A report published today by the free market think-thank called for greater flexibility, linking pay to performance and objectives.
This should be an urgent priority for the NHS now it has been promised a funding increase for the next five years, the CPS said.
Robert Colvile, CPS director, said: “The bulk of NHS funding goes towards pay.
“Yet the NHS pay structure is deeply flawed, in ways that makes it hard to address gaps in care between rich and poor areas, or to incentivise staff to perform better.
“The headline figures in the media about pay freezes also completely fail to reflect the reality of what people are earning, which could potentially damage recruitment and distort spending priorities.”
The report noted that hospitals sited in poor areas had no way to attract talent, that career progression within the NHS is often neglected, that bonuses are only given to senior doctors and that 95% of the highest earners in the NHS are male.
Report author Dr Paul Goldsmith, a consultant neurologist, said: “The NHS is full of incredibly bright, talented and dedicated people with lots of excellent ideas and initiatives, but is really poor at scaling and spreading innovation.
"The report shows how one can create an environment to achieve this, without central government meddling."
However, the public sector union Unison called the report a “pointless attack”.
Unison’s head of health Sara Gorton said: “[It] shows how behind the times the think-tank is.
“Only last week an ambitious set of pay reforms was ratified by NHS employers and unions. This will help the health service keep and attract the staff it needs so we all can continue to benefit from its care and compassion for the next 70 years and beyond.”
According to the CPS, the NHS is the fifth biggest employer in the world, with 1.7 million staff – almost two thirds of the NHS budget goes on staff salaries.
