U.K. Lifts National Health Service Pay Cap, Ending Austerity

Updated on
  • Unions met in London to sign off on 6.5% three-year pay rise
  • May came under pressure over nurses’ pay during 2017 election
Photographer: Chris J. Ratcliffe/Bloomberg

U.K. Prime Minister Theresa May’s government lifted the cap on pay for staff in the National Health Service, signaling an end of austerity that has shrunk the real income of nurses over the past eight years.

Under the new deal reached Wednesday, health workers will see their pay rise by 6.5 percent on average over the next three years. Officials from unions representing NHS staff met on Wednesday to sign off on the agreement, which will cost the government about 4.2 billion pounds ($5.9 billion) over three years and cover more than one 1 million people -- but exclude doctors.

“We have put money aside specifically for this purpose,” Chief Secretary to the Treasury Liz Truss said in an interview with BBC Radio 5 Live. “We’re able to fund that extra pay from the money that we have found from within the public spending envelope. So we are not increasing public spending beyond our existing plans.”

The fate of the state-funded health service has become a battleground in U.K. politics with Jeremy Corbyn’s opposition Labour Party accusing May of failing patients and nurses and calling for an emergency budget amid what Health Secretary Jeremy Hunt has called the service’s “worst ever” winter crisis.

Related: European Doctors Are Giving Up on the U.K.

Since 2010, the Conservatives have been holding down public-sector pay in an effort to reduce the deficit. Pay was frozen in 2011 and 2012, and since then increases have been limited to 1 percent, or well below inflation. Members of the Royal College of Nursing union descended on the British parliament in London in September, arguing their salaries had dropped 14 percent in real terms in the past seven years.

Election Setback

Austerity proved a problem in the 2017 election, when May came under pressure after telling a nurse who was complaining about her income that there was “no magic money tree.”

Since she was returned to power shorn of her majority, May’s administration has taken steps to ease the pressure on public-sector workers. Police officers and prison workers became the first to benefit in September, when they were awarded rises of 2 percent and 1.7 percent respectively.

The government’s offer to health workers had originally been contingent on staff giving up a day off in return, the Guardian reported, but that demand has now been dropped.

“The proposed agreement will turn the tide on the NHS staffing problems, by helping to attract new recruits and retain experienced staff,” the NHS Confederation said in an emailed statement. Health unions will now put the proposal to members, it said.


Depending on role and experience, some workers will receive a pay rise of up to 29 percent over the next three years, though that level applies to less than 1 percent of the workforce, according to the statement.

But the GMB union representing NHS workers recommended members reject the proposal, which represents “jam tomorrow,” it said in an emailed statement, adding that the pay increase for most workers would underperform against forecast inflation.

Nevertheless, easing pay restraint will be expensive: The government’s total pay bill is about 180 billion pounds, and Chancellor of the Exchequer Philip Hammond is still wary of loosening the purse strings too much amid the economic uncertainty caused by Britain’s departure from the European Union.

He rebuffed calls to ease of austerity measures in his spring statement earlier this month, limiting the event to an update of the economy’s health. But ahead of the statement, he did signal brighter prospects for public workers suggesting he may have leeway to spend more in the Autumn Budget.

“There is light at the end of the tunnel because what we’re about to see is debt starting to fall after it’s been growing for 17 continuous years,” Hammond said in a BBC interview. “We need to look at what’s happening sustainably in the economy and if there is the flexibility, the space to do something, then we’ll decide in the Autumn how we’re going to use that.”

(Updates cost in second paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE