Introduction

Pay is a critical aspect of the relationship between the NHS as an employer and its staff. If employees and potential employees perceive the NHS payment system as being fair, this can have positive impacts on recruitment and retention. In particular, pay structures are a crucial element of career progression and maintaining competitiveness with other career options. They can also be used to motivate staff to work in certain regions and specialties and at unsociable hours. Conversely, when staff do not view the pay determination process as clear and fair, this can demotivate them and make them think that their contribution and skills are not valued.

In this report, we focus on two key aspects of the pay determination system that are closely connected. First, we consider the actual method that determines what NHS nurses are paid and how it has evolved over time. Second, we look at the outcome of that process, in terms of the actual pay levels that NHS nurses receive. We take a long-term view. We are primarily concerned with analysing NHS nurse pay and earning trends, making comparisons with other occupations and examining the long-term outcomes of the pay determination process. We also make some international comparisons to provide reference points and comparisons. For the purposes of this report, we focus on pay and do not examine broader aspects of the reward package.

This report focuses on NHS nurses’ and health visitors’ earnings because this staff group is the largest professional group in the NHS, comprising about 26% of the NHS Hospital and Community Health Service (HCHS) workforce in England. It also accounts for nearly half of NHS staff vacancies, and has been the centre of concerns about the impact of staff burnout as a result. We bring together a range of data in order to contextualise the current pay debate in the longer term trends and we highlight and reflect on key changes that have occurred in the pay determination process for NHS nurses (Annex 1 provides a summary of data sources). Further, we look at international comparisons, both to illustrate the relative position of nurses’ pay in some comparator/competitor OECD countries and to review the pay determination process in these countries.

Our overall aim is to assess the current NHS nurses’ pay determination process and its outcomes. At a time of major recruitment and retention challenges, we also examine major changes in the process over time. Our international perspective gives an insight into how much nurses are paid in other countries, but also how they are paid. The evidence we generate gives insights into the scope for change and improvement in the UK’s current approach.

The current NHS pay system for nurses

The NHS HCHS in England directly employs around 311,000 full-time equivalent nurses and health visitors (around 347,000 by headcount, 88% of whom are female). In 2019/20, the pay bill for these staff amounted to around £14.3bn, or nearly a third of the overall NHS Agenda for Change staff pay bill of around £43.4bn. For nurses and other health care professions, the national NHS pay recommendations are made by independent Pay Review Bodies (PRBs).

Each PRB is a committee of independent experts appointed by the UK government, with a secretariat provided by the Office of Manpower Economics. The pay of NHS nurses is considered by the NHS Pay Review Body (NHSPRB), which is also responsible for reviewing the pay of most other NHS staff covered by the Agenda for Change system. This includes NHS nurses and clinical support staff, maintenance staff, porters and administrative and clerical staff, but not doctors, dentists or very senior managers (approximately 1.5 million staff by headcount across the UK). There is a separate Review Body on Doctors’ and Dentists’ Remuneration (DDRB), which covers consultants, specialty doctors and associate specialists, doctors and dentists in training, general medical practitioners and general dental practitioners.

The NHSPRB therefore has a remit covering very different occupations. Its recommendations are based on several main considerations, including the need to recruit, retain and motivate suitably able and qualified staff; the implications of regional and local labour market variations; the UK government’s inflation target; how pay links to the recruitment and retention of staff; the principle of equal pay for work of equal value; and ‘affordability’: the funds made available. The NHSPRB currently provides independent advice on the pay of NHS staff to the Prime Minister, the Secretary of State for Health and Social Care, the First Minister of Scotland, the First Minister of Wales, and the First Minister and Deputy First Minister of Northern Ireland.

The review bodies make their recommendations on pay increases based on evidence submitted by trade unions, employers and the governments in the four UK countries, and on any additional research which they have commissioned. In ‘normal’ times this has been an annual process. In the most recent pay round (2021/22) the Scottish government decided not to take part in the full review body process, making its own pay recommendations for staff covered by the NHSPRB.

