The NHS pay settlement received a broad welcome from managers this week, although finance and human resources directors voiced doubts about the government's commitment to fund it fully.

In the Commons, health secretary Frank Dobson said the settlement was the 'best pay award to nurses and professions allied to medicine in real terms in the last 10 years'.

He confirmed that£100m will be found from the NHS modernisation fund to support 'the full implementation' of the awards. He also told MPs there was 'sufficient money' in the NHS's£21bn comprehensive spending review allocation for staffing requirements.

Royal Hospitals trust finance director Barry Elliot said the awards would add an estimated£1.5m to its pay bill.

'If we have to fund that from within the increase that has already been identified to health authorities, that is going to cause us real problems, ' he said.

'We are already looking to a significant shortfall next year because of cost pressures in the system.'

Mr Elliott was sure the award would help with recruitment and retention.

But he said other initiatives were needed to hold on to staff and attract them back into nursing.

Chesterfield and North Derbyshire Royal Hospital trust finance director Eric Morton said using the modernisation fund would help make the awards affordable, provided increases for non-pay review body staff remained within the 2.5 per cent inflation level.

'It is going to be quite a tight year, ' he said. 'We can afford the full awards, but it is going to be tight for non-pay inflation, which may mean one or two local health service developments will have to move more slowly.'

The broad thinking behind the pay review body awards is that action is needed to tackle recruitment and retention problems in the NHS, particularly among nurses and PAMs.

Haydn Cook, chief executive of Calderdale Healthcare trust, which recently leafleted local residents in an attempt to find nurses willing to return to nursing, described the settlement as 'helpful - a step in the right direction'.

But he questioned whether an award slightly above general inflation 'will be enough to attract nurses who have gone to work for Tesco or a nursing home.'

Roy Tyndall, human resources director of the Royal Liverpool and Broadgreen University Hospitals trust, said he was 'quite encouraged' by the settlement.

He felt that, in the long term, it should stop a 'haemorrhage' of staff and encourage more to go into nurse education.

But he was concerned about how the awards would be funded when the service had been allocated enough to cover around 2.75 per cent.

Doctors' organisations reacted furiously to the government's decision to refuse to set up a£50m 'kitty' to top up consultants' pay.

Pay and Workforce Research director John Northrop forecast that a lower increase for doctors could stir up industrial relations problems. He was sceptical about funding for the overall settlement. A 5 per cent increase on average would cost£1.2bn, he said, and£100m from the modernisation fund 'leaves a lot to come from somewhere'.