NHS executives' pay soars by 7% a year

NHS bosses' pay rose three times faster than pay for nurses and other front-line staff in 2008-9, to an average of almost £150,000 a year.

The figures, published today, will cause embarrassment among senior managers who are warning the NHS needs to save £20bn over the next five years to meet rising demand.

Details of the inflation-busting 6.9 per cent rise came as a report released at the weekend said falling productivity in the NHS was one of the biggest failings of the 13 years of Labour rule and that a "relentless drive" to improve it must be the top priority of the incoming administration.

The Kings Fund, the health policy think tank, said in its review that the NHS had "made progress but was not yet world-class". It had to change rapidly if it was to meet the challenges of the future, it said.

Professor Chris Ham, chief executive of the Fund, said: "Doing more of the same is no longer an option. The NHS will have to do things differently by embracing innovation and becoming much more efficient in how it uses the £100bn it spends each year."

The survey of NHS boardroom pay, by Incomes Data Services, showed the highest-paid chief executive was Ron Kerr at Guy's and St Thomas' NHS Foundation Trust in London, who earned £270,000.

Steve Tatton, editor of the IDS NHS Boardroom Pay Report 2010, said: "Our annual survey of NHS boardroom remuneration will not make comfortable reading for those wishing to see [executives] at the top of the service leading from the front on wage restraint. These are undoubtedly testing times for those making decisions about how much to pay NHS chiefs – balancing recruitment and motivation against the need to keep tight control of the public purse – but it seems the equation has fallen on the side of high salary awards with pay continuing to run ahead of the rest of the workforce."

The figures show there was a £10,000 "pay gap" between the average pay of chief executives of foundation trusts (£157,500) and non-foundation trusts (£147,500). The gap is widening as foundation trusts exercise their muscle in the market to attract the best managers.

They raised the pay of their chief executives by almost 2 per cent more than non-foundation trusts – 7.8 per cent compared with 6.1 per cent.

Unions warned disclosure of the scale of the rises for top managers could inflame disputes at two trusts – St George's in Tooting, south-west London, and East Kent. Sharon Holder, GMB national officer, said staff at the two hospitals were being balloted on strike action "to try to force these trusts to uplift the pay of their outsourced low-paid cleaners" to the nationally agreed pay rates.

"What a disgrace to see in our National Health Service the upstairs/downstairs model, with the top echelons on the gravy train and low-paid workers whose job it is to stop the spread of viruses not getting the pay they are entitled to without going on strike," she said.