Doctors will receive a 1% pay rise in 2016/2017.
The pay rise will apply to Agenda for Change staff, doctors and dentists, and is being applied across the board as recommended by the pay review bodies.
The pay rise follows years of pay restraint under the coalition government and 2014’s rejection of an across the board 1% pay rise for Agenda for Change staff, which led to strikes.
The 1% for junior doctors will be included in the new pay points as part of the new contract being imposed by the government from August.
Chancellor George Osborne has said pay restraint in the public sector is expected to continue for the next four years as part of the government’s desire to reduce the overall budget deficit.
The consumer price index rate of inflation was running at 0.3% in January, according to the Office of National Statistics, while the retail price index was at 1.3%.
In its report released on Tuesday, the independent NHS Pay Review Body raised concerns about the gap between private and public sector pay and the use of caps to limit the cost of agency staff.
It said: “It is unclear how effective a strategy focused on cost caps and use of mandatory frameworks will be, when the demand for staffing cover remains high and training new supply takes a number of years.
“The rise in agency spend is an example of a labour market in operation when the current level of demand is outstripping supply. This results in higher rates of pay through the agency, with workers consequently deciding where to work and on what terms. Some NHS jobs or overtime may simply need to be made more attractive and flexible to potential staff. In the long run ensuring adequate supply is key to controlling costs and providing effective care to patients.”
Responding to the news, Danny Mortimer, Chief Executive of NHS Employers, said: “’Employers in the NHS will welcome the acceptance by the government of the clear recommendations of the NHS Pay Review Bodies.
“At the same time they recognise that the continued restraint of pay increases across the public sector is of concern to their staff and also restricts the ability to agree reform of non-medical contracts with staff representatives.”