NHS pay system not fit for purpose

A new report by the Centre for Policy Studies examining the pay structure of the NHS argues that the current system is failing both staff and patients.

The NHS as a whole employs approximately 1.7 million people making it, famously, the fifth biggest employer on the planet. Almost two thirds of its budget goes towards staff salaries. Yet its systems of rewarding and motivating staff are outdated, inflexible and frequently unfair.

‘An NHS Bonus’ argues that by introducing greater flexibility into the system, and linking pay more closely with performance and objectives, we could improve both NHS productivity and patient outcomes. It urges the Government, and NHS managers, to make reform of the pay system an urgent priority as part of the new funding settlement.

The report also demonstrates that talk of pay freezes and 1% pay caps for the NHS is highly misleading. Thanks to automatic progression along the NHS pay “spine”, the average annual pay rise between 2012 and 2017 has in fact been between 2.5% and 3%, which is broadly comparable to the private sector.

The report shows how:

  • The NHS’s lack of geographical flexibility mean that hospitals in poor areas have no way to attract talent
  • There is no way for team leaders to incentivise best practice
  • Career progression and management within the NHS is often neglected
  • Bonuses are reserved for senior doctors, rather than being shared among staff – and are given only to those who apply, potentially for life, with no reference to patient outcomes or hospital priorities
  • Despite the cap on consultants’ salaries, many are earning far more – and 95% of the highest earners are male
  • Compared to its international rivals, the NHS is relatively well staffed in clinical terms. While nurses are paid slightly less than elsewhere, doctors are paid slightly more.

The report was written by Paul Goldsmith, a Consultant Neurologist, whose previous CPS report, ‘The Medico-Legal Crisis’, exposed the full scale of the NHS’s liabilities for medical malpractice, which now total £65 billion.

Robert Colvile, Director of the Centre for Policy Studies, said:

“NHS funding has captured the headlines recently. But even more important than funding is that the money is spent wisely. “The bulk of NHS funding goes towards pay. Yet the NHS pay structure is deeply flawed, in ways that make it hard to address gaps in care between rich and poor areas, or to incentivise staff to perform better.

“The headline figures in the media about pay freezes also completely fail to reflect the reality of what people are earning, which could potentially damage recruitment and distort spending priorities.

“If we care about the NHS, we need to ensure that money is spent wisely, and that good staff are rewarded for good work.”

Dr Paul Goldsmith, Consultant Neurologist, said:

“The NHS is full of incredibly bright, talented and dedicated people with lots of excellent ideas and initiatives, but is really poor at scaling and spreading innovation.

“The report shows how one can create an environment to achieve this, without central government meddling.”

‘An NHS Bonus’ is available to download from the Centre for Policy Studies website.


For further information, or to book Centre for Policy Studies spokesmen, please contact the Centre for Policy Studies Press Office on 07876 161196 or email [email protected]


  • The Centre for Policy Studies is one of Britain’s leading think tanks, and the home of a new generation of conservative thinking. Our mission is to widen enterprise, ownership and prosperity.
  • ‘New Generation’ is the Centre for Policy Studies’ flagship programme, promoting fresh policy ideas from MPs from the 2015 and 2017 parliamentary intakes, among other new voices.
  • Dr Paul Goldsmith is a Consultant Neurologist and the author of ‘The Medico-Legal Crisis and How to Solve It’ published by the Centre for Policy Studies in October 2017.

Date Added: Monday 2nd July 2018