Ministers floated their first thoughts on how the proposed new pay system for the NHS might work this week - just as they are gearing up to announce this year's pay awards, which sources say will be on 4 February.

The proposals would introduce a single NHS pay system and introduce a 'professional contract' recognising and rewarding a broad range of tasks and responsibilities. Full details are expected to be announced in the spring at a conference of human resource managers.

The British Medical Association is the only professional body opposed to the idea of a unified review body structure covering doctors, nurses and professions allied to medicine which the government hopes to introduce in time for the 2000-01 pay round.

In a leaked memo the government says the present structure is holding back service modernisation, inhibiting development of a 24-hour service and 'depressing basic pay levels for too many staff'.

It is expected nurses' basic pay rates will rise by between 10 and 11 per cent, with more senior nurses receiving 4.7 per cent. NHS Confederation policy director Tim Jones said any award over 3.5 per cent would eat into modernisation and development funds.

'Above 5 per cent and the modernisation fund is gone. Our position is to bring nurses' pay back into line with comparable groups but do it over a three or four-year period rather than a one-off adjustment.'

However, sources believe additional money will be found to pay for the awards, despite Treasury objections. They point to the fact that health secretary Frank Dobson has been able to find extra pots of money outside the comprehensive spending review, such as winter pressures money.

Mr Dobson is believed to have been behind briefings which have led to running stories in the national and regional press about nursing shortages which have fuelled popular support for a big pay rise for nurses. The Treasury has been counter-briefing in a bid to neutralise growing pressure for an above inflation award.

The Royal College of Nursing welcomed any pay rise which would improve recruitment and retention, but stressed that an 11 per cent rise would only apply to a relatively small number of newly-qualified nurses at the bottom of grade D and not all in the D band. Such a rise would be 'a step forward' in recruiting new nurses, but 4.7 per cent would not be enough to encourage experienced nurses, like senior staff nurses, to stay.

But sources say that most nurses receive an extra 13 per cent in allowances and enhancements on top of their basic pay. An extra 11 per cent would take the starting pay for nurses to above the level for a newly qualified teacher.

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