Last week’s Budget announced that the NHS will have to find £4.35bn in savings by 2012-13.

This includes “up to £1.5bn” through procurement savings and “up to £555m” by reducing NHS staff sickness absences.

A report from the public sector fraud taskforce, published alongside the Budget, said NHS fraud accounted for £263m a year

The savings will be non-cashable because chancellor Alistair Darling used the budget to confirm “frontline” NHS spending would keep pace with inflation. The Treasury has told HSJ “front line” refers to an estimated £98.6bn of the NHS’s resource budget in 2010-11.

At the time of the pre-Budget report in December that total budget stood at £102.3bn for 2010-11. But the Budget report last week cut that to £102.1bn. It also removed £500m from the DH’s total budget for 2009-10. Figures contained in the Budget book suggest only £100m of that has been carried forward for the Department of Health to spend in 2010-11.

A DH spokeswoman said the resource had been returned to the Treasury because the department had “spent less than we originally forecast”. A government source said the returned resource had been part of a DH contingency fund, previously retained to offset against potential extra spending by foundation trusts.

The Budget also announced a fresh target to save up to £3.3bn a year by 2013-14, through reducing fraud against the public sector with an action plan to target savings due this summer.

A report from the public sector fraud taskforce, published alongside the Budget, said NHS fraud accounted for £263m a year - 4 per cent of the estimated £7bn of public expenditure lost to fraud.

But Jim Gee, chair of the centre for counter fraud studies at Portsmouth University and former head of the NHS Counter Fraud Service, said the figure was a “gross underestimate” and that £3.2bn would be more realistic.

Another report published with the Budget on senior public sector pay highlighted that 88 per cent of public employees paid over £150,000 were medics. The report from the senior salaries review body proposed a draft code for establishing senior pay that included contractual flexibilities to cut pay after a period of exceptional duties.