The extra billions being pumped into the NHS may end up being largely consumed by salary increases, according to a pharmaceutical industry think tank. The Office of Health Economics says that the health service lacks the capacity to absorb the money without inflationary pressures developing within the system.

Speaking at the launch of the office's annual Compendium of Health Statistics, associate director Jon Sussex said: “More money is great, but the question is how fast can it be spent, because what we want is more and better health care, not more expensive health care. We are worried …