The Department of Health is to conduct a “fundamental review” of its central budgets to determine how much they will be allocated in 2010-11.

The review follows the DH’s attempt to protect the NHS from the Treasury’s £2.3bn clawback from its 2010-11 budget by taking most of the hit from its central funds.

There is an £18bn gap between the primary care trust allocations for 2009-10 and the NHS’s revenue allocation of £98bn. Of that £9bn is held in central budgets.

The department’s business plan for 2009-11 - published earlier this week - shows the most significant areas of central spending in 2009-10 are grants to local authorities to cover social care (£1.2bn), research and development (£900m), primary care contractors (£714m) and the Connecting for Health IT programme (£581m).

Of the £2.3bn to be returned to the Treasury, £500m comes from a contingency fund created when the NHS moved out of deficit in 2006-07, but the remaining £1.8bn represents 20 per cent of the central budgets.

Spending on some areas has already been reduced substantially since 2008-09. Central spending on Connecting for Health will be 12 per cent (£83m) less in 2009-10 than in the previous year. Spending on pandemic flu will be down 35 per cent, from £103m to £67m.

NHS board documents show the DH made a concerted effort towards the end of last financial year to spend central budget surpluses in anticipation of future cuts. The NHS Information Centre’s finance report for March describes “significant pressure from DH departments who appear to be underspent… and are trying to offload surpluses”.