The NHS can’t be left to pick up any of the bill for this pay deal

In less than six months the government will publish its Autumn Statement; in all likelihood one of two remaining fiscal events before the country goes to the polls in 2024.

It could be a defining moment in which the government addresses the funding crisis facing the NHS head on and challenges Labour to match its commitment.

Alternatively, the health service could once again be left to wait until the winter before the evidence of intolerable pressure in all parts of the system forces ministers to find short-term emergency funding. While leaders welcomed these last-minute payouts, few would argue this was the best way to deploy public money.

NHS leaders have been required to present a balanced budget on pain of being named and shamed or worse

Only a few weeks into the financial year the screws are being tightened in NHS organisations across the country. NHS leaders have been required to present a balanced budget on pain of being named and shamed or worse. But many admit privately that they have met the mark only by making heroic assumptions about efficiency savings and their ability to meet key targets. Some NHS trusts are looking at savings as high as 7 per cent of their turnover.

We all know the financial environment has got much tougher over the past year, with inflation levels stubbornly stuck at double digits, reducing the real-terms value of the health service budget.

Further cost pressures are also likely, with the government’s expectation that the NHS increases the number of contracts it has with independent sector providers to help reduce record waiting lists. While the independent sector is an important partner to the health service, these additional partnerships will add to the already significant financial burden it faces.

Although, thankfully, the unions representing staff on Agenda for Change contracts have voted to accept the government’s pay offer, NHS leaders remain in the dark about how exactly the government’s pay offer will be funded.

Any moves to shift funding in this way again this year risks similar raids in precisely the areas most essential to achieving medium-term productivity gains

There is likely to be a gap of £1 billion or more between what the NHS has in its budget this year to pay for this deal and what it will actually end up costing. The unfunded element of last year’s pay award to NHS staff was eventually covered by cuts in central programme budgets to key areas including technology and diagnostics. Any moves to shift funding in this way again this year risks similar raids in precisely the areas most essential to achieving medium-term productivity gains.

Also unclear is the fate of non-statutory health care providers, such as community interest companies and primary care providers, both of which may be obliged to pay Agenda for Change pay rates to attract and retain staff, without a commensurate increase in funding.

In addition, the government is putting pressure on NHS organisations to restrict their pay bill by maintaining their staffing establishments at the levels they are currently at,  despite the NHS already carrying more than 130,000 staff vacancies.

If it is serious about reducing the 7.2 million people waiting for elective treatment, then the government needs to pay for more people to carry out the work needed. Money can either be saved by pausing recruitment and freezing expenditure, or ministers can allow investment in new clinics, staff and better use of the independent sector to cut the elective backlog. They can’t have both.

The NHS must continue to be set stretching efficiency savings, but these have to be based on a fighting chance of them being achieved

The NHS must continue to be set stretching efficiency savings, but these have to be based on a fighting chance of them being achieved. It serves no one — patients, politicians or the wider public — any good if the NHS is forced to sign up to unrealistic targets now that inevitably fail to be met by the end of the financial year.

To get through this, the starting point must be a collaborative and respectful approach between the government and frontline NHS organisations where realistic targets are mutually agreed. It must also ensure that the NHS isn’t left to pick up the bill from the as yet unfunded part of the Agenda for Change pay deal.

In the coming years, restoring the NHS to its long-term historical funding increases must also be a priority. NHS leaders don’t ever expect to be bailed out. What they have a right to expect, though, is stretching-yet-fair targets that they will, as always, put all their effort into delivering alongside the best patient care they can provide within those means.

Matthew Taylor is chief executive of the NHS Confederation. You can follow Matthew on Twitter @ConfedMatthew