Government plans to create a £3.8bn pooled fund for health and social care commissioning will take the level of savings needed by the health service in 2015-16 to at least 6 or 7 per cent, NHS England’s chief financial officer has warned.

Paul Baumann told NHS England’s board meeting this morning that attempting savings on that level would be “a heroic undertaking”.

The planned “integration” fund – which was unveiled in the government’s latest spending review – will mean a huge increase in the proportion of NHS budgets earmarked for social care spending.

Mr Baumann explained that there was already £1.7bn of health funding being used “in one form or another” to support local authority funded social care. But he added: “There is an additional £2.1bn – a little bit next year and then a lot in 2015-16 – which needs to be found from existing sources through savings to make that fund a reality.”

He told the board two questions needed to be urgently addressed: “The first of those is what are we going to do with a fund of £3.8bn that will really make a difference in local health economies? How are we going to get this integration concept moving for the maximum benefit for patients, and dare I say it, the maximum efficiency for the taxpayer?”

He continued: “Equally important, if not more important though, is you can’t spend money that you haven’t got. There’s a rather thornier question we need to address which is, how do you generate savings of £2bn on top of all the savings we already have to generate on an annual basis in order to keep going?

“The efficiency level in the system at the moment – the ask on the system – is around 4-5 per cent… That trips up to at least 6-7 per cent when you put an additional ask of £2bn into the system…

“That’s a non-trivial ask. It’s not just a small adjustment to the percentage savings that need to be done, that takes it into a whole different category of the stretch that is required. It’s quite a heroic undertaking.”

He added: “You can’t do that by business as usual. You can’t do it by salami slicing. You can’t do it by incremental gains of one kind or another…

“If you want to invest cash you’ve got to generate it, and that means effectively disinvesting in other activities of one sort or another, and we mustn’t avoid that, in the discussions that we have. We can’t pretend we just generate the money without making changes.”

He suggested this additional financial pressure brought forward the need for the NHS to begin making major service changes, to address what NHS England last week suggested could be a £30bn funding gap by 2020.

“We talked about [NHS England’s] ‘call to action’ being a five to 10 year challenge, possibly longer, in its vision,” he said. “This brings it very much to a 90 week challenge. And I think we’ve just got to square up to that quite quickly.”