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Osborne reveals NHS pay restraint bombshell


Nurses working in the NHS will continue to see their pay restrained, with annual salary rises restricted to 1% over the next four years, Chancellor George Osborne has said today as he laid out the new government’s financial plans.

However, he also announced the national minimum wage for people over the age of 25 will increase – creating a “national living wage” – to £7.20 an hour in 2016, and then £9 by 2020.

In his first budget announcement since the Conservative government won the election, Mr Osborne said there was a “simple trade-off” between pay and jobs in many public services.

“I know there has already been a period of pay restraint. But we said last autumn there we would need to find commensurate savings in this parliament,” he said.

“So, to ensure we have public services we can afford and to protect more jobs, we will continue recent public sector pay awards with a rise of 1% per year for the next four years,” said Mr Osborne.

The chancellor said the NHS was the government’s “priority” and went on to reiterate the Conservative commitment to provide it with an additional £8bn a year by 2020, in line with the Five-Year Forward View, the five-year plan set out last autumn by NHS England boss Simon Stevens.

Mr Osborne said this was on top of the extra £2bn already promised for the NHS budget this year, which would amount to an additional £10bn a year by 2020.

However, he noted that the NHS itself would have to make “very challenging” efficiency savings over the coming years.

“Public spending should reflect public priorities and we have to make choices. Our priority is the national health service,” he said.

In its full budget document published today, the government states average levels of public and private sector pay are the same, but that public sector workers “continue to benefit from a significant premium once employer pension contributions are taken into account”.

“George Osborne’s announcement might look attractive at first glance, but he’s simply giving to the low-paid with one hand and taking away with the other”

Dave Prentis

It says restricting pay to 1% a year from 2016-17 onwards will save the government around £5bn by 2019-20.

The document also reveals there will be a “renewed focus” on reforming progression pay and other terms and conditions for public sector workers.

Meanwhile, it explains that workers over the age of 25 will be paid a premium on top of the national minimum wage to ensure they earn what Mr Osborne is calling a “national living wage” of at least £7.20 an hour from April 2016.

However, the Living Wage Foundation – an independent charity which calculates annual minimum rates of pay – sets the current UK living wage at £7.85 an hour, and £9.15 an hour for those living in London.

Unison described the 1% pay award as “miserly” and said the announcement would “hasten the reluctant exit of many dedicated staff from our hospitals, schools and local councils”.

The union’s general secretary Dave Prentis said: “The economy is growing yet public servants remain shut out of the recovery.

“Britain won’t have public services fit for 21st century needs, unless wages for public servants are high enough to attract the best recruits. Pay austerity might be over for MPs but it’s set to continue for many more years for everyone else in the public sector.”

He added “An hourly rate of £7.20 is not a living wage. George Osborne’s announcement might look attractive at first glance but as tax credits are cruelly snatched away – leaving many workers £1,200 worse off – he’s simply giving to the low-paid with one hand and taking away with the other.”

The Royal College of Nursing echoed concerns about the “shock” announcement to limit pay rises to 1% for nurses and other public sector workers.

It warned of “serious consequences” for nurses and patients, pointing to the ongoing struggle being experienced by the NHS in recruiting nurses.

“Nurses are already feeling the effect of what will now be a decade of severe pay restraint”

Peter Carter

Peter Carter, chief executive and general secretary of the RCN, said: “Nurses are working harder than ever under greater pressure as demand for their care is growing.

“That demand is only going to increase over the years to come,” he said. “Nurses are already feeling the effect of what will now be a decade of severe pay restraint and subsequent reduced living standards.”

He added: “This decision will make the situation worse as nurses realise they are not valued – the shock of this announcement will be felt by many.

“There is an independent NHS Pay Review Body that makes recommendations about NHS pay awards – until the chancellor spoke today, nursing staff were totally unaware that this was disappearing.”




Readers' comments (56)

  • I think is is disgusting to hold public sector pay down yet again. We have been ripped off by the public utilities. Food prices and fuel have risen significantly over the last few years and our standard of living has decreased. Any nurse who works in the private sector including working for a GP gets approx 5 weeks annual leave, maybe 2 weeks full sick pay, 2 weeks half sick pay and then nothing. I am sick of nurses who have a husband bringing in a second income and who are not sole bread winners telling the rest of us to stop winging. It's very expensive to live in the south-east. And I am sick of the apathy generally found amongst nurses when it comes to standing up for our rights. Too many nurses put up with under-staffing and working unpaid overtime which puts patients at risk as tired stressed nurses are not clinically safe. The nursing profession should wake up, stop acting like martyrs and more like professionals in my opinion. The spineless section of our profession are ruining it for those of us who are dedicated to nursing and also want to make an honest living. Why the hell should hard-working nurses and other public sector workers not benefit from a recovering economy?

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  • Why do we have to have percentage rises? It galls me to think the higher paid are getting a bigger rise thus continuing the disparity between the staff nurse and the heads of nursing. Let's have a pay rise of say £1000 a year for everyone. The chancellor would then save even more money.

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  • Beggars belief I'm off early retirement and Agency work for me

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  • Others have said it, but the 1% would be easier to swallow if the MPs had refused their 11% and accepted 1% to send a message that we are all in the same boat. Seemingly not

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  • The official Labour Party response (Chris Leslie a few minutes ago)
    "I don’t feel as though, you know, we should change our position, where we were on public sector pay restraint… It is very difficult… Look, I think we have got to weigh up some of these changes and be more thoughtful in the way, you know, don’t just literally oppose everything, as Harriet was saying, tempting though it might be to oppose everything, I think it is, you know, we don’t want to see public sector jobs being lost in the way that would happen if you found departments rising, choosing to raise pay, but making people redundant and that is a very difficult and somewhat invidious choice for those departments, but ultimately I think a level of restraint is probably necessary.’

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  • In response to Anonymous | 8-Jul-2015 6:42 pm

    What a shame

    Labour going all Blairite again

    Surely it is time for the TUC and Trade union to end their association and more importantly withold their money from the Neo-Conservatives in the Labour Party

    Who exactly is on our side?

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  • Well, why does this not surprise me? As per usual, Nurses get a crap raise, yet those idiot MP's are expecting and 11% rise from the taxpayer ! It does not justify them getting a massive rise for doing sweet FA (other than laughing at the NHS and other Public Sectors), they are smiling because yet again they have or are going to rip us off. What in this world gives them the right to a huge pay rise?, while they also claim for second homes and business expenses, which are again, paid by the TAXPAYER. Why don't they have a 1% rise and give us the 10%?

    There is also the problem, of making the NHS Trusts save money, while expecting all nurses/support workers/assistant nurses, work harder for nothing extra and provide so called better care. How dare these fools assume that we are not already giving that level of care already ! Do these twits have any idea of what it is like to look after patients as though they were your own relatives/family etc? No they don't, so stop trying to shaft the NHS for under/overspending, you simply have no idea do you MP's?

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  • If min wage is £9, we should earn more than £2 more than that....

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  • The BMA gets everything it wants for doctors. They want distance between themselves and nurses, so they'll keep talking nursing down behind the closed doors of the London clubs where they meet their Westminster pals.

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  • I came into nursing to care and serve the children and families placed in my care. I did not come into nursing to concern myself with profiting from their poor fortune.

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