The NHS in England employs about four out of every five working nurses. The remaining 22% of nurses work across a range of other organisations including social care, charities, non-governmental organisations (NGOs) and the private sector. Their pay is determined by their employers, thus pay rates and employment conditions will vary; however, the NHS can be regarded as determining the ‘going rate’ in most labour markets.

The review body for NHS nurses and midwives’ pay was first established in 1983, ‘following a rancorous 18-month long pay dispute that involved most NHS staff other than doctors and dentists’. The DDRB had been set up much earlier, firstly in 1963, and then with a replacement body in 1971, and was the working model for the other review bodies. Subsequently the nurses’ review body was restructured to form the NHSPRB, which by 2007 had coverage expanded to all other NHS staff apart from doctors, dentists and very senior managers.

The main potential strength of the review body approach is that it provides an independent source of analysis that can take evidence from the different main stakeholders – the governments in the four UK countries, employers, trade unions – and arrive at evidence-based recommendations on increases in pay rates. The main weakness is that the governments in the four UK countries and employers are not bound to implement these recommendations in full, or at all. As we will show later in this chapter, there have been many years in which the recommendations have not been fully implemented, usually because the governments in the four UK countries have delayed implementation or have initiated pay constraints.

In the past, the review body process was normally an annual cycle of evidence taking, followed by pay recommendations made to the governments in the four UK countries for its consideration or implementation. However, this relatively stable pattern has been disrupted across the last 10 years. A 7-year austerity related pay cap for public sector workers (2010–2017) essentially marginalised the review bodies from making pay recommendations, and this was followed by a 3-year pay agreement for NHS Agenda for Change staff (2018–2021), which ended this year. During the NHS staff pay round for 2021/22, the Department for Health and Social Care initially submitted a 1% pay increase offer for NHS Agenda for Change staff in England. In July 2021 the UK government accepted and implemented the consolidated 3% pay increase recommended by the NHSPRB. In October 2021, the UK government announced that it would run a full public sector pay round for the following year, with pay awards to be announced in 2022 following the responses of the governments in the four UK countries to pay review body recommendations.

There is an additional challenge to the review body system. Its remit covers the NHS in each of the four UK countries, but there are some differences in approach as well as broader policy divergence occurring across the UK countries, which have become more apparent in recent years. As noted above, in the 2021/22 pay round the Scottish government took its own collective bargaining approach. This raises questions about the continuing ability to maintain internal coherence across four countries which have different electoral and funding cycles, differing NHS priorities, and may have different labour market dynamics.

Table 1 summarises the recommendations made by the NHS nurses’ pay review body since it was first set up in 1983. There have been three time periods when there were significant changes in the process:

  1. In 1988 ‘clinical grading’, a new pay structure for NHS nurses, was implemented. The new structure was developed using job evaluation techniques to identify key criteria for grading jobs systematically. The aim was for the pay rates to be determined by the key elements of the roles, skills and responsibilities undertaken by the nurse, not just job titles. Clinical grading represented a step change in the approach to NHS nurses’ pay determination.
  2. In the mid-1990s (1995,1996) there was a government-led attempt to shift more of the pay process for most NHS staff, including nurses, from a national pay approach to one that had local level pay determination. This largely failed, and a national focus has been retained for virtually all staff.
  3. In 2004 Agenda for Change was introduced, after several years of negotiation between the governments in the four UK countries, employers and unions to develop a pay system that would harmonise pay scales and career progression arrangements across different NHS occupations and professions. This introduced an NHS-wide new pay structure for all NHS staff other than doctors, dentists and very senior managers. It was partly driven by the need to comply with pay equity legislation and to ensure that the NHS pay system enabled equal pay for equal worth.

Table 1 also highlights that, while the governments in the four UK countries often accepted, funded and implemented the review body recommendations, there were many other years in which they then delayed or ‘staged’ the implementation in order to reduce the increase in pay bill costs.

