Analysis

Opportunity and risks for nurses with prospect of multi-year pay deal

The first of a Nursing Standard series on pay looks at one possible outcome of the 2018 pay negotiations – a multi-year deal

The first of a Nursing Standard series on pay looks at one possible outcome of the 2018 pay negotiations – a multi-year deal

  • Government wants NHS Pay Review Body to consider a multi-year offer
  • RCN sees opportunity to reach a deal that lifts nurses out of pay restraint
  • Long-term deal could include a clause that triggers revision if inflation spikes

Nurses’ unions say a multi-year pay deal signalled by the government could work if it contained competitive benefits and lifted pay – but there are risks attached.

Health and social care secretary Jeremy Hunt revealed in December that the government would be calling for a multi-year agreement in negotiations on the 2018 pay round for nurses.

Jeremy_Hunt©NOC
Health and social care secretary
Jeremy Hunt. 
Picture: Neil O’Connor

This followed Mr Hunt’s announcement in parliament last October that the 1% pay cap for NHS staff would end, following a sustained campaign from the RCN and other unions.

Exploratory talks have started, involving NHS Employers, the government and 14 trade unions – known as the ‘staff side’. These talks are looking at whether a breakthrough deal may be possible.

Fairness for employees

In a letter to the independent NHS Pay Review Body (RB), which makes recommendations to the government on pay for different NHS staff groups, Mr Hunt set out his idea for a multi-year deal.

However, and somewhat predictably after seven years’ of pay restraint, he also cautioned the RB to ‘consider affordability’.

£800

The RCN pay demand is a flat-rate rise for all staff on AfC contracts, plus a rise in line with inflation

‘In considering future remuneration of staff, I am therefore asking NHS Employers to continue exploratory talks with the Agenda for Change trades unions, with a view to the latter obtaining mandates to negotiate a multi-year agreement,’ Mr Hunt wrote.

‘Any agreed deal would need to be one that gives valued staff a fair pay rise alongside improving recruitment and retention, and developing reforms which better reflect modern working practices, service needs and fairness for employees.’

Precedent for longer deals

Josie_Irwin©BN
The RCN’s Josie Irwin.
Picture: Barney Newman

A pay deal with fixed percentage increases over two or more years is not unfamiliar to the NHS, and staff who were in post a decade or more ago will have experienced multi-year deals before.

When national implementation of the Agenda for Change (AfC) pay system for the NHS began in December 2004, staff received an initial pay agreement worth 3.3% every year for three years.

RCN associate director employment relations Josie Irwin says that at the time this agreement was not considered a multi-year deal as such, but rather part of the fabric of the newly negotiated pay structure, terms and conditions of AfC.

Canny arrangement

In the 2008 pay round, inflation was rising and signs of economic instability were starting to spread to the UK from the US.

Ms Irwin remembers: ‘The aim then was to try and squeeze as much cash as we could from the then Labour government in order to protect staff as much as possible against inflation.’

14%

The amount by which nurses’ pay has fallen behind the cost of living over the past seven years

Source: RCN

As it turned out, the resulting deal turned out to be a canny arrangement.

By September that year, problems in the US subprime mortgage market had triggered a global financial crisis.

Inflation-busting deal

During this unsettled time, a three-year pay agreement for NHS staff – valid until the end of the 2010-11 financial year – was negotiated.

Nurses and other NHS staff were to receive 2.75% in the first year, 2.4% in the second and 2.25% in the third year, plus extra increases for band 5 nurses through AfC restructuring.

‘There was no economic growth or inflation, so staff had a really good deal in 2008,’ says Ms Irwin.

‘We pulled off a bit of a coup, as we managed to do the only inflation-busting pay deal in the public sector at the time.’

By 2010, as the UK economy struggled to cope in the wake of the global financial crash, the new Conservative-led coalition government announced austerity measures and froze public sector pay – a freeze that would last until 2013.

