Chancellor Gordon Brown has ordered the NHS to carry on with plans for extra spending and modernisation despite shortfalls in national revenues which have forced up borrowing.

The Financial Times reported that borrowing would have to rise by £20bn – almost twice the figure forecast back in April – to enable the government to stick to its spending plans without increasing taxes.

Mr Brown said in his Pre-Budget Report statement to the Commons that there would be “£63 billion more a year for public services as a whole; and, by 2008, for health alone £41 billion more a year paid for by our national insurance rise.”

The report accompanying Mr Brown’s statement states, “UK spending on the NHS will increase by an average of 7.4% per annum in real terms over the five years to 2007/8”

In a reference to the most radical scenario put forward earlier this year by the Wanless review of healthcare funding, the report says, “It is essential that the NHS uses its resources in the most efficient manner to deliver the ‘fully engaged’ scenario described in Wanless”

The ‘fully engaged’ scenario foresaw a rapid doubling of spending on healthcare IT.

But observers of UK healthcare IT will still be asking how much of the Chancellor’s largesse will go on pay rises for NHS and what kind of modernisation strings will be attached to the 12.5% average pay increases awarded this week under the long-awaited pay modernisation initiative, Agenda for Change.

The pay award comprises a 10% on basic pay over three years, plus 2.5% to be spent on pay modernisation. Much of the modernisation cash will be spent on paying more to staff who take on more responsibility or acquire extra skills.

But the Pre-Budget Report’s section on public sector pay also stated, “Public service providers need to consider use of alternative delivery methods, such as electronic delivery where this could prove cost effective and deliver more choice to the end user.”