NHS nurses’ pay is therefore primarily determined at the national level. Since 1983, this has been based on a review body process, which has some degree of independence, but is always open to government constraints. In addition, any new national contracts are negotiated directly between the governments in the four UK countries and unions.

Table 1: Summary of nurses’ pay review body recommendations and actual implementation, 1984 to current

  • The rows shaded in grey represent the 7-year public sector pay restraint period (2010/11–2017/18).
  • The rows shaded in teal represent periods in which the implementation of nurses’ pay awards was delayed or ‘staged’.

Year(s)

Recommended headline pay rise

Actual implementation of recommendations

2021/22

3%

PRB recommended a 3% consolidated pay increase for all staff – accepted by the UK government but subject to trade union ballots at the time of writing.

2018/19–2020/21

6.5%

3-year deal. Not a PRB recommendation but the result of negotiations to deliver pay rises, new structure and reduced number of increments. Fully funded.

2017/18

1%

Recommended 1% to Agenda for Change pay points and 1% on High-Cost Area Supplements (HCAS) in England, Wales and Northern Ireland – paid in full.

2016/17

1%

1% consolidated rise on all pay points paid in full.

2015/16

1% for some

Not a PRB report/recommendation. Negotiated outcome. 

2014/15

1% rejected by the UK government

PRB recommended 1% on all pay points and high-cost area allowances.

2013/14

1%

PRB awarded 1% on all scales and high-cost area allowances.

2012

 

PRB response to Chancellor’s invitation to consider ‘How Agenda for Change pay can be made more appropriate to local labour markets’.

2012

0% and £250 for staff earning under £21,000pa

Second year of the 2-year pay freeze imposed by the coalition UK government.

2011

0% and £250 for staff earning under £21,000pa

The UK coalition government stated no annual pay rise for anyone earning over £21,000, for 2 years from 1 April 2011.

2009/10

2.25%

Year 3 of a 3-year deal.

2008/09

2.4%

Year 2 of a 3-year deal.

2007/08

2.75%

Year 1 of a 3-year deal.

2006/07

2.5%(staged award in England)

Staged award, in England: 1.5% payable from 1 April 2006, the remaining 1% from November.

2004/05

3.225% for each year, over 3 years

Not a PRB award. The 3.225% over 3 years was part of the negotiated implementation of Agenda for Change.

2003

2.5%

2.5% on pay, leads and allowances. Paid in full.

2002

3.6%

Paid in full.

2001

3.7%

Paid in full.

2000

3.4%

Paid in full.

1999

4.7%

Paid in full.

1998

3.8%

Staged award: 2% from April, remainder from December.

1997

3.3%

Staged award: 2% from April, remainder from December.

1996

2%

Second year of local pay. 2% national award, topped up by further 0.8% in 14th report under Framework Agreement.

1995

1%

First year of ‘local pay’. 1% national award, topped up to 3% in 13th Report under Framework Agreement.

1994

3%

Paid in full.

1993

1.5%

Pay ‘squeeze’ in line with public sector pay policy.

1992

5.8%

Paid in full.

1991

9.5%

Staged award: 7.5% from April, remainder from December.

1990

9%

Staged award: 7% from April, remainder from July.

1989

6.7%

Paid in full.

1988

Approximately 15% (on average)

Not a PRB award. Clinical grading introduced. Paid in full but a significant number of appeals were lodged.

1987

11%

Paid in full.

1986

8%

Payment delayed from April until July.

1985

9%

Staged award: 5% from April, remainder from June.

1984

8%

Paid in full.

Source: Authors’ notes based on stakeholder input.

73 years of NHS pay

Figure 1 provides a timeline of the major shifts in the NHS pay determination process for nurses since 1948. When the NHS was established in 1948, pay determination was based on national bargaining units (‘Whitley councils’), each involving multiple staff associations or trade unions representing different staff groups.

In the 1950s and 1960s, there was frequent recourse to arbitration to settle Whitley council disputes; for example, there were four reviews of NHS nurses’ pay in the 1960s, and two further independent reviews in the 1970s. These were essentially ‘catch up’ exercises, with NHS pay having fallen behind that of other workers in between these reviews.

