Thread by @sallygainsbury

#NHSpay a thread: It doesn’t matter what you think about the 3% offer for NHS staff, it simply isn’t affordable within the existing NHS budget, which is a problem as the gov doesn’t seem prepared to make any extra funds available to increase it [1/13 - sorry]

A 3% increase to staff pay would cost around £1.9bn if applied to all staff employed by NHS trusts (hospitals, community and mental health services). This would be higher if it was also applied to staff at GP practices and other contracted-out services [2/13]

In March the gov offered 1% (cost ~£600m) & before covid had pencilled in 2.1% (£1.3bn). Covid *has* changed things, but pay is only the tip of that iceberg. Even if we had 0 covid, the best case scenario for this yr is the NHS would overspend the orig plan by around £6bn [3/13]

That plan was set in June 2018 when then PM Theresa May awarded the NHS a real terms extra £20.5bn over 5 years, it’s known as the Long Term Plan (LTP). This extra means the NHS budget grows by about 5% in cash each year [4/13]

Given NHS inflation runs at around 2.5% a year (very much depending on staff pay rises) and activity increases (patient numbers) at around 3%, the maths was never going to work without cost cutting (aka “efficiency savings”) [5/13]

The headline figure for those cuts was 1.1% a yr (~£1.5bn) which in theory would free up some cash for new services. But in reality cuts needed to be x2 that as years of underfunding meant the NHS was starting the LTP already “overspending” – esp in hospitals [6/13]

Year 1 of the LTP was 2019/20. That year NHS trusts were told to make £3.2bn in efficiency savings – even though that was near to 3x what official reviews had said was feasible. Unsurprisingly, trusts missed that target [7/13]

By the time the pandemic hit – the start of year 2 of the new LTP - NHS trusts were spending £2bn more a yr than had been planned. The year that followed – 2020-21 – saw very low efficiency savings as the NHS as a whole grappled with covid [8/13]

Figures published by NHS England suggest that even after removing the additional quantifiable costs of dealing with covid, NHS trusts ended 2020-21 spending ~£5.5bn more than assumed in the LTP for that year [9/13]

The *best case* scenario for this year is that figure will increase to ~£6bn if pay increases by 3% - assuming efficiency levels recover (I don’t think they will). Pay isn’t even half of that problem: if pay increases were capped at 1%, overspending would still be ~£5bn [10/13]

NB this overspending is AFTER removing the costs of covid, which HMT has done a reasonable job of covering. But it’s done so on a one-off basis only & is yet to recognise that covid means the NHS missed out on ~2yrs efficiency savings which render the entire plan obsolete [11/13]

The upshot is the NHS LTP budget set in summer 2018 is no longer valid. Cost cutting assumptions were always too high and covid put paid to heroic efforts to prove otherwise, and that’s before we factor in the extra costs of dealing with waiting lists and “pent up” demand [12/13]

Over then to HMT & DHSC who will spend the summer arguing over for the autumn spending review. But don’t be fooled: funding the staff pay rise – whatever that ends up being – will be a drop in the ocean next to the proverbial iceberg of the NHS’s financial problems [13/13]