Matching nurse pay to inflation would cost every household in the country about £1,000.
This figure is problematic for a number of reasons. Firstly, it describes an inflation-matching pay rise for all public sector workers, not just nurses. There are also concerns about how it was calculated, including the fact it does not appear to take into account money that would come back in taxes on these higher salaries.
The government would have to find £10 billion of funding to meet the Royal College of Nursing’s demands for a 19% pay rise.
The £10 billion figure describes a pay rise of 19% for all NHS staff with the exception of doctors, dentists and very senior managers, not just nurses. It is unclear exactly how this has been calculated, and the Department for Health and Social Care (DHSC) has not confirmed whether it takes into account the amount that would be directly returned through taxes on higher salaries.
For each percent pay increased by, the government would have to find either £700 million or £800 million.
DHSC has not confirmed how this has been calculated, though a spokesperson said it was £700 million as opposed to £800 million. This refers to increasing pay for all NHS staff with the exception of doctors, dentists and very senior managers, not just nurses.
During appearances across multiple news programmes on Thursday morning, health minister Maria Caulfield made a number of claims about nurse pay.
Some of these were missing important context, while others appeared to conflate pay increases for nurses with pay increases for all NHS staff with the exception of doctors and dentists.
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During an interview on BBC Breakfast Ms Caulfield said, in response to a question about nurses’ pay: “If we matched, say to 11%, which is just above inflation right now, that would add about £1,000 to every household in the country.”
We fact checked the same claim earlier this week when health secretary Steve Barclay claimed: “If everyone in the public sector had a pay rise in line with inflation, it would cost an extra £28 billion, an extra £1,000 per household."
So this is a figure referring to pay rises across the public sector, not just the pay of nurses.
Last financial year (2021/22), the public sector pay bill was just under £233 billion. The Treasury has told us that this year it estimates the pay bill will be about 5% higher (putting it at about £244 billion).
If this rises by 11% next year (in line with CPI inflation in October), it will reach around £271 billion, or £27 billion above what it is this year. The Treasury also said “pay drift and workforce growth” would have some impact, so came up with a final figure of approximately £28 billion. Divided equally between the 28 million households in the UK, this gives a rough figure of around £1,000 per household.
There are several issues with this calculation.
Firstly there’s the question of how relevant it is to the current situation. It reflects the change in the pay bill for public sector employees from 2022/23 to 2023/24, despite the fact that many of the ongoing pay disputes are about the amount by which pay has already increased in 2022/23 when compared to 2021/22.
The Royal College of Nursing (RCN), for example, is striking over the pay increase nurses were given in 2022/23, while Communication Workers Union members are also striking partly due to a current pay deal offered by Royal Mail.
If the government wanted to increase the average pay award this year to 11%, it wouldn’t cost the government £28 billion extra because public sector workers have already been given an average 5% pay award this year.
According to the Institute for Fiscal Studies (IFS), the estimated “extra” cost involved in increasing that 5% to match inflation (based on a slightly lower inflation rate of 10.5%) would be around £13 billion.
If the government wanted to increase wages by 11% next year, that would be well in excess of the expectations for inflation next year, which is predicted to fall.
Putting aside questions over how relevant the £28 billion figure is, there’s also a problem with how it's calculated.The Treasury previously confirmed to us that its calculation did not take into account tax which would be returned directly to the Treasury as a result of increasing wages, meaning the net cost of an 11% pay increase may be lower than £28 billion.
It’s also important to note that Ms Caufield was specifically responding to a question about nurse pay when she claimed that matching pay to inflation would cost every UK household about £1,000.
In fact, as we have set out above, this calculation is based on all public sector workers in the UK (an estimated 5.8 million employees). In the NHS in England in June 2021, there were around 330,000 nursing staff including midwives and health visitors.
During multiple interviews about nurse pay Ms Caufield claimed that matching 19% pay (the same increase as that called for by the RCN) increase would cost around £10 billion.
She told GB News: “The RCN is asking for a 19% pay rise—that’s £10 billion of funding that we would have to find.”
Also, in an interview with Sky News she said: “For every 1% that we agree for the nurses or for anyone else in fact that’s around £700 million that we have to find.”
This appears to refer to information published by the Department for Health and Social Care (DHSC) in December, which stated: “Uplifting pay for all staff on the Agenda for Change contract by 19.0%, instead of the existing 22/23 award, would cost around an additional £9.8 billion”. It also said that “each additional 1% of pay for all Agenda for Change staff would cost around £700 million per year”.
Agenda for Change is an NHS pay system which covers all staff except doctors, dentists and very senior managers, and was introduced in 2004. The government says the contract “aligns pay scales and career progression across all groups, meaning pay rises apply to everyone under this contract”.
In other words, the way the contract works means that if nurses get a pay rise, other NHS staff would too. So the £9.8 billion figure refers to all NHS staff on Agenda for Change contracts who would also be entitled to a pay rise—not just nurses.
The £9.8 billion figure appears to simply multiply the £700 million figure by 14, reflecting the fact that the 19% request would be 14 percentage points higher than the existing pay award, which averages around 5%, though the DHSC has not confirmed this. .
It’s not clear from the fact sheet published by the government how exactly the £700 million figure has been calculated, or if it takes into account the same issues with taxation that we described with the £28 billion figure above.
We asked DHSC how it was calculated, and if it took into account money that could be recouped through higher rates of taxation, but did not receive an explanation.
Ms Caufield also repeatedly claimed that for each percentage point pay was increased, the government would have to find either £700 million or £800 million.
She told Radio 4’s Today programme: “For every percent we’d have to put pay up, that’s £700 million we’d have to find”.
About two minutes later she said: “For every 1% we put pay up we have to find £800 million.”
DHSC confirmed to us that Ms Caulfield misspoke when she said £800 million, and that the figure was in fact £700 million.
After we published this fact check, we contacted Maria Caulfield to request a correction to her claim that matching nurse pay to inflation would cost every household in the country about £1,000, and to ask for details of the calculations relating to the other claims about nurse pay
Ms Caulfield did not respond.
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