Road block looms over bid to link pay to productivity

This latest article in our series on the 2018 pay negotiations looks at what is shaping up to be the biggest stumbling block – the government’s insistence on linking pay rises to improved productivity

Our series on the 2018 negotiations on nurses’ pay looks at what is shaping up to be the biggest stumbling block – the government’s insistence on linking pay rises to improved productivity

  • Relief over end of the pay cap is tempered by moves to link pay to productivity
  • Panel of MPs says nurses are overstretched and warns government to be realistic
  • Employers insist they are optimistic about a positive outcome that benefits all sides

Picture: Daniel Mitchell

When health and social care secretary Jeremy Hunt told MPs last autumn that the 1% pay cap for NHS staff had been scrapped, he said future pay rises would be dependent on ‘improved productivity’.

Speaking in parliament, Mr Hunt said latitude the chancellor had given him in negotiating future pay rises was partly linked to productivity improvements to be negotiated at the same time.

Concerns beyond nursing

But attaching a future pay rise to improved productivity has caused concern beyond the nursing profession.

The cross-party Commons health committee has publicly cautioned the government to be realistic about demands for improved productivity, in its report on the nursing workforce.

‘It’s incredibly insulting when we know people are working 12-hour shifts and staying even longer, unpaid, to finish off the work they feel they need to do to keep patients safe and give good care’

Janet Davies, RCN general secretary

Health unions that represent NHS staff, including the RCN, the Royal College of Midwives, Unison and Unite, also condemned the demands.

The health committee report argues that NHS productivity is already higher than the background rate of the wider economy.


The minimum above-inflation pay rise that the RCN and other unions have called for to address the estimated 14% real-terms pay cut nurses have suffered since pay restraint began in 2010.

The MPs wrote: ‘We urge the government to come forward with realistic proposals, as nursing is already an overstretched workforce.

‘It is essential that pay rises alone are not seen by government as the sole solution to the problem of nurse retention, as we have heard in this inquiry that pay is only one element amongst many.’

Mr Hunt reiterated the link between any pay rise and public sector productivity in a letter to the chair of the independent NHS Pay Review Body (RB). Talks on a 2018 pay deal for staff who are subject to the Agenda for Change (AfC) pay system are now under way between government, NHS Employers and the staff side.

‘What the NHS needs now is more capacity and fair pay, which is an investment in higher quality and even more productive services, but it must be funded’

Jon Skewes, Royal College of Midwives director for policy, employment relations and communications

The RCM’s Jon Skewes.

The government has yet to expand on what ‘improved productivity’ looks like, so at this stage it is unclear what kind of conditions might be attached to a pay deal.

Money in vs treatments out

Unison head of health Sara Gorton argues that measures of NHS productivity are ‘notoriously crude’‎, essentially tracking money in against treatments out.

Ms Gorton says: ‘On paper, culling millions from staff pay and strangling NHS funding has supposedly produced a more productive NHS.

£2.2 billion

The cost of fulfilling a fair pay claim for NHS staff, according to evidence from the 14 staff side unions. this would add 6.3% to the non-medical pay bill.

‘But this is not the reality of the experience for patients waiting longer for treatment or having operations cancelled.

‘Neither is it the reality of the experience of NHS managers struggling to find enough staff to fill shifts and spending thousands on stopgap solutions to the current recruitment and retention crisis.’

Doing more for less

RCN associate director employment relations Josie Irwin believes ‘improved productivity’ would inevitably mean nurses and other NHS staff ‘doing more for less’.

Ms Irwin says: ‘In the simplest terms, productivity is about achieving greater efficiency – which really means more output for less input.’

She says the NHS would ‘grind to a halt’ without all the extra unpaid hours that nurses already do every day.

‘The focus in the NHS has largely been about reducing staff costs – as well as jobs lost, services outsourced, down-banding and substituting new lower-paid roles for registered nurses.’

‘People are already giving as much as they can possibly give us. How can we make the system more productive when everyone working in it is on their knees?’

Sarah Carpenter, Unite head of health

Sarah Carpenter, Unite head of
health. Picture: Unite

Productivity improvements ‘cannot be achieved by the NHS tightening its belt any further’ and expecting any more from staff who are already working at their maximum, she says.

The pay talks are taking place against the backdrop of soaring demand for NHS services and a profession in crisis.

The RCN says the NHS is ‘haemorrhaging’ nurses at a time when demand for health and social care services has never been higher, and estimates there are 40,000 nursing vacancies in England alone.

Pay deal imperative

Meanwhile figures from NHS Digital reveal more nurses are leaving the profession than ever before, with 33,000 nurses leaving the NHS in England in 2016-17, including 17,000 under the age of 40.

Overall, unions estimate that in real terms nurses have seen their pay fall by 14%, or £3,000 a year over the past seven years.

It is imperative that staff side negotiators, NHS Employers and government reach agreement on future pay rises for NHS staff, but it remains to be seen whether the demand for productivity improvements will hinder this.

The real test

Ms Gorton, lead staff side negotiator, says: ‘The real test of any reform package will be the funding that government is prepared to put forward.

‘Unions have been very clear that a reform package without significant additional funding simply will not fly.’

‘The chancellor has said that if we can have a negotiation and look at some of the ways that we could improve productivity at the same time, then he is willing to have a discussion with me about whether extra resources can be found’

Jeremy Hunt, health and social care secretary

A Department of Health and Social Care spokesperson says: ‘The broad aims are to strengthen the AfC agreement on progression and review more generally the need for wider reform in a way that is fair to staff and to the taxpayer.


The number of nurses and midwives leaving for reasons of work-life balance in England in 2016-17 – nearly double that in 2012-13, when 3,170 left for the same reasons.

Source: Department of Health and Social Care

‘The government has been clear that it will fund a multi-year pay deal for staff employed under the national AfC contract – including nurses and midwives – if talks on contract reform are successful.

Still optimistic

‘Discussions between NHS Employers and unions to agree this new pay deal have been constructive, but we do not wish to pre-empt that.’

Similarly, NHS Employers chief executive Danny Mortimer says he cannot comment on ‘the finer details’ of the negotiations, such as the productivity demands.

He says: ‘These complex and sensitive negotiations are still ongoing, and we remain optimistic that a positive outcome will be achieved that benefits all sides.’

‘A pay rise for nurses would improve productivity’

Poor pay and insufficient staff are driving experienced nurses to leave the profession and dissuading others from joining, health unions say.

RCN associate director employment relations Josie Irwin says a pay rise in line with inflation and which begins to close the 14% gap ‘would be a good start’.

She also says investment in training could help, and maintains that cuts in professional development funds mean nursing staff are falling behind on technological changes.

Best employers

‘The best employers are developing line managers and leaders at all levels to manage change and performance,’ she says. ‘This would also make a difference. Addressing the excessive workloads and related stress that is forcing nurses out of the career they love wouldn’t cost much, and if nurses are encouraged to stay it would reduce agency costs.’

Ultimately, she says, a pay rise for nursing staff would improve productivity in the NHS and would be good for the economy.

‘It would return higher tax receipts, reduce welfare payments and increase money spent on goods and services in other sectors.’

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