Nurses’ pay rise could push Labour into raising taxes

 Pay rises for 1.4 million NHS staff could force Labour to raise taxes to cover a funding gap.

The 3.3 per cent uplift for nurses, midwives, and other NHS workers on the Agenda for Change scheme is more than the Government said it could afford. Doctors are not included in the scheme.

In its submission to the NHS pay review body, the Government said it could only budget for a 2.5 per cent increase to wages for 2026-27 “without having to make trade-offs”.

NHS budgets might have to be redirected to make up the difference or Rachel Reeves, the Chancellor, might have to find the money elsewhere.

Wes Streeting, the Health Secretary, said the discrepancy would be “managed” by the Department of Health (DoH) but would not involve cuts to front-line services.

Unions have expressed anger at size of the increase, with nurses describing it as an “insult” and midwives saying they had been “let down”.

The DoH’s budget for the next financial year is £211bn and recommendations for doctors’ and dentists’ pay are yet to be published.

Mr Streeting said he had accepted the independent pay review body’s recommendations in full despite it being more than had been deemed affordable.

“The uplift is above the Office for Budget Responsibility’s forecast inflation of 2.2 per cent for 2026-27, delivering a real-terms pay rise for NHS staff,” he said, adding that it would be in “pay packets from April for the first time in six years”.

“This award is above the Government’s affordability position set out in its evidence,” he said.

Fund within existing settlement

Mr Streeting said the business planning process for 2026-27 was under way and efficiency targets for NHS providers requiring them to “break even” were “foundations of the Government’s ability to fund this within the existing settlement”.

He added that the “additional pressure above affordability will be managed by the Department of Health... but none of the pay increases will be paid for by cutting front-line services”.

Dean Royles, interim chief executive of NHS Employers, said: “NHS trusts are right now in the midst of submitting their medium-term financial, service and workforce plans.

“They will have prepared for the award being less than the 3.3 per cent that has been announced, so it is essential that the funding of the award is clarified as soon as possible.”

The pay review body said it recognised the position of the Government but “in the absence of further detail about what specific transformation projects or workforce developments would lose funding to implement pay awards above affordability, it is difficult for us to understand the implications of this beyond a general contextual point that implementing awards above 2.5 per cent would result in reprioritisation of some kind”.

Prof Nicola Ranger, the Royal College of Nursing general secretary and chief executive, said: “A pay award below the current level of inflation is an insult. 

“Unless inflation falls, the Government is forcing a very real pay cut on its NHS workers. This knife-edge game-playing is no way to treat people who prop up a system in crisis.”