Questions have been raised over the 'bizarrely low', budget for establishing the new super-regulator.

The Department of Health has estimated that streamlining three regulators into the Care Quality Commission will cost£7m over three years. But sources close to the merger have questioned whether this is enough.

One said: 'These figures have raised eyebrows because at first glance they look almost bizarrely low. It's hugely important that the true cost of the merger is properly spelled out.

'We need to know what size of cheque they're writing for any benefits that a merger might deliver.'

The Care Quality Commission will absorb the Healthcare Commission, Commission for Social Care Inspection and Mental Health Act Commission. It will form as a shadow organisation next October and is expected to be fully running by April 2009.

An impact assessment accompanying the Health and Social Care Bill, published last week, predicts transitional costs of running the watchdog or its shadow organisation will be£1m in 2007-08,£2m in 2008-09 and£4m in 2009-10.

These figures are not broken down, but sources fear they will not cover costs such as redundancy payouts for staff restructuring. The Healthcare Commission has already imposed 47 redundancies.

The DoH will also need to invest in a new IT system and salaries for the shadow commission board, expected to have a chief executive, chair, commissioners and directors.

HSJ understands a DoH 'establishment board', has been created to oversee the changes and is also likely to require funding. Smaller groups are working on different aspects of the transition.

Additional funding will be needed for the existing regulators to carry out any pilot work requested by the shadow organisation.

Fitting out new premises, or moving the three regulators into one building, could be another cost.

The DoH claims the merger will save up to£41m over three years by centralising head office, infrastructure and support services costs.

A spokesman said the£7m included IT, building space, recruitment processes and appointing a chair and non-executive directors.

  • In a separate move to focus regulation more on outcomes than processes, a consultation has been launched on the Comprehensive Area Assessment replacing the Comprehensive Performance Assessment for local authorities in 2009. The CAA will assess the quality of life for people living in a particular area, drawing evidence from bodies including councils and health organisations.