Comment / Pay attention

A recent report by the Nuffield Trust provides a sobering analysis of the scale of the challenge facing the NHS. 

While providers officially ended 2016/17 with a collective deficit of £791m, the underlying deficit was closer to £3.7bn, it claimed.

To arrive at this figure, the thinktank added back in some £790m of savings achieved non-recurrently – as one-off savings they do not reduce the cost base for the following year and effectively need to be added to savings plans the following year.

It also added back the whole of the £1.8bn sustainability and transformation fund on the basis that this is non-recurrent for providers and should not be counted on beyond 2018/19.

We can argue with the analysis. Expecting all savings to be achieved recurrently each year is unrealistic.
Some savings are made non-recurrently as a precursor to them becoming recurrent downstream. However, it also has to be acknowledged that the service is reliant on one-off savings and is falling short of its own targets for recurrent savings.

And we could argue that including the STF in the underlying deficit is a bit ‘clever-clever’. These funds are recurrent for the NHS nationally, but not for local providers. 

The NHS is pursuing new models of care with the aim of re-providing some care in different settings and at different points in the pathway. 

Some may argue that it makes sense not to commit these resources recurrently upfront to one part of the provider sector, when funding will have to flow differently to support these new models. And at some point we in any case need to think about refocusing the STF on transformation. 

However the report does capture how financially challenging it feels right now in the NHS. 

Last month also saw the public sector pay cap lifted for police and prison officers, widely interpreted as an indication that the pay cap may also disappear for NHS staff from 2018/19.

The current financial context suggests that any such move would need to be accompanied by increased funding, particularly as the existing financial settlement assumed continued pay restraint. 

NHS health economies would be further challenged if required to absorb an unplanned increase in their single biggest cost pool from within existing resources. Such an ask could undermine the significant progress the service has made.

What is clear is that our staff are absolutely vital to the challenges we face – both in meeting day-to-day operational demands and transforming services. They need to be properly motivated, valued and in sufficient numbers. Pay is not the only issue – having the right number of frontline and support staff to enable them to deliver a high-quality service is also crucial. 

Rates of pay – taking account of inflation and economic conditions – are just one indication of how you value your workforce. 

However, they also have an influence on how we meet connected staffing challenges such as reducing reliance on agency staffing. 

Having pay levels for substantive roles that are appropriate to the labour market is of course fundamental to improving the temporary/permanent staffing balance.

Financially the NHS faces significant challenges that call for a longer term solution for both health and care. 

But we should not assume that our staff will personally support this by accepting salary restraint indefinitely and at the same time remain motivated and value-driven. There appears to be a growing consensus that ending the 1% cap is the right thing to do. 

All eyes will now be on November’s Budget to see how the government plans to take this forward.

Contact the president on [email protected]