IFS - Nurses more likely to leave NHS hospitals where costs of living have increased quickly

24 Feb 2021 01:49 PM

Improving the retention of NHS staff has been a long-term policy challenge, and will be of even greater importance in the aftermath of the Covid-19 pandemic.

NHS pay is currently tightly regulated in order to reduce variation in pay for the same roles in different parts of the country and to stop hospitals competing for staff on the basis of pay. However, this regulation has consequences: a new report by researchers at the Institute for Fiscal Studies and Imperial College London, as part of the National Institute for Health Research Policy Research Unit on Health and Social Care Workforce, shows that national pay-setting limits the flexibility of hospital trusts to respond to local conditions, exacerbating shortages in hospital nursing labour before the start of the pandemic. These shortages exist despite increases in the overall number of nurses working in the NHS.

Using novel administrative payroll data covering the entirety of the NHS acute hospital sector between 2012 and 2018, researchers find that in parts of England where house prices – a proxy of cost of living – have increased rapidly, the relative earnings of nurses in these areas have decreased compared to nurses living and working in areas with slower growth in living costs. This has translated into increased movement of staff between hospitals, and more exits from the hospital sector entirely among frontline nurses.

Specifically, findings include:

Isabel Stockton, an IFS Research Economist and an author of the report, said:

“National pay-setting affords NHS hospitals little flexibility to respond to economic conditions in their local area. When, as a result, nurse earnings do not keep pace with local increases in cost of living, this prompts more nurses to exit NHS hospitals, particularly in expensive areas.

The existing system of supplements and retention premia is not fit for purpose. The pressures of the Covid-19 pandemic on staff, and the need to tackle a large backlog of NHS treatments in the aftermath, have only made the issue of nurse retention more pressing.”

Cost of living and the impact on nursing labour outcomes in NHS acute trusts