Nurses’ unions accused the Department of Health of bullying after it insisted that medical staff should have a below-inflation pay rise to plug the hole in budgets, saying that patients would suffer otherwise.

The department said that doctors, nurses, midwives and dentists should get basic pay rises of 1.5 per cent next year, despite the NHS budget rising by 9 per cent. The 1.5 per cent offer is less than half the rate of inflation, so in real terms pay rates would be cut.

In its evidence to the independent pay review boards, the department gave warning that without pay restraint the NHS would not be able to tackle its deficits, jobs would be cut and patient care would suffer.

It said: “The NHS is facing a challenging financial period with the need to change a £512 million deficit in 2005-06 into lasting financial balance.”

The department added: “All NHS pay is met from the general NHS allocation; there is no separate funding for pay. Therefore, pay uplifts must be affordable, otherwise funding for patient services will suffer. If pay levels are too high, NHS employers may well need to reduce staff posts.”

Unions, which will present their claims on Tuesday, said that the Government was bullying them into accepting an offer that amounted to just 2p an hour for a newly qualified nurse. Karen Jennings, Unison’s head of health, said: “It is outrageous to suggest that unless staff take what is effectively a pay cut, jobs will go and patients will suffer.”

Josie Irwin, head of employment at the Royal College of Nursing, said that the offer was derisory. “It is a slap in the face for the staff who have worked so hard under such intense pressure to deliver the Government’s health reforms.”

The Government faces the prospect of industrial action from Amicus, the union for health workers. Kevin Coyne, its national health officer, said: “Unless an improved [offer] is put on the table we will not hesitate to proceed to ballot for industrial action.”

The British Medical Association has already demanded a 4 per cent pay rise for doctors.

The Government dismissed claims that 1.5 per cent amounted to a pay cut because staff also got a rise for each year worked. Pay for some staff would be cut but the offer delivered a 4 per cent increase in average earnings “which compares with the average across the whole economy”.

Andrew Lansley, the Shadow Health Secretary, said that Ms Hewitt was trying “to make NHS staff pay for the consequences of the Government’s financial mismanagement and the £1.3 billion deficit from last year”.

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