Our analysis of long-term trends in UK nurses’ earnings highlights several key points.

From a long-term perspective, over the last three decades (1988–2019), female full-time nurses’ real-terms weekly earnings grew by a very similar factor to overall female full-time employee earnings. However, the year-on-year earnings trend for nurses diverged considerably from the overall pattern of all employee earnings, driven primarily by two key positive developments – the introduction of clinical grading (1988) and Agenda for Change (introduced in 2004) – and by negative impacts, notably the public sector pay restraint period of 2010–2017.

Prior to the pay restraint period, female full-time nurses’ average gross weekly earnings doubled in real terms between 1988 and 2009. However, the austerity period led to a real-terms earnings decrease for nurses that changed only recently with the 3-year Agenda for Change pay deal in 2018. In real terms, female full-time nurses’ mean gross weekly earnings in 2019 were virtually the same as in 2008.

Our analysis also underscores the impact of using different start dates for long-term earnings trends. We use the introduction of clinical grading in 1988 to illustrate this: between 1988 and 2019, nurses’ average weekly earnings increased by 94% in real terms, but between 1989 and 2019 the increase was only 59%. The substantial ‘one-off’ increase of clinical grading has a marked effect.

Further, while nurses on average earn slightly less than police officers and secondary teachers in nominal terms, nurses’ earnings have been more resilient to consumer price inflation relative to the other groups in the last three decades. This includes the period of public sector pay caps (2010–2017), when all three workforces registered declines in average real-terms earnings.

NHS nurses’ earnings data in England are only available over a shorter timeframe, since NHS trusts began using the ESR in 2009. On average, NHS nurses’ basic earnings in England grew by 1.3% a year over the period from March 2011 to March 2021. However, when CPIH inflation (averaging 1.7%) is taken into account, NHS nurses’ average earnings fell by 5% in real terms in this period. The need to assess the likely impact of inflation on pay has recently become more prominent, with inflation forecast to exceed 3% in 2021/22, set against the NHSPRB’s 2021 recommendation of a 3% pay increase.

When we look further afield, OECD data show that on average, hospital nurses’ earnings in the UK are less than the corresponding averages in key comparator economies such as Australia, Canada, New Zealand and the United States, both in absolute terms (when comparing remuneration levels across countries adjusted for cost of living in each country) and relative terms (when comparing the remuneration of nurses to the average wage of all workers in each country). Adjusted for PPP, hospital nurse remuneration in the UK fell below the OECD average in the decade to 2019. The ratio of average hospital nurse remuneration to the average full-time employee wage in the UK has also trailed the OECD average since 2009. In a context where the UK has historically relied heavily on international nurse recruitment and is likely to compete with other OECD countries for nurse labour supply, this international analysis is highly relevant.

Policy implications

Our long-term assessment of nurses’ earnings and the review body approach, taking a perspective of almost 40 years, have highlighted that the review body process has maintained nurses’ real-terms earnings since its establishment in 1983. However, this has largely been achieved through two pay boosts driven by structural and contractual changes, in 1988 and in 2004. Since 2004, there has not been an equally significant pay uplift, and the public sector pay cap in the 7-year period concluding in 2017 has had a negative impact on nurses’ earnings.

The ability to reach independent recommendations gives the review body the scope to take a considered and evidence-based view of an issue that is always contested and sometimes controversial, and which has significant public funding implications. This ‘independence’ was most recently highlighted in this year’s report, where the NHSPRB made a recommendation for a 3% pay uplift after the government in England had argued strongly for a 1% increase.

However independence is only a reality if recommendations are then accepted by the governments in the four UK countries, and implemented and funded in full. In the past, this has sometimes been compromised or undermined by government action. In the period between the NHSPRB’s first report in 1984 and 2007, there were at least 7 years in which its recommendations were delayed, More recently and more notably, the NHSPRB was marginalised during the 7-year public sector pay cap period, which, as we highlight, led to a significant drop in nurses’ earnings compared to overall average earnings.

The review body approach also gives scope for significant, planned and agreed changes to be made in the overall pay determination process and structure, as we highlight above, most notably in 1988 and 2004, but not since. The NHSPRB is now flagging that it has identified the need for further reform of the system. In this year’s report it has called on the governments in the four UK countries, employers and unions to examine and update several aspects of the current pay determination process, including:

  • better integration of pay as part of the overall approach to workforce planning and development
  • to focus more on the ‘total reward’ (to take account of flexible working, support for continuing professional development, etc)
  • to examine the use of the High-Cost Area Supplements.

The current pay system was emerging from the 7-year pay cap at a time of significant nurse shortages, and the nurse labour market is now further impacted by COVID-19, which has highlighted the contribution of nurses and channelled widespread public support for the profession, but raises concerns about workload, retention, motivation and longer term supply.

