Government budgets 2.8% for NHS pay rises next year

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The money would cover both the headline pay rise for staff on Agenda for Change (AfC) contracts – including social workers and social care staff employed by NHS trusts – and planned changes to the AfC pay structure.

The Department of Health and Social Care (DHSC) announced the plan in its submission to the independent NHS Pay Review Body (NHSPRB).

Based on the DHSC’s evidence and that of the Welsh Government, Northern Ireland Executive, NHS employers, trade unions and others, the NHSPRB will make recommendations for AfC staff in England, Wales and Northern Ireland for 2025-26.

It will then be up to the three governments to accept or amend these in relation to their countries’ staff.

5.5% rise this year for NHS staff

Shortly after taking power in July 2024, the Labour government accepted the NHSPRB’s recommendations of a 5.5% rise for AfC staff in relation to workers England in 2024-25.

The Welsh Government subsequently followed suit in relation to staff in Wales.

This meant that NHS social workers in England and Wales were given a larger pay rise this year than counterparts in most local authorities, who received increases of 3-4%.

Council concerns over social work pay differences

This prompted concerns from the Local Government Association (LGA) that councils were losing ground to the NHS in terms of social worker pay competitiveness.

However, in Northern Ireland, where statutory social workers generally are employed by the NHS, no deal has been done because the region’s Department of Health says it cannot afford to deliver the NHSPRB’s recommendations.

The DHSC’s submission to the review body would, if implemented, entail a headline salary rise for NHS staff of less than 2.8% in 2025-26.

The remaining budget would be spent on amending the AfC pay structure, including to tackle the relatively small differences between some pay bands, which the NHSPRB has said creates disincentives for staff to seek promotion.

Prospect of real-terms pay cut

With the independent Office for Budget Responsibility (OBR) predicting an average rate of inflation of 2.6%, this would mean that many staff would likely see a real-terms pay cut or freeze.

In justifying its submission, the DHSC said it faced an “extremely challenging fiscal position”, in which the AfC pay rise would need to be considered alongside other priorities.

While NHS England’s budget is due to rise from £182.8bn this year to £193bn in 2025-26, a cash increase of 5.6%, the DHSC said the health service needed to boost productivity and efficiency to achieve the government’s targets around cutting waiting times.

Should the NHSPRB recommend a higher increase than that budgeted for by the department, the DHSC said it would need to consider “difficult trade-offs” in relation to NHS budgets.

‘Not what NHS workers wanted to hear’

The proposals were criticised by UNISON, whose head of health, Helga Pile, said they were “not what NHS workers wanted to hear”.

“Staff are crucial in turning around the fortunes of the NHS,” she added. “Improving performance is a key government pledge, but the pay rise proposed is barely above the cost of living.”