Ministers should review pay policy for NHS staff and the impact it has on workforce morale, peers have said.
A new report from the House of Lords Select Committee on the long-term sustainability of the NHS acknowledged a "prolonged period of pay restraint" faced by health workers.
Last week it was announced health workers ranging from doctors, dentists, nurses and midwives to cleaners and porters will receive a 1% pay rise prompting anger from unions.
The Committee called on the Government to commission a formal independent review to examine pay policy with a particular regard to its impact on the morale and retention of health and care staff.
The authors wrote: "We received evidence on the lengthy period of pay restraint experienced by health and care staff and the consequential impact of this pay restraint on morale.
"This was a particular problem for those who were often at the lower end of the pay scale such as nurses, other healthcare workers and social care workers.
"It was clearly a relevant factor in the low levels of morale and significant staff retention problems we heard about."
The Committee added: "We recognise the necessity of public sector pay restraint when public expenditure is under considerable pressure. However, by the end of this Parliament, pay will have been constrained for almost a decade."
Peers also expressed their concern over an "absence" of a long-term NHS workforce plan over the coming years.
The report states a lack of strategy for the next 10-15 years presents "the biggest internal threat to the sustainability of the NHS".
The Committee also said "too little attention" has been paid to training the existing workforce.
Sarah Carpenter, national officer for health at the union Unite, said: "The committee homes in on the link between continued pay restraint and plummeting morale and workforce retention and, again, this is something that Health Secretary Jeremy Hunt might like to take note of, following last week's measly 1% pay rise for NHS staff."
Janet Davies, chief executive and general secretary of the Royal College of Nursing, added: "The (report) explicitly blames the Government's short-termist pay cap for low morale in the NHS and the numbers being pushed towards leaving the nursing profession.
"If ministers want to keep the best nurses working in the NHS, they must fund it properly and end the pay cap."
Dr Mark Porter, chairman of council at the British Medical Association, said: "The committee is right to identify the serious and ongoing problems in recruiting and retaining NHS staff, and the morale damage of years of ongoing pay restraint.
"Only last week, doctors got yet another real-terms cut in pay despite working harder than ever before."
Christina McAnea, head of health at the union Unison, said: "Years of pay restraint have led to low morale. But hospitals must be able to reward staff properly to recruit and retain employees."
Labour's shadow health secretary Jonathan Ashworth added: "The Tories have left our health system underfunded and unstaffed.
"We now need a long term plan for the NHS which tackles this chronic underfunding and invests in staff so patients get the world-class treatment they deserve."
Professor Ian Cumming, chief executive of Health Education England said: "We welcome this comprehensive report and are particularly interested to see proposals for an enhanced future role for Health Education England that reflect a need for more longer term, strategic workforce planning.
"We have started some work in this area already and will publish further work along these lines in our workforce plan at the end of this month.
"We accept, however, that much more needs to be done and look forward to examining the report and its 34 recommendations in detail over the coming days and weeks and working with partners to help support a better system to provide higher quality education and training for students and trainees and better quality, safer care for patients."
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