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The current pay round looks set to form a pivotal point in NHS industrial relations. You could mount a convincing argument that the start of every year's negotiations has a similarly portentous air. But these deliberations, destined to stretch into the new century, will take place amid a welter of novel factors which even the authors of a management game would have been hard-pressed to think up.

First comes the hangover from last year's award. The government has decided that that rise - the most generous for 10 years - has pretty much solved the NHS's recruitment and retention problems. Trusts and health authorities are not quite as hasty in their judgement, but they agree with ministers that the service's priority now must be to improve staff's working lives in the face of a remorselessly increasing workload.

Meanwhile, Unison claims that more than half of wards are still short of nurses, and questions how legitimate it is to trade off proper staffing levels against better pay. At a time when unemployment has reached a 19- year low, it may have a point.

Despite growth of 5.1 per cent this year, the nurses' big pay rise has led to financial problems and cuts in many trusts. Growth next year will be only 4.6 per cent, and fear of an unfunded award is keeping managers awake at night. In the words of one, quoted in the NHS Confederation's evidence to the review body, such a step 'would wipe us out'. The government's plea that the rise in next year's paybill should be well below the growth in NHS resources looks like more than a mere negotiating stance in this context.

Other storm clouds are moving in on this unsettled outlook. Non-review body staff are about to ballot on industrial action in response to a 3 per cent offer. As Unison's Bob Abberley remarked to human resources directors last week, a slide into a 'traditional industrial relations situation' would be damaging for everyone - not least as talks on a new pay system appear to be reaching delicately poised agreement, though some major questions about its scope may yet be unanswered.

Local aggravations around millennium pay continue, while soon the service may have to get to grips with the confused situation regarding the working- time directive's effect on holiday pay (see news, pages 2-3).

Expectations have been raised that a watershed is approaching in tackling working conditions. NHS chief executive Sir Alan Langlands has called HR 'the new bottom line'. His colleague, head of pay Aileen Simkins, last week characterised terms and conditions for many health service staff as '1940s shipyard'. But staff see a gap between the rhetoric and the reality, which impatience and cynicism will fill unless rather dramatic action follows promptly.

Finally, two external factors will impinge on this year's pay scenario and may destabilise it, despite the best efforts of ministers to deny or divert them. First is chancellor Gordon Brown's unexpected£5bn tax revenue surplus. A clamour will inevitably be heard from all the public sector unions that the country can now afford a decent increase for NHS workers.

The second factor is that on most conventional assessments, the government is now only 18 months away from calling the next general election. Party managers may calculate that the time has passed to tough it out on difficult issues like public sector pay. When opinion polls show repeatedly that disappointment with the NHS remains a top concern with voters, and the tabloids fill lengthy column inches with tales of overworked junior doctors, perhaps the panjandrums at Millbank Tower will hold sway over the mandarins at the Treasury.

If the stark choice is fidelity to Mr Brown's cherished friend Prudence, or the widespread return of a 'traditional industrial relations situation', political survival instincts may declare it no contest.

Of course, all the protagonists are well aware of all this, and the weeks up to Christmas are traditionally the high season for pay-round posing and posturing. Nevertheless, the ingredients are present for a tense autumn in the NHS.