In addition, from a pay perspective, there are now increases in National Insurance contributions to consider, as well as a rise in inflation. This context has sharpened the focus on what nurses get paid, to assess if the system can respond to these critical shortages and staffing concerns or requires a new structural change. The points made by the NHSPRB in this year’s report highlight that it has identified the time is right for review and update.

The broader policy emphasis in the NHS is now focused on how to ‘build back better’, and part of that broader focus must be to assess if the NHS national pay system also remains fit for purpose. As we highlight, it is more than 15 years since the last significant change was implemented and gave nurses’ pay a substantial boost.

None of the national stakeholders contacted for this report, prior to publication of the NHSPRB report in July 2021, or in more recent follow-up meetings, were at the time in favour of immediate large-scale or fundamental reform, because of funding constraints and capacity challenges at the time of the pandemic. There was, however, widespread recognition of scope to optimise and update the pay progression mechanisms to better recognise staff with high levels of skills, experience and advanced practice contributions. The most common issue stakeholders highlighted for examination was the need for improved pay rates and career pathways for experienced, enhanced and advanced practice nurses. Many thought the current pay structure was too compressed, with insufficient overall progression before reaching the top of pay bands. A major potential retention mechanism they identified was introducing scope for experienced and advanced practice nurses to progress to higher pay rates. The NHSPRB has now clearly signalled that this issue should be examined.

A second main area of NHS focus, and identified by some stakeholders, is on the extent to which pay supplements should be targeted at hard-to-fill posts or high cost of living areas. The NHSPRB has in earlier reports raised the need to look in more detail at targeted pay supplements, and this examination should now be taken forward in more detail. It should consider High-Cost Area Supplements, but look beyond pay supplements to take account of other possible incentives such as loan repayments, ‘return of service’ models, and subsidised or fully funded additional education. The international comparisons in our report highlighted that a range of different policy responses are in use in other countries aimed at increasing recruitment to, and retention in, underserved areas and hard to fill specialties.

A third point is that there is an ongoing requirement to assess the extent to which the pay system established under Agenda for Change meets one of its initial objectives, to support pay equity. Nursing is a workforce where nine out of ten professionals are recorded as female. Assuring pay equity requires a more complete approach to monitoring of pay and earnings distribution by gender and ethnicity than is currently available in the public domain; it requires more complete data, and requires support and action at employer level and nationally.

A fourth area for flexibility considerations is pensions. While pension provision has not been a focus of this report, it is a major part of the overall employment package and it must be recognised that the NHS nursing workforce is ageing, with a high proportion of nurses nearing retirement age. Further flexibilities in pension contribution and payments could encourage more nurses to remain at work or return to work. The point made in this year’s NHSPRB about fuller consideration of the total reward package is important in this regard. A flexible approach to pension access and provision should be an integral element of the package.

A fifth challenge is the issue of emerging divergence in NHS pay processes across the four UK countries. The UK has one overarching regulatory body for nurses, and commonalities in undergraduate education for nurses, which underpin a ‘shared’ labour market to the extent that nurses trained in one UK country have largely unfettered mobility and ability to practise across all four countries. However, each UK country develops its own NHS system and priorities and its own NHS funding, workforce planning and development approaches, and has its own broader policy and political cycle. Trying to accommodate these four country differences within one pay system has already created tension and it may be time to look to a more explicit approach to a devolved, four UK country, pay process. The Scottish government has already withdrawn from the NHSPRB remit in this 2020/21 cycle, but has maintained engagement with the DDRB.

Examples from Australia and Canada highlight that it is feasible to have a different pay determination cycle and processes at the state or province level in federal countries; in some cases with local ‘top-up’ bargaining, or with a national ‘safety net’ of minimum rates. While the UK is not a federated country, there could be scope to look at more country level flexibility within an overall ‘looser’ UK pay determination model, if there is an identified need to maintain enabling elements of commonality across the whole UK labour market for nurses.

The full impact of the COVID-19 pandemic on UK nurse labour markets has not yet been fully seen and will have continuing implications for nurses’ pay. There appear to be some positive side effects, most notably the (possibly short-term) increase in applications to nurse education. There have also been more negative direct and marked effects on the health and wellbeing of those who have been in the front line of the NHS response, which may significantly reduce retention rates, increase early retirement and long-term absence. NHS England stands out from the other UK countries, and from nearly all the other OECD countries examined for this report, in not paying some type of pandemic-related pay supplement, or bonus to nurses, in recognition of their central and critical contribution. This exception has been widely reported as a disincentive to nurses and as being out of kilter with the public mood.

The COVID-19 pandemic has accelerated the need to review the current approach to NHS nurses’ pay determination. The UK government has announced that it intends to run a full public sector pay round for 2021/22. This must be followed through with full acceptance and funding for review body recommendations. This can then be a start towards ensuring that the nurses’ pay process and subsequent earnings levels are at the front and centre of rebuilding and funding, not an adjunct standalone exercise or afterthought.

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