Over a million hospital porters, 999 call handlers, healthcare assistants, nurses, midwives and other NHS staff across England are being offered pay rises of between 6.5 and 29% over the next three years.
Under the proposed agreement – reached after months of negotiation between unions, NHS employers and the government – hospital caterers, cleaners, porters and other staff on the lowest pay grade would get an immediate pay rise of over £2,000 this year (an increase of between 11 and 13%).
This would mean that from 1 April every NHS worker in England is to be paid at least £8.93 an hour, which is 18p above the real living wage of £8.75. This would take the lowest full-time rate of pay in the NHS to £17,460.
Under the proposals, band one would be scrapped by April 2021 and all staff moved to the next pay scale. The lowest salary in the NHS would then be £18,005. Over the three years more than 100,000 of the lowest paid health workers would be in line for wage increases of between 15% (£2,300) and 17% (£2,600).
Other NHS staff would receive between 9% and 29% over the three years. Proposed changes to the existing pay structure would see most staff moving to the top of their pay band more quickly. It would also result in an end to overlaps, which have seen some employees on lower bands earning more than more senior colleagues the next level up.
For health workers already at the top of their band, most would get 6.5% between April 2018 and April 2020. All but the very highest paid staff would get 3% in April 2018, 1.7% and a 1.1% lump sum in April 2019, and 1.7% from April 2020.
Additional funding of £4.2bn agreed by the Treasury means the increase in the NHS pay bill over the three years won’t have to come from existing budgets.
Health and Social Care Secretary Jeremy Hunt said: "NHS staff have never worked harder and this deal is recognition of that - alongside some important modernisation of the way their contracts work.
"Over one million employees on Agenda for Change contracts - including the lowest paid NHS workers - will get pay rises that see starting salary increased from £15,404 to £18,005 in 2020/2021.
"The starting salary of a nurse will rise to £26,970 which will have a significant impact on retention and recruitment issues.
"We will also extend shared parental leave rights to all staff, and employers and unions have made a commitment to reducing sickness absence through a better shared focus on staff health and wellbeing, all of which will be welcomed by staff after a very tough winter."
Unison's head of health and lead pay negotiator for the NHS unions, Sara Gorton, said: "Seven years of pay freezes and wage increases well below the cost of living have meant significant financial hardship for health staff and their families.
"It's also created headaches for employers as they struggled to attract new recruits and hold on to experienced staff.
"The agreement means an end at last to the Government's self-defeating and unfair 1% pay cap. It won't solve every problem in the NHS, but would go a long way towards making dedicated health staff feel more valued, lift flagging morale, and help turn the tide on employers' staffing problems.
"If health workers accept the offer, everyone's wages will go further, and the lowest paid would get a significant income boost. Starting salaries for nurses, midwives and other health professionals would also become more attractive to people considering a career in the NHS."
Janet Davies, general secretary of the Royal College of Nursing, said: "The progress achieved here is a credit to our members who fought hard to scrap the brutally unfair pay cap.
"Today's deal is neither a magic wand nor a blank cheque but commits significant Government cash to overlooked NHS staff without making any unpalatable demands in return. For that reason, we will be asking members to vote in favour.
"There are 40,000 unfilled nurse jobs in England alone and this should begin to make the profession attractive again.
"The next three years could be turbulent and this deal gives NHS workers some much-needed stability."
Unite national officer for health Sarah Carpenter said: "At long last, after years of pay austerity there has been a significant recognition that this harsh pay regime imposed on hard-working and dedicated NHS staff can no longer be sustained.
"Unite welcomes many aspects of this deal, on which we will be consulting our membership over the next couple of months.
"However, we regard this as the start, not the end, of the journey for true pay justice for NHS staff, which we will campaign for with vigour in the coming months and years.
"It should be stressed that this is a fully-funded deal - ie 'new' money, so it is not finance that is being taken away or diverted from cash-strapped NHS services.
"This is something we believe the Government should have done a long time ago - and they should do so now for other public sector workers who have endured a similar rigid pay policy."
Ruth May, executive director of nursing at NHS Improvement, said: "NHS staff have continued to work incredibly hard despite several years of pay restraint.
"The proposed pay deal today rightly rewards NHS staff for the amazing work they do every day.
"We are pleased that the Treasury and the Department for Health and Social Care have found new money to fund this increase. This ensures that NHS providers can continue to prioritise funding for frontline care, where it is most needed, while NHS staff are rewarded for the work they do.
"We await the outcome of the respective union ballots."
Shadow health secretary Jonathan Ashworth said the Labour Party had been "vindicated" in calling for a "long overdue" pay rise.
Mr Ashworth told ministers that with "stories of staff turning to food banks" the pay cap should have been scrapped "years ago".
He said: "In the General Election ministers said scrapping the pay cap was nonsensical and when a nurse pleaded with the Prime Minister for a pay rise on national television she was told there was no magic money tree.
"So can he tell us how this pay rise will be paid for? Has the Prime Minister's horticultural skill grown said magic money tree?
"If it is additional money, will it be paid for by extra borrowing? Will it be extra taxation?
"Public servants deserve reassurances that this Government won't be giving with one hand and taking away with the other."
Mr Hunt responded, telling MPs that the Government was able to fund the pay rise due to their "stewardship" of the economy.
He said: "This pay restraint that we've had in the NHS for the last eight years has been caused by the worst financial recession since the Second World War, caused by a catastrophic loss of control of public finances."
He added: "It is additional funding from the Treasury into the NHS and it's not coming from extra borrowing because if he had been listening to the Autumn Statement that debt as a proportion of GDP is starting to fall this year.
"That is possible because we have taken very difficult decisions over the last eight years opposed by the Labour Party, decisions that have meant three million more jobs that have transformed our economy out of recession into growth."
Asked whether the announcement on NHS pay meant that other public sector workers could expect settlements above the former 1% cap, a Downing Street source said: "The independent pay review bodies will make their recommendations in the normal way.
"We have said as a Government that the arbitrary 1% pay cap is no longer in place. If people recommend changes to that, they will be considered.
"But let's just focus for a second on the fact that this is, we hope, a generous and important offer that recognises the incredible hard work, dedication and professionalism of NHS staff up and down the country."
The source confirmed that the NHS settlement would be funded from Government reserves.
Mr Hunt said the Government would need to find a way of getting more money into the health service after Liberal Democrat former leader Tim Farron said the announcement would not be trusted if there was no long-term plan for funding health and care.
The Health Secretary told MPs: "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."
Several Labour backbenchers criticised the deal, with Ruth Smeeth (Stoke-on-Trent North) describing it as a "drop in the ocean" as she said NHS workers had had a 14% pay cut in real terms since 2010.
Vicky Foxcroft (Lewisham, Deptford) said the health service was short of 100,000 staff because of the Government's "neglect" of the workforce, and called on ministers to "apologise to all NHS workers for undervaluing them for so long".
But Labour former minister Diana Johnson welcomed the "change of heart of the Government".
Welsh Health and Social Services Secretary Vaughan Gething said: "I am pleased the UK Government has listened to my repeated calls to lift the public sector pay cap and provide additional funding to reward NHS staff across the UK.
"The NHS Wales Partnership Forum is meeting tomorrow to offer advice on how any consequential could be used in Wales."
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