Jeremy Hunt, UK chancellor, is to pump more money into the NHS to fund a new pay deal for heath workers, in a surprise move that comes despite the Treasury’s previous focus on efficiency savings to fund the offer.

Steve Barclay, health secretary, said on Tuesday that the pay deal would be fully funded. “I want to be clear — there will be no impact to frontline services or quality of care as a result of this offer,” he said.

The government’s shift in position may affect not just strikes in the NHS but industrial action by other public sector employees.

The Treasury confirmed the health department would receive more money and would also reprioritise spending. However, Hunt’s allies rejected claims by some health insiders that an extra £3bn had been agreed.

Nurses, ambulance crews, physiotherapists and other non-medical NHS staff are beginning to vote in trade union ballots on the government’s pay offer, made last month.

Barclay is determined to settle the NHS strikes and hopes to reassure staff they can endorse the pay deal — covering this financial year and 2023-24 — without experiencing cuts elsewhere.

The Treasury’s softer line with NHS pay will be seen as a sign it might be willing to loosen the purse strings to help settle other pay disputes, notably with teachers.

The National Education Union has asked teachers to reject a new pay offer, demanding that it should be funded from extra Treasury money, rather than coming from existing school budgets.

Treasury insiders have insisted for weeks that new public pay settlements should be funded from existing departmental budgets. No new money was allocated in last month’s Budget.

On Tuesday, they said the extra funding for the NHS would not come from higher taxes or borrowing, but by reprioritising spending within the existing “envelope” for overall government expenditure.

The NHS pay offer consists of two one-off payments for the current financial year 2022-23, worth up to £3,789 depending on salary band, as well as a 5 per cent consolidated pay increase for 2023-24.

Barclay said on Tuesday: “I’m working with the Treasury to ensure my department has the money it needs to fully fund this pay offer, which will include additional funding and reprioritising existing budgets.

“This is on top of the existing funding we have already made available for a pay increase of up to 3.5 per cent in 2023-24.”

The Royal College of Nursing began balloting its members on Tuesday on whether to accept the government’s revised pay offer, which follows six days of strikes since mid-December.

Matthew Taylor, chief executive of the NHS Confederation which represents health organisations across England, welcomed Barclay’s “reassurance . . . that work is under way with the Treasury to fully fund the pay offer”.

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