How an “unfunded” pay deal will affect doctors, patients, and the NHS

What does “unfunded” mean here?

In July, the government’s pay review body said that it would increase NHS workers’ salaries in 2022-23 by more than the 3% initially proposed in the autumn budget1—but the government has promised no new money to back up the additional salary increase.

The extra pay will therefore need to be covered by the existing NHS budget, further tightening the financial straitjacket the health service is working under. The NHS Confederation has calculated the unfunded amount to be around £1.8bn (€2.1bn; $2.1bn).2

Where will the additional money come from?

Sally Gainsbury, senior policy analyst at the Nuffield Trust, explains that the 3% pay rise that was originally promised is transferred from NHS England to NHS commissioners, who add it to the payments they make to trusts to cover trust activities. The additional pay rise will have to be financed from the trusts themselves, at a time when they are already having to make very large savings. Budgets set aside by trusts for service transformation are likely to come under pressure, although Gainsbury adds that “there is not a huge amount of wriggle room.”

Anita Charlesworth, director of research and the REAL Centre at the Health Foundation, says, “The higher cost of energy and soaring inflation are already reducing the value of the NHS budget set out at the [latest] spending review: current estimates point to a real terms cut between £4bn and £9.4bn.

“Integrated care systems are already facing demanding efficiency targets of over £5.5bn—around 5% of total system …