James Meadway on why
we can afford
to pay nurses more

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The last week has seen an historic first strike by the Royal College of Nursing, with 100,000 of its members out on strike last Thursday to try to secure a pay increase that would compensate for years of declining wages, relative to prices, and soaring inflation today. There’s no doubt they have significant public support. People remember how just a few years ago we were applauding nurses as “essential workers” in the depths of the pandemic. And anyone who has used the NHS recently will have seen the desperate strains on the system, with overworked staff attempting to cope with a Covid backlog, surges of winter viruses and a decade of relative underfunding.

If we don’t want to borrow, we could finally start to tax the wealthiest properly

Recognising this, the government has been more cautious about directly attacking the nurses or their union in the same way the guns have been metaphorically turned on the rail workers or posties – both in unions with longer histories of strike activity, and, in the case of the RMT, now locked into a bitter dispute that has rolled on since the summer. Instead, ministers have taken to insisting that the pay claim of the RCN is “unaffordable” – that with so many other demands for funding, the country simply can’t afford to pay the nurses the 19 per cent pay rise they have demanded. Labour leader Keir Starmer, sadly, has made the same case. But how true is this?

A 19 per cent pay rise may seem a lot, but as the general secretary of the RCN, Pat Cullen, has argued, it reflects a compensation for the decline in pay nurses have seen over the last decade. If awarded, the 19 per cent pay rise would take nurses, in real terms (meaning after allowing for inflation), back to the level of pay they had in 2011. We could afford to pay them then, and the economy today is bigger than it was in 2011, so in principle the same level of pay should be affordable now. It’s a question of priorities – of choosing what gets funded inside the economy that we have. If we wanted a properly funded NHS, with staff that are fairly rewarded for the work they do, we could choose to allocate the huge resources of this very rich country that way.

What we have at present is an NHS that is unable to meet rising demand. Covid has created huge, long-term challenges. The NHS waiting list, the backlog of patients waiting for treatment, now stands at 7.1 million – 60 per cent higher than before the pandemic, the product of cancelled operations and appointments during that time. Covid itself is still a menace – hospitalisations are currently rising rapidly. More patients are spending longer in hospital than pre-pandemic, and the NHS is having difficulty discharging patients, in part the result of the dire state of our social care system. And long Covid is likely to become a further strain in the future. Over time, as our population ages, we can expect more demands for healthcare from increasing numbers of elderly people – so even if we eventually get through the problems of Covid, in the long run the NHS will require more and more of our resources.

After years of underfunding, it is the staff who have to carry a desperately struggling system. We are short of 46,000 nurses in the NHS, a record number, and as their pay has declined, but conditions of work have worsened, many nurses simply can’t carry on with their jobs. The year to June 2022, according to health researchers at the Kings Fund, saw a 25 per cent increase in numbers of NHS nurses quitting their jobs, up 7,000 on the year before. The NHS has been understaffed, relative to need, for at least the last decade, but the situation is becoming chronic. This is a service approaching breaking point.

We can’t afford not to pay nurses properly – not, at least, if we want an NHS that functions. The cost of meeting the nurses’ pay award has been estimated by ex-Monetary Policy Committee member Andrew Sentance as £2.6 billion. The government has claimed it would cost £10 billion to pay the same hike across the NHS. But even this is less than the amount saved in government borrowing costs since the Kwasi Kwarteng and Liz Truss mini-Budget. The government could now borrow the money needed to raise pay for the entire NHS and still meet its own targets for borrowing.

Or, if we don’t want to borrow, we could finally start to tax the wealthiest properly. Capital gains tax rates, mostly paid by the very wealthy when sell their shares or a painting or whatever, are currently lower than the tax the rest of us pay on our income. Equalising the two would bring in about £16 billion.

So of course we can afford this. We are a rich country, but we have ended up choosing to put that wealth in the hands of a very few – whilst letting our public services, and those who work in them, scrape by. We could make different choices.

James Meadway is an economist and director of the Progressive Economy Forum, an independent thinktank (progressiveeconomyforum.com)

Interact: Responses to James Meadway on why we can afford to pay nurses more

  • How to pay for the National / International Health Service? - Discover Society
    07 Jun 2023 14:19
    […] made a sensible argument that, given its aging population and Covid induced backlogs, the UK couldn’t afford not to pay nurses properly if it wanted an NHS that functions. Given the figures of settling the dispute with nurses ranging […]

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