NHS chief executive Sir David Nicholson has written to NHS managers to explain the spending review settlement allocated by the treasury.

Writing to NHS chairs, chief executives and directors of finance Sir David confirmed that total NHS spending will be “protected in real terms”.

Sir David also said that primary care trust allocations for the next financial year will be announced in December.

He also said that the assessment of the “£15-20bn quality and productivity challenge had been borne out” and reassured managers that “every penny of those savings will be available for reinvestment in frontline healthcare”.

Clarifying the terms of the settlement, Sir David said it “will still provide sufficient capital for the major public capital schemes already approved nationally to continue and for the NHS to keep up essential NHS maintenance expenditure”.

A total of £2bn of additional funding for social care from the Department of Health and NHS funding was announced today by chancellor George Osborne. In the letter Sir David confirmed that there will be a £1bn “redistribution” from capital revenue to “support greater integration between health and social care”

He said that additional revenue for commissioners to spend on social care would also benefit health. He said: “This upstream expenditure in meeting the needs of vulnerable people will represent a better quality and more efficient service across the health and social care system, preventing the need for greater expenditure downstream in acute healthcare.”