that has been asked of it over the course of the next year and the year beyond,” he said.

He added: ’We are having to operate in very constrained circumstances, which is the consequence of seven years’ worth of the NHS budget growing at 1% compared with a historic rate of 4%.

“We are spending £23bn a year less than if we were spending at French or German levels, as a consequence,” noted Mr Stevens.

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