The governments decision to award most health service staff an above inflation pay rise could leave the NHS struggling to meet the cost of other demands, health service managers have warned.

The NHS Confederation admitted it was a good settlement, which could be met from the growth money available for next year. But it said the average award of 3.4 per cent, with up to 8.4 per cent for some staff, would not leave much room for manoeuvre.

Announcing that the government had accepted the recommendations of the pay review bodies, and that the awards would not be staged, health secretary Alan Milburn said the increases would help recruit more nurses into the NHS so it could treat patients more quickly.

But NHS Confederation human resources chair Andrew Foster said: It isn't enough to increase the number of staff. You need money for extra staff. That is the next thing we need.

The NHS will receive a 2.5 per cent inflation increase in April, plus 4.3 per cent growth money. But at least half of this will be eaten up by the pay settlement and other pay costs.

Stephen Thornton, chief executive of the NHS Confederation, warned the year 2000-01 could be one of our toughest on record.

Shadow health secretary Dr Liam Fox said: This is bound to reduce patient care elsewhere and trusts are already saying that reductions will have to be made.

Staff not covered by the pay review bodies - including administrative, clerical and ambulance workers - are still waiting for last years pay deal to be settled.

Unison threatened strike action over the issue, but held off when the government promised a long-term deal. Last week, non-pay review body staff were offered 3.25 per cent for 1999-2000 as part of a three-year settlement.

MSF head of health Roger Kline said the difference between this offer and the average of fer to nursing staff leaves a bad taste in the mouth.

The review body awards give most staff a 3.4 per cent increase. But 60,000 nurses at the top of Grade E, who lost out last year, will receive 7.8 per cent.

Higher awards also go to enrolled nurses and auxiliaries, and professions allied to medicine.