Where devolution creates competition: The UK’s growing NHS Pay Gap
By Dr Georgina Bensted
Today, the Welsh branch of the Royal College of Nursing (RCN) enters its second day of another two-day strike, after failing to reach an agreement with the Welsh Health Minister on nursing pay. Not going through the ins and outs of the stalemate, the current negotiations between NHS members and Health Ministers across the devolved nations raises some serious questions.
Scotland’s recent offers to nurses and junior doctors of a 14% pay rise over two years poses a dilemma for Welsh, English and Northern Irish NHSs, especially with regard to how each devolved administration keeps their workforce from leaving NHS employment for agency work, or from going to another part of the UK for more generous pay.
These offers in Scotland have not been cheap either – with the Scottish Government committing £568 million for Agenda for Change pay in 2023-24 alone (which covers nurses) and a further £61.3 million in proposed junior doctor pay rises.
Scotland’s high spending levels on NHS pay represent a further predicament for Wales, especially if the UK Government is reticent to match it in England. While Scotland can partially pay for their pay increase through taxation, some key tax levers are not devolved or are partially devolved in Wales. This leaves the Welsh Government unable to introduce new tax thresholds and, every time the Welsh Government raises the level of taxation, the Fiscal Framework Agreement means equivalent funding from the UK Government will be lowered.
Instead, the annual Budget at Cathays Park is defined by a dependence on UK Government funding and expenditure on services in England, and it is telling that Wales’s Budget is largely derived from contributions from Westminster; roughly 80%, compared with just 20% raised from fully or partially devolved taxes. This is compared with about 50% in Scotland, with 30% raised from income tax receipts alone.
So, there is little wriggle room for the Welsh Government to be able to move in terms of providing better pay for NHS. There is a further added problem that, if income tax were to be fully devolved as in Scotland, a lack of higher earners living in Wales makes any pay offer more difficult to fund.
Although an anathema to those on the left of the political spectrum, who want to spread the wealth by placing higher taxes on those who earn more in Wales, this alone could not raise the revenue needed. And those who earn higher rates could just simply leave Wales to live over the border. Even the Welsh Government’s Finance and Local Government Minister has considered the behavioural impacts of tax changes in documents accompanying the 2023-24 Budget.
Therefore, Welsh Government must be smarter about retaining the NHS workforce when its budgets are so constrained, although the Welsh Education Minister has managed to find £50 million - down the back of the Welsh Government’s sofa - to provide teachers with an 8% pay rise for 2022-23 and a further 5% rise for 2023-24.
All NHSs and devolved administrations will be thinking very keenly about their retention strategies now, so extending the offer beyond higher pay in order to appeal to doctors and nurses will be essential. Three years on from Health Education and Improvement Wales’s (HEIW) Workforce Strategy for Health and Care, the body is creating a workforce strategy for nursing, and is consulting nurses during the summer about the current challenges they face and how the workforce wants the future to look.
Although the strategy is due to be published in 2024, for a number of years, it’s been clear what improvements Welsh nurses want to see in their working lives. Take, for example, RCN Cymru’s report in 2022, Retaining Nurses in the Profession: What matters?, which highlighted that a successful national retention strategy has leadership from Local Health Boards so they can be applied locally, and that Health Boards should be focussing on areas such as staff wellbeing; support for early career nurses so they get support when they transition from student to practitioner; career pathways and professional development through flexible working and professional support such as mentoring; regular staff engagement and improved staff communications.
This isn’t really that much to ask, as allowing nurses protected time to access continuing professional development will inevitably lead to better job prospects throughout their career and higher wages, so they will be more likely to stay. However, asking Health Boards to ensure that their nursing workforce can access this protected time is a steep ask, as many nurses in Wales find they aren’t given this protection, therefore they become disillusioned and disengaged from their career.
In the face of stiff competition from other devolved nations on pay and its lack of ability to raise extra funding, the Welsh Government has to be innovative about its offer to NHS professions. A “pay rise plus” offer may be the alternative here – perhaps promising a more modest pay rise than Scotland, for example, but focusing heavily on staff wellbeing and better working conditions, such as more flexible hours and more pathways to reach higher grades of pay. Furthermore, strengthening monitoring of Health Boards and whether they actually apply these working conditions and safe staffing levels will be a welcome promise from Welsh Government to the NHS workforce.
So, the next few months of negotiations will be critical for the Welsh Government and other devolved nations – whether they can address the UK’s NHS pay gap within that time will remain to be seen.
Scottish Government: NHS pay rise delivered in April (22 March 2023)
Scottish Government: New pay offer for junior doctors (22 May 2023)
Welsh Government: The Welsh rates of income tax ready-reckoner (December 2022)
Minister for Education and Welsh Language: Written Statement: Teachers’ Pay Award 2022/23 (19 April 2023)
Health Education Improvement Wales: A Healthier Wales: Our Workforce Strategy for Health and Social Care(October 2020)
RCN Cymru: Retaining Nurses in the Profession: What Matters? (July 2022) https://www.rcn.org.uk/Professional-Development/publications/retaining-nurses-in-the-profession-what-matters-uk-pub-010-374
For a bird's eye view.
Am olwg oddi uchod.
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