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Hi Anon 10:39. Thanks for your questions. To clarify, £400m of the £500m clawed back comes from the capital allocation; the remaining £100m comes from the resource allocation, or current expenditure.
There's no mischief here. We're reporting what happened to the DH budget, and the views of a respected health economist about that, as we have done in the past (https://www.hsj.co.uk/news/finance/treasury-confirms-55bn-nhs-underspends-are-lost/5020835.article).
There is also no assumption that capital underspends should be converted into revenues for general expenditure. It is worth noting, however, that they can at least in principle be reallocated for other capital projects: https://www.hsj.co.uk/news/finance/exclusive-trusts-given-days-to-apply-for-300m-capital-fund/5039891.article.
The suggestion reported here is that what makes 2011-12 different to previous years is that it is the first year of a 4-year efficiency savings programme, and that the assertion of the DH was that "every penny" of those savings would be available for reinvestment in healthcare: http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_120693.pdf.
In that context it is surely a legitimate question, at least, to ask why some of the money saved this year will not be available.