In more recent decades, broader plans for NHS reform and restructuring included suggestions that that NHS pay determination process be shifted to a more localised approach. The rationale for this was that it would enable local NHS management autonomy and control and reflect more closely varying labour market conditions. The need for localised or ‘regional’ pay determination was a theme of the NHS reforms of the 1980s and 1990s., Despite this emphasis on additional local pay flexibility during these decades, the reality was that only a very small number of NHS employers withdrew from the national pay system, and some of those who did have subsequently returned. The main reasons given for this repeated stalled shift away from a national approach have included a lack of funds, limited local management capacity (or lack of interest) and opposition from trade unions.,

The last significant reform of the pay structures for NHS nurses and other staff was implemented about 15 years ago. Agenda for Change took several years to negotiate and implement fully, with its introduction beginning in 2004. The main stated objectives of these reforms were to improve recruitment and retention, increase pay flexibility within a national framework and improve productivity, as well as to ensure that NHS staff pay determination processes complied with equal pay legislation (Chapter 2 provides more detail on the Agenda for Change pay framework). A National Audit Office review of its implementation highlighted that despite the significant overall costs of implementation, there was no systematic assessment of the costs, benefits and impact of Agenda for Change.

Figure 1: Timeline of major changes in NHS nurses’ pay determination in the UK, 1948–2020

 

 
Source: The Health Foundation

 

The current national system does make some provision for local pay flexibility, notably London weighting for staff in the capital and HCAS for staff working in specified regions, mainly in the South East, but use of these supplements has been limited. The NHSPRB has also expressed interest in looking at targeted pay and noted in 2017 that, ‘There is, however, clearly a case for pay targeting given that there are recruitment and retention pressures in certain occupational groups and in some geographical areas.’

Use of the limited flexibilities that exist in the system have also been constrained in recent years by national pay restraint and central pay bill control. Local flexibility within a national system is particularly difficult to sustain when there is little capacity or additional resources for individual organisations to be innovative in determining pay, and when the external labour market is challenging, with many NHS employers in England reporting significant difficulties in recruiting nurses.

Pay flexibility means that local NHS employers can make their own decisions on the mix of nursing staff on different grades. These localised variations in so-called ‘grade mix’ have in turn led to examples of ‘grade drift’, as some employers upgrade posts to achieve a more competitive pay rate. The NHSPRB has several times noted that these flexibilities are only infrequently used by local NHS employers, and has reviewed options for increasing flexibility or targeted pay. It has not recommended a specific approach but places the emphasis on employers and unions deciding how this can be achieved. In 2017, the NHSPRB stated, ‘Our judgement is that we are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS.’

In its 2021 report, the NHSPRB highlighted again its assessment that the current Agenda for Change system requires review and updating to be applied more flexibly, and to reflect changed labour market conditions and increased roles and contributions being made by some nursing and midwifery staff. It urged the governments in the four UK countries, employers and unions ‘to consider whether the Agenda for Change system accurately reflects the relative job weight of the realities, complexities and development trajectories of nursing as a modern graduate profession, best to enable the recruitment, retention and motivation of nurses in the short and medium term’. At the time of finalising this report, several of the trade unions involved in the NHSPRB process have not yet concluded consulting and balloting members on this year’s pay award.

* Much of the available data on staff earnings from NHS Digital refers to nurses and health visitors in the NHS HCHS sector as a combined group, so we largely focus on that group in addition to analysing broader averages of all UK nurses’ earnings based on data from the Office for National Statistics. We do not separately analyse nurses’ earnings in general practice and the independent and voluntary sectors as there is a lack of data in those areas. Further, we do not look at the earnings of registered nurses in the adult social care sector as that sector is dominated by private providers, whereas our analysis focuses on nurses working in the public sector.

† This is based on input from the Department of Health and Social Care, which the authors gratefully acknowledge.

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