The Department of Health will not need to revisit the allocations it has set for primary care trusts in 2010-11, HSJ has been told.

Chancellor Alistair Darling today confirmed that the DH’s share of its £5bn spending cut for 2010-11 will be £2.3bn.

The cut to planned spending will leave the DH with £104bn compared with the £106.3bn planned at the time of the last Budget. But the DH said it will pay for that by giving the Treasury back its “centrally held contingency”.

In a statement, the DH said today it had been building this contingency since the beginning of the current comprehensive spending review period in 2008-09 to “provide a buffer against potential cost pressures and financial turbulence”.

“However, the excellent financial management in the NHS - with a surplus of over £ 1.7bn in 2008-09 - mean these centrally held contingencies can now be safely returned,” the statement continues.

HSJ has estimated there has been a difference of approximately £800m between the inflationary increase it has passed on to PCTs in their allocations and the larger increase it has received itself. The total difference over three years would come to around £2.4bn.

Danger

But KPMG UK head of healthcare Alan Downey warned that although the NHS settlement for 2010-11 now looks “extraordinarily generous when compared to other departments” there was a danger that NHS managers would feel a “false sense of security” about the years after that.

Overall, public spending will increase by just 0.7 per cent a year in real terms, the chancellor said today, but that will include spending on unemployment which will inevitably rise.

“NHS organisations might think they don’t need to make cuts which will mean that when they do come, they will be done in too quick and unthinking a way. They need to start planning them now and make them over a number of years,” Mr Downey said.

A senior source told HSJ today that expectations should be set no higher than 0.4 per cent real terms growth in 2011-12, with 0 per cent not at all unlikely.

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