The Government is right to give NHS staff pay rises – but it musn’t stop there

If one moment at last year’s general election showed that the Conservatives were out of touch with the nation’s mood, it was when Theresa May told a nurse in a TV audience who pleaded for a pay rise that there was “no magic money tree”.

The Government has finally got the message, and found some money on its tree. One of the worst aspects of the austerity measures since 2010 has been the squeeze on the wages of public sector workers – often low paid, often women. Of course, pay could not be ignored when savings were sought; it accounts for about a quarter of all public sector spending. But, after a two year freeze followed in 2013 by a one per cent cap, wage restraint has lasted for too long.

The ceiling has been lifted for police and prison officers and now the Government has reached agreement with most trade unions representing 1.3 million NHS workers in England (excluding doctors and dentists) for a 6.5 per cent rise over three years. Individual rises will range between 6.5 and 29 per cent. Rightly, there will be bigger increases at the bottom end of the salary ladder. The lowest full-time salary – for cleaners, catering staff and porters – will rise by 15 per cent to £18,000.

The proposed agreement is welcome, if overdue. But it is not as generous as it looks. Nor is it a done deal yet. All 14 unions involved must accept it. The GMB, the only one not to recommend it to its members so far, argues that the rises would not keep pace with inflation. Nor will NHS staff catch up; their incomes have fallen by about 14 per cent in the past seven years.

Ministers have wisely dropped a controversial plan to force staff to forgo one day’s holiday as part of the package, which threatened to scupper an agreement. With some 400,000 nursing jobs unfilled in England, they had no choice but to tackle serious problems with recruitment and retention. The proposal to replace automatic incremental pay rises with larger, less frequent increases based on achieving professional milestones is sensible.

Of course, the pay shake-up will not solve the NHS’s problems. Jeremy Hunt, the Health and Social Care Secretary, admitted in the Commons yesterday: “We will need to find a way of getting more money into the NHS and social care system in the future as we face the pressures of an ageing population, and we need to find the best way to do that.” There is a live cabinet debate on this, with tax rises on the agenda – possibly earmarked for health, an idea the Treasury has long resisted. This is a much more realistic approach given the demographic pressures and the Tories’ traditional obsession with tax cuts.

The Treasury will foot the £4.2bn bill for the health workers’ deal from its reserve funds. Ministers knew that it would be impossible to ask the NHS to find the money when its budgets are already stretched to breaking point.

The Government should adopt the same approach when the rest of the 5 million public sector workers join the queue for the pay rise they deserve too. Otherwise, ministers will rightly be accused of giving with one hand and taking with the other, and the quality of already overstretched public services will decline further. Nor would the Tories reap any political benefit for easing their austerity programme. They should not forget the public backlash against Ms May for her response to the nurse in that TV studio.