William Waldegrave has replaced Kenneth Clarke as health secretary in a move seen as an indication that the government does not regard the internal market reforms as a vote winner. It is understood Mr Clarke accepted his new job, at education, reluctantly.

Health authorities in England claim they need an extra£1.3bn to cover expected NHS inflation of 8.6 per cent in the next financial year. They say pay awards and price rises were underfunded by£235m this year. The HAs expect that by the end of the year 3,563 beds may have closed - almost 3 per cent of all acute beds in the country.

NHS deputy chief executive Peter Griffiths has denied widespread rumours that he is to resign his post in the new year to head the future Guy's Hospital trust.

Sources also claim that Yorkshire regional general manager Andrew Foster has already been recruited to replace Mr Griffiths at the NHS Management Executive.

Mr Griffiths acted immediately to dismiss the rumours, He told HSJ: 'I have no plans to move at all.'

Many of the 66 trust applications are 'almost devoid of realistic financial projections', according to a survey by consultants Newchurch and Company. It shows a third of applicants are overspent and the majority are seeking to 'defend' rather than develop services. Their main reason for applying is to raise extra capital and gain freedom for managers.

Sweeping recommendations for more money for community care have been made by the Commons social services select committee. It strongly questions HAs' ability to finance community care developments from land sales. It also calls for the DoH to monitor hospital closures and urges ministers to provide more cash for the mental illness specific grant.