• Institute for Public Policy Research (IPPR) publishes new analysis on the economic impact of lifting the NHS pay cap
• It recommends that the government lifts the NHS pay cap and provides additional funding to cover the additional costs
• We warn that trust budgets are already over-stretched, and that there is not currently sufficient funding to finance further pay rises

The Institute for Public Policy Research (IPPR) has published Lifting the cap: The fiscal and economic impact of lifting the NHS pay cap.

The analysis argues that lifting the NHS pay cap and increasing pay would have a positive economic impact. It argues that increasing pay in line with CPI would generate additional GDP of £250 million by 2019/20, with associated additional tax income of £100 million.

The report recommends that:

• the UK government lifts the NHS pay cap and revises its guidance to the NHS Pay Review Body;
• government should provide additional funding at the Autumn Budget to cover this additional expenditure, rather than requiring NHS trusts to meet the cost from existing budgets; and
• The government should develop a national NHS Workforce Strategy, in conjunction to ensure sustainable workforce pipeline for the future.

Responding to the IPPR’s report “Lifting the Cap”, the head of analysis at NHS Providers, Phillippa Hentsch said:

“We welcome the report’s review of options for ending pay restraint in the NHS. The pay cap is one of a range of factors impacting recruitment, retention and staff morale in the health service and continued pay restraint has become unsustainable. 

Trust budgets are already over-stretched. There is not currently sufficient funding to finance further pay rises, when the NHS faces so many other pressing demands.

“We agree with the report’s assessment that additional funding will be needed to cover the extra spending required to lift the cap. Trust budgets are already over-stretched. There is not currently sufficient funding to finance further pay rises, when the NHS faces so many other pressing demands.

“The report rightly points out than when assessing the cost of lifting the pay cap, we need to review the total impact for the Treasury and wider economy not just the headline cost associated.

“The options explored in the report are two possible scenarios for ending pay restraint and we support the independent pay review bodies in their role of making recommendations on NHS pay.

“The government now needs to set out a clear plan for the promised end of pay restraint.”