NHS Staff Retention Plan and Pay Review Body Reform

Public finances & the next generation — Mixed picture

moderate · moderate confidence

The policy could save real money by reducing costly agency staff, but a genuinely independent pay review body and an unfunded childcare expansion could push NHS wage costs up significantly — and the net effect on public finances is unclear. Several headline measures are already in place or already happening, which limits the policy's additionality.

The evidence

• The policy commits to ending reliance on agency workers as a 'false economy' and to a ten-year retention plan, a more independent pay review body, and expanded affordable childcare. — libdems.org.uk (manifesto) — “ending the false economy of spending money on agency workers”
• NHS agency spending has already fallen substantially, from £3.46bn in 2022/23 to £2.07bn in 2024/25 — a £1.4bn reduction. — commonslibrary.parliament.uk (government) — “NHS providers spent £3.46 billion on agency staff in 2022/23, which reduced to £3.02 billion in 2023/24, and further to £2.07 billion in 2024/25, representing a £1.4 billion reduction compared to 2022/23”
• The stated ambition is to eliminate agency use entirely by the end of the current parliament. — gov.uk (media) — “The ambition is to eliminate agency use entirely by the end of the current government's term”
• Agency staff cost on average 20% more than NHS bank staff, so shifting away from agencies has a real fiscal benefit. — commonslibrary.parliament.uk (government) — “Staff supplied by agencies cost, on average, 20% more than NHS bank staff”
• Poor staff health, wellbeing and turnover already cost the NHS in excess of £12 billion per year in 2022. — vertexaisearch.cloud.google.com (media) — “The estimated cost of poor staff health and wellbeing, including absence and turnover, was in excess of £12 billion per year in 2022”
• IFS estimates that keeping NHS pay competitive with the wider economy would require real-terms increases in the NHS wage bill of approximately 4.4% per year — implying significant ongoing cost pressure if a more independent PRB acts on this. — skillsforhealth.org.uk (institutional) — “to attract and retain sufficient staff, NHS pay will likely need to keep pace with earnings in the wider economy, implying real-terms increases in the NHS wage bill of approximately 4.4% per year”
• The current Pay Review Body is already formally independent, but has been overridden by government, undermining its effectiveness. — oxera.com (media) — “government has overridden PRB recommendations, as it did in March 2023 by offering an additional 2% for 2022/23 and a 5% pay increase for 2023/24, effectively bypassing the PRB process for the latter year”
• Flexible working as a day-one right already exists for NHS staff under the Employment Relations (Flexible Working) Act 2023. — croydonuniversityhospital.unison.site (media) — “As of April 2024 (following the Employment Relations (Flexible Working) Act 2023), all NHS staff in England, Wales, and Northern Ireland have a contractual right to request flexible working from their first day of employ…”
• NHS and Health and Care Worker visa sponsors are already exempt from the Immigration Skills Charge. — garthcoates.com (media) — “Eligible employers sponsoring Health and Care Worker visa applicants are already exempt from the Immigration Skills Charge”

Biggest unknown: Whether a truly independent Pay Review Body would recommend higher pay awards than government would otherwise grant, and whether any retention plan investments would be explicitly funded rather than borrowing-financed.

Our reading: The policy's clearest fiscal upside is reducing agency staffing costs. Agency spend has already fallen by £1.4bn since 2022/23, and eliminating it entirely would save additional hundreds of millions annually — with bank staff 20% cheaper than agency. Better retention also addresses a measurable £12bn+ annual cost from turnover and absenteeism, so a credible retention plan has genuine fiscal logic. However, the dominant fiscal risk comes from making the Pay Review Body genuinely independent. The current PRB is already formally independent but the government has overridden its recommendations. If a reformed PRB is insulated from Treasury override, and if the IFS projection is correct that competitive NHS pay requires ~4.4% real annual wage bill growth, the resulting cost pressure on the NHS budget would be substantial — potentially dwarfing agency savings. The policy provides no funding mechanism for this, nor for 'expanded access to flexible, affordable childcare.' Meanwhile, two headline measures — day-one flexible working and the Immigration Skills Charge exemption — are already in force, reducing the policy's net additionality on the savings side. The 'mixed' verdict reflects: real and already-evidenced savings potential from agency reduction; a real and plausible cost risk from a genuinely empowered PRB; and two unfunded commitments (retention plan investments, childcare expansion) whose financing is unspecified. The net effect on the debt path depends heavily on whether PRB reform leads to higher-than-budgeted pay awards and whether retention investments are funded from efficiency savings or new borrowing — both genuinely uncertain.

