The government's triumphant multi-billion pound boost for the NHS was left tarnished this week by MPs' allegations that it put a 'misleading' gloss on the real pounds8.8bn increase over three years by double and triple counting.

The mood of euphoria that greeted the comprehensive spending review announcement was further dampened after it became clear that ministers wanted health service pay levels to be bolted firmly to inflation targets.

Unions and managers fear this will leave wage rises lagging behind those in the private sector, and will do little to help with the introduction of a planned new system of pay determination.

Unions and managers also said a failure to award 'fair' wage rises could cripple health secretary Frank Dobson's modernisation plans and scupper his ambitious bid to recruit 15,000 nurses and 7,000 doctors.

But despite these caveats, most remained grateful for the spending boost, and NHS finance director Colin Reeves said the money would 'transform' the private finance initiative (see right).

'This is the best settlement the NHS has seen for many years... an opportunity to invest in modernising and raising the quality of the service,' said the chair-elect of the Healthcare Financial Management Association, Eric Morton.

The pounds8.8bn figure for England - in line with the pre-spending review wishes of many in the service - is revealed in Department of Health totals. They show that spending will rise from pounds37.2bn this year to pounds46bn in 2001- 02.

But the government has presented the total increase over three years as pounds17.8bn. Overall, the government claimed that it was increasing health spending throughout the UK by pounds21bn.

The pounds17.8bn figure - described by the Commons Treasury committee this week as 'public relations fraud' - is achieved by triple-counting next year's pounds3bn increase and double-counting the pounds2.9bn increase in 2000-01.

Health economist John Appleby, of the University of East Anglia, said the DoH figure was 'completely misleading' and unnecessary. 'It is hype beyond the call of duty,' he said.

'This is not a measly, parsimonious settlement that needs to be dressed up.'

But Mr Dobson was typically upbeat when he announced 'the biggest cash increase ever announced for the NHS' in the Commons last week.

He announced the scrapping of eye test charges for pensioners and promised there would be 'no new NHS charges in the lifetime of this parliament'.

There was praise from the service for the government's commitment to create a pounds5bn ring fenced 'modernisation fund' to finance information technology, tackling waiting lists, mental health, health promotion and primary care initiatives. It is believed that trusts will have to bid for cash for specific projects.

Labour's boost to public capital spending also went down well. The HFMA pointed out that although private finance targets had been raised, they were falling as a proportion of total capital spending, reversing recent trends.

Mr Dobson hinted that management jobs could disappear in trust mergers and efficiency savings.

But NHS Confederation chief executive Stephen Thornton warned that the government's reforms mean management costs 'may have to increase'.

There were also further warnings this week about rising health service cost pressures.

These pressures include 'hundreds of millions' needed to clear health service debts, an estimated pounds250m for combating the millennium computer bug, and an estimated pounds80m to filter blood donations to reduce the risk of transmitting Creutzfeldt-Jakob disease.

See News Focus, pages 10-11; Comment, page 17.