The government has been warned that it must deliver a bumper pay deal for nurses if it is to achieve its ambitious NHS reform plans.

Following the chancellor's increase in health spending, the Royal College of Nursing (RCN) is demanding a significant increase in the pay of its members.

General secretary Dr Beverley Malone said an increase would be the "single most effective way" to overcome recruitment and retention problems.

One nurse told the annual BMA conference yesterday that working in an emergency unit was a "living hell".

A report published by the RCN yesterday also slammed the treatment of foreign nurses working in the UK. The report found evidence of systematic exploitation of foreign recruits.

Meanwhile private sector health firms from the UK and abroad have said they are "very encouraged" by the chancellor's budget and the government's pledge to use private sector capacity where appropriate.