Healthcare — Helps

moderate · moderate confidence

This policy targets NHS staff shortages by improving retention, pay fairness, flexible working, and reducing costly agency spending — all of which could help get more staff to more patients. The main caveat is that several elements are already partly in place, and the scale of real-world impact depends on funding and implementation over many years.

The evidence

• The policy commits to a ten-year NHS staff retention plan, a more independent pay review body, day-one flexible working rights, affordable childcare, immigration visa fixes, and ending agency worker spending. — libdems.org.uk (manifesto) — “retaining more staff across the NHS through a ten-year retention plan, making flexible working a day-one right and expanding access to flexible, affordable childcare, fixing the work visa system and exempting NHS and car…”
• NHS staff leaving rates are high, with an average annual leaver rate of 13% in acute and community sectors between 2014 and 2021, above the UK average of 10%. — ifs.org.uk (institutional) — “between 2014 and 2021, an average of 13% of staff left the NHS acute and community sectors annually, which is higher than the average job-changing rate of 10% across all UK employees”
• Nursing and midwifery leaving rates are especially high at 16.2%. — ifs.org.uk (institutional) — “Leaving rates were particularly high for nursing and midwifery staff (16.2%)”
• Improving staff retention is considered one of the fastest and most cost-effective ways to increase workforce supply and improve patient outcomes. — vertexaisearch.cloud.google.com (media) — “improving staff retention is one of the fastest and most cost-effective ways to increase workforce supply, leading to better patient outcomes and increased productivity”
• Poor staff health, wellbeing, absence and turnover cost the NHS in excess of £12 billion per year in 2022. — vertexaisearch.cloud.google.com (media) — “The estimated cost of poor staff health and wellbeing, including absence and turnover, was in excess of £12 billion per year in 2022”
• The current NHS Pay Review Body is already technically independent, but unions have questioned its independence when the government has overridden its recommendations. — oxera.com (media) — “a perceived lack of independence or effectiveness, particularly when the government has overridden PRB recommendations, as it did in March 2023 by offering an additional 2% for 2022/23 and a 5% pay increase for 2023/24, …”
• The IFS estimates NHS pay will likely need to grow at approximately 4.4% per year in real terms to attract and retain sufficient staff. — skillsforhealth.org.uk (institutional) — “to attract and retain sufficient staff, NHS pay will likely need to keep pace with earnings in the wider economy, implying real-terms increases in the NHS wage bill of approximately 4.4% per year”
• Flexible working from day one is already a right under the Employment Relations (Flexible Working) Act 2023, so this element of the policy largely reflects existing law. — croydonuniversityhospital.unison.site (media) — “As of April 2024 (following the Employment Relations (Flexible Working) Act 2023), all NHS staff in England, Wales, and Northern Ireland have a contractual right to request flexible working from their first day of employ…”
• Lack of affordable, flexible childcare significantly impacts retention of predominantly female health and social care staff. — publications.parliament.uk (government) — “a lack of affordable and flexible childcare, especially for those working shifts, significantly impacts staff retention, particularly among the predominantly female and often lower-paid health and social care workforce”
• NHS agency spending fell from £3.46 billion in 2022/23 to £2.07 billion in 2024/25, a £1.4 billion reduction already underway. — commonslibrary.parliament.uk (government) — “NHS providers spent £3.46 billion on agency staff in 2022/23, which reduced to £3.02 billion in 2023/24, and further to £2.07 billion in 2024/25, representing a £1.4 billion reduction compared to 2022/23”
• The Recruitment and Employment Confederation warns that cutting agency staff could harm patients by reducing staffing flexibility and potentially lengthening waiting lists. — nhsprocurement.org.uk (media) — “a "fixation" on cutting agency staff could ultimately have a detrimental impact on patients, potentially leading to longer waiting lists, as agencies provide crucial flexibility in filling staffing gaps”
• Eligible employers sponsoring Health and Care Worker visa applicants are already exempt from the Immigration Skills Charge, so this element may have limited additional effect. — garthcoates.com (media) — “Eligible employers sponsoring Health and Care Worker visa applicants are already exempt from the Immigration Skills Charge”

Biggest unknown: Whether the funding committed will be sufficient to deliver pay increases that keep pace with the wider economy, which the IFS estimates would require roughly 4.4% real-terms annual wage bill growth.

