LEADING ARTICLE:There may be trouble ahead ...

It was always inevitable that the Government's continuing freeze on the public pay bill would run into difficulties. An incomes policy that dares not speak its name was just as likely to suffer the same fate as previous openly declared pay policies, foundering on the rock of unfairness. As the economy revives, issues of equity of treatment come to the fore; and the Government's pleading of rough justice in the cause of the wider national economic interest no longer holds sway at the bar of public opinion.

Now even the midwives are prepared to imagine industrial confrontation with a beleaguered government. Yet what is ostensibly at issue is not pay but the location of where it is set. Last month the Government was swift to accept the recommendations from pay review bodies for the health service. However, while doctors and dentists were allowed to receive their 2.5 per cent pay award centrally, only 1 per cent of the awards for nurses and midwives was to be met centrally. Up to 2 per cent was to be met locally in negotiations with individual trusts.

Not surprisingly this disparity in treatment aroused strong passions. The health unions regard the Government's stance as the thin edge of a dangerous wedge that will import job insecurity and unfair regional differentials into the health service.

Meanwhile, the Government has stuck fast to its line that a degree of discretion on local pay is vital to the promotion of a new-style health service. If that is to work, local managers must have the ability to respond to widely differing conditions in their areas.

The dispute is symptomatic of the muddle the Government has got into with its health service reforms. The Government wills the end of greater local diversity - but continues with national pay review boards. It sanctions national awards for the officers - but insists on local settlements for the rank and file.

This is a logically and, arguably, politically untenable position. There is a case for locally negotiated pay - but the Government will fail to make it while it maintains a structure in which national review bodies make pay recommendations. If the Government wants local pay it should dismantle the bodies. If it is not prepared to do this, it should endorse national pay awards for nurses as well as doctors, for midwives as well as dentists.

We can all do without a summer of discontent over this issue. One way or another the system of pay determination in the health service has to be one that satisfies the demand for fairness as well as efficiency.

At the same time, the dispute serves as a warning both to the Government and to New Labour about the problems that will attend the thawing or the smashing of the pay freeze. The Government's strategy is, presumably, to hold the line, while transferring the electorate's gaze to tax cuts and painting Labour as the party more likely to squander precious resources on a public sector pay binge. It is not at all clear that the midwives will oblige it.