Staff organisations have hailed a benchmarking exercise beginning this week as the 'first really concrete leap forward' in introducing a new pay system for the NHS.

The exercise will analyse the jobs of 500 employees, providing the information to set grade bands for the new pay system and showing where jobs across the NHS will slot into the bands.

Royal College of Nursing senior employment relations officer John Humphreys said this was 'a significant milestone'.

'In the next couple of months, the whole system and the job evaluation part will become a lot more real and tangible. There is an agreed protocol about how the exercise will be implemented locally, ' he said.

A jointly agreed job-evaluation 'factor plan' will be used to measure the components of each job and their levels of responsibility.

Letters are due to go out this week to 40 NHS sites agreed by both management and union representatives on the Agenda for Change job-evaluation working party, Mr Humphreys confirmed.

The exercise will involve 500 people filling in questionnaires, supported by trained job analysts.

The sample will evaluate approximately three members of staff in each of the jobs examined.

And although unions and employers have yet to agree whether senior managers will be covered by the new pay system, the sample jobs 'go right up to senior manager/director level and I think chief executive level as well', Mr Humphreys said.

The information from the exercise will be reviewed by a 70strong national panel - half drawn from the employers' side, half from staffside. The results are due in May.

At least one other tranche of benchmarking is expected to follow. This would 'assist the assimilation' of staff across the NHS to the new grade bands, Mr Humphreys said.

NHS Confederation human resources policy director Andrew Foster said: 'This is a big leap forward for the credibility of the whole modernisation agenda. '

Roger Kline, head of health at MSF, said: 'You can't modernise if you do not have a new pay system.

Of course It is going to cost money, but you can't afford not to do it. '

Unison negotiator Paul Marks said: 'We are all agreed about the importance of benchmarking. '

But the vexed question of 'linkage' between the three proposed pay spines - for doctors and dentists, staff covered by the nurses' pay review body, and other staff - is still unresolved.

Mr Marks said: 'We haven't got a precise formula yet on linkage. It should be possible to work that out. If we do not, it compromises the whole exercise. '