Doctors’ pay increase – First steps or final offer?

The government confirmed last week that they have accepted the recommendations of the Doctors’ and Dentists’ Review Body (DDRB) and subsequently announced an increase in pay scales of 6% for junior doctors, consultants, salaried GPs and practice staff.

For junior doctors, and perhaps recognising a greater need to incentivise and avoid the risk of abandonment of a career before it has really started, there will be an additional permanent increase of £1,250 per annum for all pay scales, which will lead to a slightly different percentage increase for junior colleagues depending on which level they are at, this percentage varying between 8.1% and 10.3%.

Reaction to the increase

Of course, any increase in pay is welcome. However, with the most recently announced inflation rates still running at 7.9%, then this still largely represents a real-terms drop in pay for the profession.

Certainly, there has been an unimpressed initial response from consultants who are going ahead with this week’s strike action, with more planned in August. This follows the recent strike action by junior doctors.

It remains to be seen whether the additional £1,250 per annum placates junior colleagues, but our thoughts are that this is unlikely.

Additional tax hit to higher paid consultants

With additional tax rates now coming into effect for higher paid consultants, it is also unlikely that they will actually see a huge net pay benefit from these rises. The additional tax rate of 45% will now take effect on taxable income above £125,140, so many consultants will now be subject to 47% tax and NIC, as well as 13.5% pension contributions.

For consultants at the lower end of the pay scales, there is the risk of loss of tax-free childcare provisions and also their tax-free personal allowance, if their taxable income moves above £100,000.

GP practices – full funding for those pay increases?

GP practices will receive a backdated contract uplift of 6% for the 2023/24 NHS year to cover the increases in GP and practice staff pay. It remains the practice’s prerogative as to how this money is actually spent, but the market will dictate the level of increase that practice staff will expect, and it is certainly the intention that the funding is used for this purpose.

Practices will likely need to fund the additional employer’s pension that will arise on any pay increase. Staff are likely to expect the full 6% in their pay packets, however there will as ever be the additional on-costs of pension and National Insurance which GP partners will see come off their bottom-line profits.

What next?

It is, with no pun intended, perhaps striking that the government have not set out exactly how this will be funded, other than by reallocating existing budgets and with no additional borrowing. It therefore will be interesting to see how future budgets within healthcare may be squeezed as a result of this increase.

It is noticeable that the government have made it clear that this is a final offer and that they are not considering any further negotiation. Whether this will change as a result of continued pressure remains to be seen; but with an election on the horizon in the near future, the profession may well find themselves in a strong negotiating position.

In any case, pay remains just one aspect of the ongoing staffing crisis within healthcare. Increased workloads, burnout, patient demand and lack of opportunity all contribute to the current malaise felt by many of our valued healthcare professionals, and it is doubtful that a small increase in net pay will assist greatly with this.

It is this that future governments of whatever stripe will need to address to stem the current tide of dissatisfaction in the profession.

As ever, each individual’s circumstance will be different so it is vital to speak with your usual contact to identify how this may affect you – or if you are not currently a client of ours, then please feel free to speak to one of our healthcare team.