Our reading: The core logic of this policy is sound: NHS staffing shortages are a proven constraint on patient access, high leaver rates (13% annually in acute sectors, 16.2% in nursing) represent a major and costly problem, and improved retention is evidenced as one of the most cost-effective ways to expand effective workforce supply. A ten-year retention plan, more credible pay-setting, and childcare support address real, documented drivers of attrition. The agency staff reduction target builds on already-substantial progress (£1.4bn already cut), with savings intended for frontline reinvestment. However, several elements are already partly in place — flexible working from day one is already law, and the Immigration Skills Charge exemption for Health and Care Worker visa sponsors already exists — which limits the marginal improvement from those specific measures. The pay reform is the highest-stakes element: if the restructured pay review body leads to pay genuinely tracking the wider economy (as the IFS suggests is necessary), that would materially aid retention. But pay reform requires sustained funding commitments that the policy text does not detail, and past governments have overridden pay body recommendations. The REC's concern about agency cuts reducing flexibility is a real operational risk, though the shift to bank staff is a more cost-effective alternative if managed well. On balance, the direction is clearly positive for healthcare access — more and better-retained staff means shorter waits and better care. The magnitude is moderate rather than major because several measures are incremental improvements on the status quo, and long-term delivery risk is substantial.

Good work & fair pay — Helps

moderate · moderate confidence

This policy aims to improve pay fairness, job security, and working conditions for NHS staff through better retention, flexible working rights, and pay review reform. The main caveat is that some measures already partly exist, and the real-world impact depends on funding and implementation.

The evidence

• The policy commits to a ten-year NHS staff retention plan, day-one flexible working rights, affordable childcare access, pay review body reform, visa system fixes, Immigration Skills Charge exemption for NHS/care staff, and ending reliance on agency workers. — libdems.org.uk (manifesto) — “retaining more staff across the NHS through a ten-year retention plan, making flexible working a day-one right and expanding access to flexible, affordable childcare, fixing the work visa system and exempting NHS and car…”
• NHS staff leaving rates are high, with 13% of acute and community sector staff leaving annually between 2014 and 2021, above the 10% UK-wide average. — ifs.org.uk (institutional) — “between 2014 and 2021, an average of 13% of staff left the NHS acute and community sectors annually, which is higher than the average job-changing rate of 10% across all UK employees”
• Leaving rates are especially high among nursing and midwifery staff at 16.2%. — ifs.org.uk (institutional) — “Leaving rates were particularly high for nursing and midwifery staff (16.2%)”
• The estimated cost of poor staff health and wellbeing, including absence and turnover, exceeded £12 billion per year in 2022. — vertexaisearch.cloud.google.com (media) — “The estimated cost of poor staff health and wellbeing, including absence and turnover, was in excess of £12 billion per year in 2022”
• The NHS Pay Review Body already exists as an independent advisory body, undermining the novelty of the 'properly independent' claim. — assets.publishing.service.gov.uk (government) — “The NHS Pay Review Body (NHSPRB) is already an independent advisory non-departmental public body that makes recommendations on the remuneration of NHS staff paid under Agenda for Change terms”
• The government previously bypassed the PRB process, offering pay rises without following its recommendations, fuelling union distrust. — oxera.com (media) — “the government has overridden PRB recommendations, as it did in March 2023 by offering an additional 2% for 2022/23 and a 5% pay increase for 2023/24, effectively bypassing the PRB process for the latter year”
• As of April 2024, all NHS staff already have a contractual right to request flexible working from day one, meaning this policy element is largely already in law. — croydonuniversityhospital.unison.site (media) — “As of April 2024 (following the Employment Relations (Flexible Working) Act 2023), all NHS staff in England, Wales, and Northern Ireland have a contractual right to request flexible working from their first day of employ…”
• A lack of affordable and flexible childcare significantly impacts retention, particularly among the predominantly female health and social care workforce. — publications.parliament.uk (government) — “a lack of affordable and flexible childcare, especially for those working shifts, significantly impacts staff retention, particularly among the predominantly female and often lower-paid health and social care workforce”
• NHS agency spending has already fallen significantly, from £3.46 billion in 2022/23 to £2.07 billion in 2024/25. — commonslibrary.parliament.uk (government) — “NHS providers spent £3.46 billion on agency staff in 2022/23, which reduced to £3.02 billion in 2023/24, and further to £2.07 billion in 2024/25, representing a £1.4 billion reduction compared to 2022/23”
• Improving staff retention is projected to be one of the fastest and most cost-effective ways to increase workforce supply, leading to better patient outcomes and increased productivity. — vertexaisearch.cloud.google.com (media) — “improving staff retention is one of the fastest and most cost-effective ways to increase workforce supply, leading to better patient outcomes and increased productivity”
• To attract and retain sufficient staff, NHS pay will likely need to keep pace with wider economy earnings, implying real-terms wage bill increases of approximately 4.4% per year. — skillsforhealth.org.uk (institutional) — “to attract and retain sufficient staff, NHS pay will likely need to keep pace with earnings in the wider economy, implying real-terms increases in the NHS wage bill of approximately 4.4% per year”
• Cutting agency use further could have a detrimental impact on patients if it creates staffing gaps, according to the Recruitment and Employment Confederation. — nhsprocurement.org.uk (media) — “a "fixation" on cutting agency staff could ultimately have a detrimental impact on patients, potentially leading to longer waiting lists, as agencies provide crucial flexibility in filling staffing gaps”

Biggest unknown: Whether the government will actually fund the real-terms pay increases needed to retain staff and whether a reformed pay review body will be genuinely independent rather than still subject to Treasury override.

