It is not unusual for public sector employers to recommend wage restraint.

However, there is an important and significant difference about the recommendation made by NHS Employers that the pay freeze for NHS staff should be extended into a third year. For the first time, the body representing all major NHS employer organisations is placing affordability at the centre of its argument. Put simply, it is saying that - when all the pressures on the NHS are taken into account - the service cannot afford to pay its staff another one per cent without potentially compromising the quality of patient care. While NHS Employers is an independent body, it is funded by the Department of Health and it is very unlikely to be sending such a strong and contentious message without having checked with its paymasters first.

The warning arrives at a febrile time. The Kings Fund has warned of the need to better understand the pressures the £20bn efficiency programme is placing on the NHS, while the debate grows over whether the Chancellor will use his December autumn statement to alter his hard line on public spending.

But the key to understanding the NHS Employers warning over pay is the tensions created by negotiations over flexing terms and conditions set out under Agenda for Change. Even when pay is “frozen”, NHS Employers claim pay bills rise by an average two percent as a result of “increments” awarded under AfC.

The flagship employment reform of the last decade has - despite its many strengths - fallen into some disrepute as salary rises meant to reward increased experience and skills have too often been handed out regardless of progress. This outcome is as much to do with employer’s failure to manage the scheme correctly.

As HSJ has reported a “pay cartel” of 20 trusts in the South West have decided to break away from AfC. The unions have reacted furiously and are threatening to pull out from national pay talks.

This is a high stakes game. At a national level there is a high degree of pragmatism among the leadership of unions and employers, who both understand, to varying degrees, that change is inevitable. But both also have memberships containing a significant element itching for a fight. The win-win for both parties is the quiet demise of the south west cartel amid national compromise, but that outcome is far from certain.

NHS Employers director Dean Royles says the time has come from a major debate on NHS terms and conditions. He writes: “Skill mix, ways of working and extended working days will require new processes and systems and change the way we train and educate staff.”

To have this debate and to reach a sensible conclusion while maintaining staff commitment will require the wisdom of Solomon. Siren voices will be heard on all sides. How, for example, new hospital consultants in Ireland are facing a 30 per cent pay cut or how widespread industrial unrest can be used to unseat the government’s NHS reforms.

Key is identifying solutions which deliver efficiencies, but also offer staff something in return. If, for example, staff are asked to work longer hours for the same pay they should expect to enjoy some job and role security. If they flex their roles to enable new, more effective service models they should receive the necessary training and, perhaps, enhanced reward.

Most important of all, it is vital the great majority of savings are perceived by staff as being reinvested in the NHS. If the proceeds of efficiency are regularly siphoned off to “national risk pools” or to service the national debt reform will be still born.