Government would recover 81 per cent of NHS pay rise

The London Economics consultancy has argued that 81 per cent of the cost of a five per cent or 10 per cent pay rise for NHS staff in England would be recovered by the government.

This means that a substantial pay rise for NHS staff in England battling the coronavirus pandemic, covering England’s one million nurses, midwives, health professionals and NHS support staff, would cost the exchequer only a fifth of the headline price tag and boost Britain’s struggling economy.

The study argues that if pay was increased, the Treasury would receive more in taxes paid by these workers and their employers, and staff would spend more in local businesses, helping Britain’s economy to escape the deepest recession in 300 years and bringing in still more taxes.

Commissioned by NHS trade unions, the report also claims that, while the cost to the exchequer of a 10 per cent pay increase would be £3.4 billion this year on paper, wider benefits would take the actual cost down to just £660 million. Equally, for a five per cent increase, costing an upfront £1.7 billion, the more likely figure would be only £330 million.

Chancellor Rishi Sunak has exempted NHS staff from a pay freeze for public sector workers this year. However, there are increasing concerns that the government may only allow a limited NHS pay rise as the Treasury prepares for a tightened March budget in response to record public borrowing caused by the pandemic.

In a joint letter sent to Prime Minister Boris Johnson, the heads of Unison, the Royal College of Nursing and Royal College of Midwives said a pay rise was vital when hospitals were stretched to the limit. The unions are demanding a significant pay rise to reflect this strain, and to repair the damage from a decade of austerity that has left wages 10 per cent below 2010 levels for most staff, and as much as 15 per cent down for long-serving workers.