Foundation trusts are expecting their income to drop by an average 0.8 per cent a year from 2010-11 to 2012-13.

The negative forecasts are set out in foundation trust annual plans submitted to their regulator Monitor. It is thought to be the first time the foundation sector has anticipated income reduction rather than growth.

In the recent past Monitor has criticised foundations for assuming cuts in NHS tariff prices can be offset by simply increasing workload volumes.

Last year, former executive chair Bill Moyes said such growth assumptions amid the recession meant roughly a quarter of foundation trust annual plans were “absolutely worthless”.

This year the least optimistic foundations are acute trusts, which are anticipating a compound annual income growth rate of -1.1 per cent between 2010-11 and 2012-13. Specialist trusts are the most optimistic, forecasting average annual growth of 1 per cent.

Monitor portfolio director Jason Dorsett said the pessimism in the acute sector was likely to reflect the marginal tariff, which sees trusts paid just 30 per cent of the tariff rate for cases over their 2008-09 volumes.

However, Monitor’s review of annual plans, published today, raises an eyebrow at the level of cost reductions foundations claim they will make over the next three years.

Foundation trusts plan, as a sector, to make 4 per cent cost cuts in 2010-11, rising to 4.3 per cent in 2011-12. If achieved, that would allow foundations to increase their surplus earnings ratio from an average 7 per cent in 2009-10 to 7.7 per cent in 2012-13, despite falling incomes.

But the scale of the planned cost cuts contrasts significantly with the scale of cuts achieved in 2009-10, which stand at just 3 per cent. That has lead Monitor to call the plans “challenging” in its report, although it says they are “not unachievable”.

Mr Dorsett said the bulk of the planned cost cuts were from wage bills, as these represent the larger part of foundation trusts’ costs. He added that while most of the plans were “cash releasing” some were likely not to be.

The annual plans also reveal 53 foundation trusts are considering acquisitions, all involving the takeover of primary care trust provider arms.

However, by the time foundations had to approve their annual plans through their board in early summer, only four were certain enough about the acquisition to include it in their financial projections.