Our reading: This policy bundle targets several real drivers of poor workforce conditions in the NHS. The measurable baseline is damning: leaving rates of 13–16% above economy-wide norms, burnout costs exceeding £12bn/year, and longstanding pay dissatisfaction rooted in a PRB process unions describe as compromised. Addressing these would meaningfully improve job security and pay fairness for a large workforce — real gains for O4. However, several stated commitments are partly hollow or already delivered. Day-one flexible working rights already exist in law since April 2024. The PRB is already nominally independent — the real problem is government override, which this policy promises to fix but provides no binding mechanism to enforce. Immigration Skills Charge exemptions already apply to Health and Care Worker visa holders. These overlaps reduce the marginal impact of the stated measures. The strongest new commitments are the ten-year retention plan and the childcare expansion, where evidence shows real unmet need — especially the shift-pattern childcare gap affecting lower-paid, predominantly female staff. The agency staff reduction is already well underway (£1.4bn cut since 2022/23), though the REC warns further cuts risk patient harm if gaps aren't filled another way. The critical unknown is funding: IFS projects 4.4% real-terms annual wage bill growth is needed to actually retain staff — a figure that depends on future spending decisions not guaranteed by this policy text. Without that, the structural retention problem persists regardless of plans and review body reform. On balance, the direction is 'improves': the policy coherently targets real workforce problems, and even partial delivery would benefit NHS workers' pay security and conditions. But the magnitude is moderate rather than major because several elements are already in place and the funding question is unresolved.

Immigration & border control — Moves toward more control

We don’t call this better or worse — that’s your call; we only show which way the policy moves it.

minor · moderate confidence

This policy keeps existing routes for overseas NHS and care workers while proposing to fix the visa system and maintain exemptions from the Immigration Skills Charge, which points to a broadly stable or slightly more controlled overall immigration direction. The net effect on migration numbers is uncertain because it depends on how domestic retention improves and whether the visa system changes widen or narrow overseas recruitment.

The evidence

• The policy proposes fixing the work visa system and exempting NHS and care staff from the Immigration Skills Charge. — libdems.org.uk (manifesto) — “fixing the work visa system and exempting NHS and care staff from the Immigration Skills Charge”
• Eligible employers sponsoring Health and Care Worker visa applicants are already exempt from the Immigration Skills Charge. — garthcoates.com (media) — “Eligible employers sponsoring Health and Care Worker visa applicants are already exempt from the Immigration Skills Charge”
• International Medical Graduates make up 42% of all licensed doctors, making overseas recruitment critical to NHS staffing. — thedoctor.bma.org.uk (media) — “International Medical Graduates (IMGs) are critical to the NHS, making up 42% of all licensed doctors”
• If domestic retention improves significantly, demand for overseas recruits could fall, lowering net migration from this route. — england.nhs.uk (media) — “The NHS Long Term Workforce Plan aims to retain up to 130,000 fewer staff over the next 15 years”
• Exempting NHS workers from the Immigration Skills Charge could make it cheaper to hire migrant workers, potentially sustaining or raising overseas recruitment. — theyworkforyou.com (media) — “it could make it relatively cheaper to hire migrant workers, potentially hindering efforts to develop the domestic workforce”

Biggest unknown: Whether 'fixing the work visa system' means tightening or easing visa rules for overseas NHS staff, and how much improved domestic retention reduces reliance on international recruitment.

Our reading: The policy's immigration-relevant elements are narrow: it proposes to maintain or clarify the Skills Charge exemption for NHS and care staff (already largely in place) and to 'fix' the visa system without specifying whether that means loosening or tightening. On balance, retaining exemptions preserves current overseas recruitment pathways, while a strong domestic retention drive (10-year plan, flexible working, childcare) could over time reduce reliance on international staff. The net direction on migration is therefore marginally toward more controlled via substitution of domestic for overseas staff, but the effect is minor and uncertain given the ambiguity in what 'fixing' the visa system entails.