‘The length of the deal itself is a consideration, but what is in the deal is far more important’

Sarah Carpenter, Unite national officer for health

But thanks to the pay deal struck in 2008, the government could not immediately impose the pay freeze on NHS staff, who thus escaped the first year of pay restraint.

From 2013, public sector pay rises were capped at 1%.

What might a multi-year pay deal mean for nurses?

Unite national officer for health Sarah Carpenter leads on pay for her union and says the devil will be in the detail of any deal that extends over two or more years.

Ms Carpenter says: ‘On its own, a multi-year deal might be good, bad or indifferent – it could be 10% a year for ten years or could be 0.5% over four years, which would be fairly grim.

‘The length of the deal itself is a consideration, but what is in the deal is far more important.’

She says multi-year pay agreements are not an unfamiliar concept in industry as a whole.


Sarah Carpenter. Picture: UNITE

‘Private companies routinely do multi-year deals, often when there is a need for stability in the workforce.

‘Seen from a company or organisational point of view, to be able to budget for a number of years can sometimes be good.

‘It’s a bit like fixing a mortgage, which can be a brilliant thing. But if rates change, you take a risk.’

Safety mechanism

Ms Carpenter warns that one clear risk in any multi-year pay agreement would be if inflation suddenly rocketed, rendering a pre-negotiated pay increase effectively worthless.

But she says any pay deal could include a safety mechanism that would come into effect if inflation jumped.

1 in 4

or 24% of nurses are thinking of quitting their job due to money worries.

Source:  RCN survey

‘If inflation rose to 4% and the deal was for 2%, for example, then we could all get back round the negotiating table,’ she says.

‘We are always happy to explore what the government is actually talking about because, as with all conversations around pay, a multi-year deal is just a part of it.

‘Nothing is agreed until everything is agreed.’

Explore possibilities

Ms Irwin emphasises uncertainty due to Brexit and the need for security: ‘It's a very uncertain world and future we have ahead.

‘With Brexit happening next year it is important to improve but also protect members’ pay. Healthcare is in crisis: there is a huge staffing shortage and a 14% pay gap that’s opened up.

‘There could be an opportunity for us to do some sort of a deal here that is beneficial for staff and gets us out of this terrible pay restraint that has had such an impact on recruitment and retention.

‘All unions should explore the possibility that there might be sufficient money in the pot to do some sort of deal that is win-win for all parties.’

Lead negotiator says it won’t be easy – or quick

Sara_Gorton

Unison head of health Sara Gorton is lead negotiator for the 14 trade unions in talks with NHS Employers and the Department of Health for the 2018 pay round.

Ms Gorton says the trade unions have got their own ‘very clear priorities’, including ending low pay, improving starting salaries and making it quicker for staff to reach the top of pay bands.

‘But we are well aware in trying to achieve what we want, we are going to come up against additional priorities that other parties in the talks will want to pursue.’

First chance in a decade

She says negotiations will not be quick or easy.

‘It's the first opportunity we've had in a decade for discussions with government and employers about longer-term improvements to the AfC pay structure.’

Ms Gorton adds that if the other side make too many unreasonable demands, unions would not force a deal through.

‘For a multi-year pay deal to work it has to work for individuals, staff as a whole and the system.’

Nurses' annual pay rises since start of AfC

  • For the three years to 2007-08 nurses’ pay rose 3.3% per year.
  • That slipped to 2.75% in 2008-09 then 2.4% in 2009-10 and 2.25% in 2010-11.
  • Pay was then frozen for two years. It rose 1% in each of the following five years, up to 2017-18.

 

Related: Nursing Standard analyses on pay 

Part 2: Unions seize chance to modernise NHS pay structure with fairer grading

Part 3: Shake-up of flawed pay bands system could make it quicker to get to the top

Part 4: Road block looms over bid to link pay to productivity

Part 5: Pay: why this year's salary increase may depend on where you live

 

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