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Continued pay restraint for NHS staff will have adverse effects on the service

Further public sector pay restraint will make it harder to recruit and retain high quality staff and have knock-on effects on the quality of NHS services and other public services.

That’s the conclusion of an Institute of Fiscal Studies report.

It says average weekly public sector pay has fallen by 4% in real terms since 2009–10, and further restraint would take public pay to historically low levels relative to that in the private sector.

On average the issue is clearer for better educated public sector workers than it is for lower paid workers, with these higher paid groups faring less well against the private sector.

The report does acknowledge that increasing public sector pay is expensive.

The government spends £181 billion per year employing 5.1 million public sector workers. So even small percentage increases in pay would imply large increases in the cost of employing these workers.

Compared to increasing pay scales by 1% per year, increasing pay in line with either inflation or private sector earnings for the next two years would cost around £6 billion per year by 2019–20.

Jonathan Cribb, a Senior Research Economist at the IFS, and author of the report, said: “The government is considering lifting the public sector pay cap for at least some workers. If it decides to maintain the 1% cap, we should expect increasing difficulties in recruiting, retaining and motivating high quality public sector staff, reducing the quality and quantity of public services.

“But increasing pay for these workers implies substantial extra costs to public sector employers. The Treasury could provide extra funds for this by raising taxes, cutting other spending or borrowing more. Asking the NHS, for example, to fund higher pay increases from within existing budgets would be very challenging.”

Dr Chaand Nagpaul, BMA council chair, added: “This report is yet more evidence which shows the benefits of easing the punitive public sector pay cap.

“Doctors’ pay has sharply declined, falling by 22% since 2005. Staff morale across the health service has been worsened by year on year real-term cuts to pay through the government’s public sector pay cap. The NHS is struggling to attract and retain doctors: a recent BMA survey has found that two-thirds of hospital doctors, and almost half of GPs, report vacancies in their departments and practices.

“With the NHS at breaking point investing in the NHS workforce and providing fair terms and conditions must be a priority for this Government, otherwise the NHS simply won’t be able to attract and keep the frontline staff needed to deliver safe, high-quality patient care.”

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