The remuneration of doctors and nurses should be decided by the market, not politicians
No politician has said this – but if we had a National Beer Service, they definitely would, at least if that meant that the incomes of brewers and publicans were set by politicians rather than by the market. Because this is what happens when pay issues are politicised. Staff may be ignored between elections, and then suddenly wooed and promoted to the role of “the backbone of the nation” at election time. The Labour Party’s promise to raise the pay of NHS staff by more than 3 per cent, at a cost of around £1bn, is a good example.
There is nothing wrong per se with this notion. Maybe the NHS workforce really is underpaid. By international standards, the remuneration of UK healthcare workers is not particularly high – although this varies hugely by profession.
Up-to-date figures are hard to come by, but OECD data from a few years ago suggest that British nurses earn about 5 per cent more than the national average wage, which is relatively low compared to other high-income countries. Nurses in the Netherlands, Germany, Japan, the United States and Australia earn more than 10 per cent above their respective national average.
British specialists and GPs with their own surgery, on the other hand, are among the best paid in the world, at least when their income is expressed as a multiple of the national average. However, if you are a salaried GP, you would be better off in most of our neighbour countries. So, all in all, no consistent picture emerges from such comparisons.
But regardless of whether you think that health workers’ pay is too low, too high, or about right, the issue’s politicisation cannot produce anything other than cheap populism. Bidding wars between politicians about who can shower a profession with more praise are cringeworthy.
Yes, of course, the work of health professionals is incredibly important. But that does not automatically mean that they should be paid more.
Most professions are important, at least to some of us, or otherwise they would not exist. Cleaners are also important. Farmers are important. Hairdressers are important. Policemen are important. Childminders are important. Brewers are important. The reason not all of these professions are especially well-paid is not that we fail to appreciate their importance. It is that there are plenty of people who want to do these jobs, and their wages are determined by supply and demand in the labour market.
The problem is that, in healthcare, this is only true to a very limited extent. It may be tempting to believe that as long as we have a National Health Service, rather than a market-based or a mixed system like most developed countries, key variables like the pay of healthcare professionals will always be a political issue. But that is not necessarily true: the NHS is no longer the monolith it once was.
The health reforms of the last Labour government have brought market mechanisms into it. NHS providers are now semi-autonomous actors, which are, to some extent, in competition with one another, and which are partly paid on the basis of activity. However, these market reforms have never really been extended to the “medical labour market”.
They should be. Decisions over pay, working hours and working conditions should be decentralised, and removed from politics altogether. They should be negotiated locally between individual Clinical Commissioning Groups, individual NHS trusts, and the representatives of various health professions. The Department of Health should not be involved.
It is not possible, in the current system, to get the politics out of it completely. At the very least, the government would set the overall level of healthcare spending, which would indirectly determine the scope for pay rises. But we would no longer hear arguments along the lines of “Vote Party X, and health profession Y will get a Z per cent pay rise”. The pay of NHS workers would then differ across the country, to the extent that labour market conditions, healthcare needs and other variables differ. Politicians would have fewer opportunities to virtue-signal, but we might get a medical labour market that actually manages to match supply with demand.
This article was first published in City AM.