Pay reviews reject order to freeze increases

Review bodies covering the salaries of 1 million public-sector workers have rejected the command by Kenneth Clarke, the Chancellor, to freeze pay.

Reports from five of the six review bodies - those for the armed forces, doctors and dentists, nurses, the professions allied to medicine and senior salaries - have reached Downing Street with the teachers' pay review body due in shortly. Publication hasbeen provisionally set for 9 February.

The reports for doctors, nurses and teachers - covering more than a million workers - are thought to have recommended increases ranging from 2.5 to 2.9 per cent, with that for teachers expected to be 2.9 per cent and the National Health Service review bodies allowing room for manoeuvre for locally determined pay.

The recommendations come despite Mr Clarke stating to the bodies in September that any increase must be paid for by productivity. "Across-the-board increases should not be regarded as a right," he said.

He warned that "higher pay costs could lead to reductions in service levels, or reductions in employment, if they cannot be covered within provision by the necessary efficiency savings and other economies".

Hospitals and health authorities will face a tight squeeze if the Government honours the awards, unless Mr Clarke raids the contingency fund. That, however, looks very unlikely, given his Budget speech declaration that the policy remains as last year, that pay and price increases "should be met by greater efficiency and other economies".

The nurses' pay review body is understood to have opted for an "x + y" formula, which would provide a basic across-the-board increase of about 2.5 per cent, while leaving trusts free to top that up with a 0.5 per cent from locally determined pay.

One of the toughest decisions, however, will come on doctors' pay, with the British Medical Association threatening industrial action if health ministers go ahead with plans to allow NHS trusts to decide pay locally.

Their review body has traditionally been more wary about locally determined pay than the nurses', although it hoped last year that the BMA and the Department of Health could make progress on the issue. DoH sources indicate the review body has now moved far enough to allow ministers to move forward.

However, Gerry Malone, the Health Minister, indicated yesterday that ministers would still act cautiously. It was important that trusts should be able to attract specialists into difficult areas by varying terms and conditions of service, he said on BBC radio. But "the independent review body system, whatever happens about the introduction of local pay", would continue to retain an "oversight" on NHS pay.