National living wage rise to cost NHS millions

The Treasury indicated to HSJ that the NHS would have to fund the pay bill from existing planned revenue funding.

Chancellor Sajid Javid told the Conservative Party Conference in Manchester yesterday the government would look to increase the national living wage to £10.50 over the next five years.

According to the latest Agenda for Change pay scales, effective from April this year, more than 15 pay points, including all of band 1, 2 and six of the seven pay points in band 3, pay less than £10.50 an hour. 

This is equivalent to more than 300,000 staff, based on figures from the 2019 NHS Pay Review Body report. The lowest paid are all of those in band 1 and those with fewer than five years experience in band 2 at £9.03, so the government’s proposals would equate to a payrise of £1.47 per hour for these staff. 

HSJ asked the Treasury whether there would be additional growth in the NHS budget to fund it. A spokesman said: “The historic settlement we’re giving the NHS provides the largest cash increase in public services since the Second World War. These increases to the NHS budget include the provision for future pay rises for NHS staff.”

Danny Mortimer, chief executive of NHS Employers, told HSJ: “The NHS 2018 three-year pay deal prioritised increasing wages for our lowest paid employees, along with increasing starting pay for newly appointed clinical staff.

“That deal was backed with investment from the government and the chancellor’s announcement must be followed by a similar commitment. Without that investment, money intended for the NHS long-term plan will be reduced and pressure on fragile local finances increased.”

He also called for greater pensions flexibility to be offered to the entire NHS workforce. He warned social care employers would see the announcement in “even starker terms”, adding: “Increases in their pay bill serve to again reinforce the need for all politicians to put forward meaningful long-term plans for social care funding.”

Saffron Cordery, deputy chief executive of NHS Providers, said the increase was welcome as NHS and social care employers relied on “a very large number of dedicated lower paid and younger members of staff, and this will make a real difference to them. We know that pay is one important factor behind staff morale.”

But she warned: “This means an additional cost pressure at a time when both sectors are struggling to balance the books following a substantial period of funding restraint. We would like to see a commitment from the government that councils and the NHS are both fully supported to meet this additional cost.”