Vanessa Abrahamson Blog: What’s the deal with NHS pay rises?

“Nurses are in line for a bigger pay rise than the widely-criticised one per cent.

“Many staff will actually get a 1.7 per cent increase to their wages this year thanks to a deal previously agreed by the Government.”

Daily Mail, 12 March 2021.

Following the government’s proposal to raise NHS salaries in England by 1% from next year, the Daily Mail claimed that, in fact, many staff will get a 1.7% increase to their wages.

This isn’t technically accurate and misrepresents the extra 0.7% funding the government has put into NHS staff pay.

In addition to the 1% rise, the government plans to spend 0.7% more on staff salaries as a whole, which will mean a small number of staff will see their salaries rise considerably but the majority will not benefit from this change. The 0.7% rise is not being spread out evenly as implied.

Additionally, some staff will see their pay increase by more than 1% from next year, because NHS staff also receive pay rises when they accrue a certain number of years of experience.

How NHS pay works

First it’s important to know how NHS pay works.

All staff except doctors, dentists and very senior managers are paid using the same system which assigns different jobs to one of nine different pay “bands”. For example a pharmacy technician would be in band 4 while a school nurse would be in band 6.

Within each band there are a number of different pay points. As staff spend more time in their role, their salary increases until they reach the top of their band.

This used to happen automatically each year. However, in recent years, more and more staff have been moved on to contracts which mean this progression is linked more to performance.

Nevertheless, it is expected that staff should progress through their band once they’ve accrued enough years of experience.

The number of pay points in some bands has also been reduced.

In practice this means that salaries will increase less regularly, and the increase won’t be as automatic, but when it does increase there will be a bigger jump, and it will take staff less time, in total, to reach the top of their band.

For example, in 2017/18, a newly qualified nurse starting at the bottom of band 5 would be on pay point 16 earning a base salary of £22,128 per year. They would expect to advance by a pay point each year, earning a slightly higher annual salary each year, until they reached the top of their pay band after seven years’ experience.

In 2020/21, a newly qualified nurse starting at the bottom of band 5 would be earning a base salary of £24,907. Instead of seeing their salary increase each year, they would receive a larger increase every two years, reaching the top of the pay band after six years’ experience.

From next year, a newly qualified nurse could advance to the top of band 5 in as little as four years due to the removal of pay points, which we’ll detail later.

In addition to this pay progression through the bands, each year the amount paid at each pay point may change.

As mentioned, for example, the starting salary for a newly qualified nurse increased from £22,128 in 2017/18 to £24,907 in 2020/21.

The government’s offer of a 1% pay rise would affect the pay for each of these pay points.

So, for example, a nurse who qualified in 2020/21, and is currently earning £24,907 per year would see their salary increase by 1% in 2021/22, as they would not yet be due to advance to the next pay point and so would only receive the 1% uplift.

But a nurse with a bit more experience (but still earning £24,907) who was due to go up to the next pay point in their band from 2021/22 would receive that salary increase plus the 1% increase. Currently the second pay point in band 5 is £26,970, but the government is proposing this is raised by 1%.

The 1% proposed increase doesn’t account for inflation. With inflation forecast to be 1.7% next year, this means staff benefitting from just the 1% pay rise would have less purchasing power in 2021/22 than they did in 2020/21.

What’s the 0.7%?

Then there is the 0.7% which confuses things further.

Currently there are four pay points in bands 5, 6 and 7. From 2021/22 this will be reduced to three by, it appears, eliminating the second highest pay point in each band. We have asked the Department for Health and Social Care to confirm it is this second highest pay point that will be removed.

People in this second highest pay point will be moved to the top of the band. This is what will cost the government an additional 0.7%. It’s not the case that all or many staff will receive a 0.7% increase to their salary. Some people will receive a large increase in their salary from this change, and some will not at all.

For example, in 2020/21 a band 5 nurse with four to five years of experience would have been at the second highest pay point in their band, earning a base salary of £27,416.

Under the system at the time, with four pay points, they would not have been expected to progress to the top pay point until they had at least six years of experience.

But, due to the abolishment of their pay point, from next year, they will be bumped up to the top pay point of the band.

Staff affected in bands 5, 6 and 7 will see salary increases of 11.7%, 12.2% and 6.7%, and that’s before the 1% general salary uplift.

What does all this mean?

Ultimately then, the government’s proposals will affect salaries of affected NHS staff differently.

Staff who are due to stay at their current pay point next year would see their salary increase by 1%.

Staff due to progress to the next pay point in their band will be entitled to whatever salary that new pay point commands, which itself would also be 1% higher than it was last year.

And all staff at the second highest pay point in bands 5, 6 and 7 will be moved up to the top of their pay band, irrespective of whether they were due to under the old system. Again, that top pay point would be 1% higher than it was last year.

While neither the Royal College of Nurses nor the Department for Health and Social Care could tell us exactly how many people fall into each of these groups, we can make some estimates, using data published by NHS Digital.

As of 30 April 2020 there were 1,159,727 NHS staff in England on these affected contracts. As mentioned, this excludes people like doctors, dentists and some senior managers.

Of those, around 105,000 were staff in bands 5,6 and 7. This year staff in those bands may benefit from the 0.7% extra funding. These are people who:

Would be due to progress to the second highest pay point in their band but will now progress to the top pay point
Were due to stay in the second highest pay point but will now progress to the top pay point
Were due to move up to the top pay point next year anyway but may receive that increase in salary slightly sooner as a result of the band being restructured

Another 124,000 staff across all bands were at a level that, this year, would mean they’d be due to move to a pay point which commands a higher salary in the next financial year, that isn’t the top point in bands 5, 6 and 7.

This would include, for example, a nurse in band 5 on the lowest pay point moving up to the second pay point, having had two years of experience.

Another 921,000 people were at a level meaning they would not be due to benefit from the 0.7% or pay progression and so would just receive the 1% salary uplift. Finally, a small number of staff had an “unknown” pay point so couldn’t be categorised.

These figures aren’t perfect. For one thing, they use data on the number of staff in each band and pay point in April 2020. That composition is likely to have changed since.

They also assume people stay in their bands when, of course, some may be promoted into new roles, though whether this should be considered a “pay rise” or not is a matter of debate.

But the data does suggest that the vast majority of NHS staff will only receive the 1% proposed uplift, if the proposals go ahead. A significant minority of staff would see their salary rise by more than 1% either due to the change in pay structure in bands 5, 6 and 7 or standard pay progression.

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