Queen’s House Consulting announces publication of its discussion paper “What Price the NHS?“. This independent report coordinates data about the United Kingdom National Health Service (NHS) pay and funding, alongside population change, inflation and government revenues since 2010. This is presented in the context of an ongoing pay dispute between NHS staff trade unions and the UK Government.
Analysis indicates that NHS staff pay has not matched inflation since 2010. In contrast, private sector pay has increased by more than inflation since 2010. Overall, total NHS spending has approximately matched inflation over the same period, if the exceptional costs of the COVID-19 pandemic are discounted. However, this has not taken account of population growth since 2010, or the disproportionate increase in the people over 65 years old who have greater need for NHS services.
The currently-disputed pay offer provides an average 4% salary increase, which is less than the 7.0% annual inflation to March 2022. The incremental cost of this pay offer in England would be up to £2.8bn, or 7.3% of the NHS pay budget. This offer would add 1.8% to the total NHS budget.
The discussion paper proposes three different models for NHS pay, which may offer options for settlement of the current dispute. Model 1 provides a pay increase based on the annual inflation rate in the preceding year. Model 2 provides a pay increase which corrects the gap between salary in each pay band and the cumulative inflation since 2010. Model 3 provides a pay increase which delivers parity with the growth in private sector pay since 2010. In England, the incremental costs of these models are up to £3.8bn, £6.5bn and £12.3bn. They would add 9.8%, 16.9% and 31.8% to NHS pay costs, representing an increase of 2.5%, 4.3%, and 8.1% of the total NHS budget respectively.
The cost of additional funding to provide for demographic changes since 2010 has also been calculated. Applied to pay models 1-3, these costs in England are £17.6bn-£18.7bn, which is approximately 11.7%-12.5% of the total NHS budget.
To build additional resilience into the NHS, the cost of an extra 10% capacity has been calculated. This would allow normal service delivery during times of high demand, with the opportunity for service improvement at other times. Applied to pay models 1-3, these incremental costs are estimated to be £16.1bn-£17.1bn, which is approximately 10.8%-11.4% of the total NHS budget.
Although the demographic and capacity investment are not directly associated with pay, they offers a potential reduction of staff workload. Along with pay, that outcome may facilitate staff recruitment and retention, to benefit both staff and patients.
Collective implementation of such pay models, demographic adjustment and capacity improvement would raise the UK from 16th to 5th ranking in a global comparison of national healthcare expenditure. Together, they would cost £27.4bn-£38.6bn, adding 18.3%-25.8% to the NHS budget in England. Extrapolating this to the whole UK would cost £32.7bn-£47.0bn. This would increase healthcare spending as a proportion of personal taxation from 26.0% to between 30.8% and 32.8%. As a proportion of total government income, these combined options would increase healthcare spending from 14.2%-15.1% to between 17.9% and 19.1%.
These models identify the cost and value of different investments in healthcare. It may be timely to consider what level of healthcare service the UK wants and how much of the national wealth should be committed to deliver it.
The discussion paper analyses the problems and offers solutions for consideration by stakeholders. This approach is in line with the broader offering from Queen’s House Consulting.
Click here to read the full report.