Pay rises for senior managers, including performance-related pay, must not exceed 3. 7 per cent of the pay bill for this group in any organisation this year, NHS chief executive Nigel Crisp announced last week.

Guidance for trusts and health authorities makes clear that any decision to make payments outside the 3. 7 per cent must be justified in the organisation's annual report.

The guidance also says the government intends to develop new arrangements for pay and contracts for senior managers, to give stronger and more consistent links between pay and performance. A framework will go out for consultation later in the year.