When Labour came to power in 1997 it inherited two main NHS workforce challenges: to combat staff shortages and to raise productivity by introducing better working practices and creating new roles.
On the first count, New Labour has enjoyed visible success, with 304,000 more NHS staff last year than in 1997.
According to the latest NHS workforce census, published this week, the number of nurses increased by 85,305 more nurses over that period, while the number of senior hospital doctors rose by 10,519; more controversially the number of managers almost doubled, to 39,391.
With regards to productivity, however, the picture is less clear, partly because new roles have been created. Nurse practitioners, for example, diagnose and treat many minor illnesses previously dealt with by doctors; and specialist GPs now perform treatments such as minor surgery that were previously provided only in hospital.
There have also been new national contracts for hospital consultants, family doctors and nurses. But questions are being asked as to whether these contracts represent value for money.
For example, despite many GPs having opted out of providing out-of-hours care and closing their Saturday surgeries, the profession's average income is now between £100,000 and £120,000 a year, with the top earners taking home more than £250,000. Some commentators argue that the new contract paid them extra for work they were already doing.
The Department of Health has now admitted that it underestimated the cost of new contracts for doctors and nurses by £610m, with GPs receiving £300m more than projected, nurses £220m more and consultants £90m more.
Yet there is little hard evidence that the NHS is getting any more bang for these extra bucks, or is likely to do so. So much managerial time appears to have been spent on working out how to implement the new pay systems that little attention was paid to what their goal was. Pay reform became an end in itself rather than a means to improve productivity and patient care.
The thinktank the King's Fund will report next month on the impact of the new consultants' contract in England. In the meantime, the best independent assessment comes from the Scottish public spending watchdog Audit Scotland. It estimated that the consultant pay bill in NHS Scotland had increased by 44% over the three years to 2005-6.
The watchdog found "limited evidence of benefits to date" and recommended that the Scottish Executive must in future ensure that "pay progression is linked to achieving objectives".
Where does this leave ministers and NHS managers trying to deal with financial deficits? NHS staff pay increases cannot be recouped; the only scope for recovering the costs is to try to keep future pay increases low, make staff redundant or improve productivity.
Unsurprisingly, the first annual pay review for NHS staff since the new contracts were introduced was even more politically charged than usual. The pay body for doctors noted that consultants and GPs had "done well" from their new contracts but highlighted an absence of information to make judgments about actual costs and productivity.
Both the doctors' and the nurses' review bodies made clear last month that there was no concrete evidence linking national pay increases and local NHS debts, and that deficits should not be an overriding factor in pay awards.
The chancellor, Gordon Brown, however, intervened to stagger the introduction of salary increases for hospital consultants recommended by the doctors' pay body, reducing the recommended 2006-07 pay deal by about £30m and provoking anger from the British Medical Association. The row could prove to be a foretaste of annual battles between frontline healthcare staff and their employers.
On top of this, NHS trusts have announced 7,000 job cuts the past few weeks, with the number projected to reach 13,000 or even 20,000 over the coming months, while the Royal College of Nursing has claimed that up to 10,000 nursing graduates will be unable to find work this year owing to cuts and freezes on recruitment.
With NHS funding set to level off in 2008, the pressures on trusts to trim their workforce are not going to go away. When a trust has a deficit, often its first target is to reduce the pay bill.
The root of the problem could be that the rapid growth in staff numbers has outstripped the NHS's capacity to use them. Given the political pressure on trusts to reduce their debts, it is unlikely they will be able to increase capacity sufficiently to offset further staff cuts in this financial year.
· James Buchan is a professor at Queen Margaret University College, Edinburgh, and an associate fellow at the healthcare thinktank the King's Fund
