I’ve simply posted this thread on Twitter:

The information that there had been a (dangerous) pay provide within the NHS pay dispute nonetheless gave rise to the virtually inevitable cry of ‘how are you going to pay for it?’ from each journalist within the land. So, let us take a look at the reply to that query and others arising from this deal. A thread…

The pay deal provided is 4% for 2022 plus about 6% in bonuses, to be adopted by 5% in 2023 and (I very strongly suspect) 1% for the years thereafter.

In 2021/22 the NHS value roughly £230bn for the UK as a complete. About 75% of that was for wages, or about £172bn. That is my base level for what follows.

In 2021 NHS pay rose by 3%, or about £5.2 billion. It ought to have risen by 5% as a result of that was inflation: that will have been £8.6bn. The federal government saved £3.4 billion.

In 2022 the pay rise shall be 4% plus a few 6% bonus. So the pay rise is a primary improve of £7.1 billion and a bonus of £10.7 billion, making £17.8 billion. If an inflation-matching pay rise had been made based mostly on what ought to have been paid in 2021 that will have been £18.1bn.

After that, the pay rises are based mostly on the 2022 determine excluding the bonus. So 5% in 2023 would possibly sound honest however it’s based mostly on pay that’s 6% too low to match inflation, so in fact it doesn’t make good the loss from inflation in 2023.

The pay rise in 2023 shall be £9.2bn, but when complete pay had saved tempo with inflation one other £15.2 billion of pay ought to have been made that 12 months. In different phrases, underpayments in 2021 ought to have been made good and the 2022 bonus ought to have been repeated.

That £15.2 billion shortfall implies that NHS will on common be 6.4% worse off in 2023 than they need to be. That may be a truth.

So why has this horrible deal been accepted? I can solely assume that somebody within the nurses’ negotiating crew thinks that if inflation falls closely then so too do costs. However that’s not true.

I can’t stress sufficient that simply because inflation is falling in 2023, and shall be nearly non-existent after that, doesn’t imply costs are falling. It simply implies that they don’t seem to be rising anymore. Inflation measures the change in costs, not absolute value ranges.

And what which means is that the price improve for which a bonus was wanted in 2022 continues to be there in 2023. So if that 6% additional value isn’t lined by further pay in 2023 these within the NHS who don’t get that pay shall be worse off.

I’ve estimated that the shortfall in pay amongst NHS workers is about 6.4% from 2023 onwards. Meaning within the phrases of the NHS as a complete that the federal government shall be saving greater than £11bn a 12 months on pay because of this deal.

From 2023 onwards so huge is that saving to the federal government that they are going to be effectively over £60 billion by the tip of 2026.

However the result’s disastrous for the NHS. The recruitment and retention disaster that it has will proceed consequently. And one other strike is not going to work when inflation has fallen to 1%, which is what the federal government is counting on.

The NHS will, consequently, proceed to haemorrhage workers.

The nation’s well being will proceed to worsen.

The variety of individuals within the workforce will proceed to fall.

And fewer tax shall be paid, general.

In reality, the lack of tax paid on the lacking pay rises and on the pay of those that can’t work because of the NHS disaster would, I’m certain, be greater than sufficient to have paid for an inflation-matching deal on primary pay in 2022 and onwards. However the authorities has refused that.

What it really refused was what it ought to have appreciated, if solely it may have thought like a authorities as a substitute of like a shopkeeper, was a self-funding deal for a greater NHS. Actually, a full-pay provide may have paid for itself.

As an alternative, it selected a deal that can’t fund itself, as a result of NHS workers needed to have inflation-matching pay rises for a self-funding deal to work.

You’ll nearly assume the federal government doesn’t need a functioning NHS, or the high-pay economic system Rishi Sunak promised, or the individuals again at work Jeremy Hunt says he needs, as a result of this deal will stop all of these taking place.

And saying that I’ve ignored the financial multiplier impact on development from nurses having extra to spend within the economic system, which might increase development for these they might spend their further pay with, and end in but extra tax paid.

How one can summarise this then? By considering of the NHS as if it’s a profit-maximising non-public firm the federal government has provided a horrible pay deal that’s dangerous for nurses, horrible for the NHS, dire for individuals within the nation and terrible for the economic system. It truly is that dangerous.

Financial insanity doesn’t come a lot worse than this. Excepting the actual fact, that’s, that completely bizarrely the NHS unions are recommending that this deal be accepted. I believe that they too will endure when their members realise how badly they’ve been misled.

The NHS is a good distance from being out of bother because of this deal: as a substitute, issues are going to get very a lot worse.

And for many who need them, these are my not very sophisticated workings on which this prophecy of doom relies. It isn’t rocket science.