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Failing to scrap pay cap could hamper recruitment and morale, says IFS

Failing to remove the cap on health sector pay increases would increase problems with ‘recruitment, retention and motivation’ a new report claims.

Failing to remove the cap on health sector pay would increase problems with staff recruitment, retention and motivation, a new report says.

The Institute of Fiscal Studies (IFS) says further restraint would take public sector pay to historically low levels compared with the private sector.

The 1% cap has been in place since 2010 and unions and other organisations say this has resulted in a real-terms loss of earnings for nurses and other public sector workers of 14%.

Caps consequences

IFS senior research economist and report author Jonathan Cribb writes: If the government maintains the 1% pay restraint for most or all public sector workers, the difference between public and private sector pay would be likely to fall further.

This would likely increase recruitment, retention and motivation problems in the public sector, and risk leading to lower-quality public

Failing to remove the cap on health sector pay would increase problems with staff recruitment, retention and motivation, a new report says.


Picture: Nathan Clarke

The Institute of Fiscal Studies (IFS) says further restraint would take public sector pay to historically low levels compared with the private sector.

The 1% cap has been in place since 2010 and unions and other organisations say this has resulted in a real-terms loss of earnings for nurses and other public sector workers of 14%.

Cap’s consequences

IFS senior research economist and report author Jonathan Cribb writes: ‘If the government maintains the 1% pay restraint for most or all public sector workers, the difference between public and private sector pay would be likely to fall further.

‘This would likely increase recruitment, retention and motivation problems in the public sector, and risk leading to lower-quality public services.’

The report estimates scrapping the cap and giving workers pay increases above the consumer prices index inflation rate of 2.9% would cost £3 billion in 2018 and £6 billion in 2019.

Mr Cribb concludes: ‘If the treasury does increase the funds available, to fund the higher pay settlements, it would need to raise taxes, reduce spending elsewhere or borrow more.’

Fully funded

The IFS report comes after health unions, including the RCN, last week broke with tradition and submitted a pay claim direct to the government rather than through the independent NHS pay review body.

In a letter to chancellor Philip Hammond, unions called for funding to be set aside in the autumn budget in November to increase health workers’ pay in line with the retail price index inflation rate of 3.9%.

General secretary Janet Davies said: 'Nursing staff must be given a pay rise that matches inflation, with an additional consolidated lump sum that begins to make up for the years of lost pay.

'It must be fully funded and not force the NHS to cut services or jobs to pay for it.'


Further information

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