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”
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, 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.”