The Department of Health has admitted defeat over plans to create a tariff for end of life services provided by the voluntary sector.
Speaking at a public accounts committee evidence session on end of life care yesterday, NHS chief executive David Nicholson said the department had been intending to draw up a national tariff but this was proving "almost impossible to do".
"It's simply not going to be done over the next three to four years," he said, adding that the department was backing local tariffs such as a scheme drawn up by primary care trusts in North London as "a better option for people going forward".
Mr Nicholson blamed variations in historic patterns of service and individual patterns for the problems setting the tariff.
His comments came as the public accounts committee considered the National Audit Office's End of Life Care report, which found that more than£100m a year could be saved and invested in community services by improving end of life care commissioning and provision.
Mr Nicholson also signalled that PCTs that were failing to agree multi-year contracts with hospices - one of the report's strongest criticisms - would find themselves in the firing line.
He said: "It's not acceptable for PCTs to contract on a yearly basis with the voluntary sector in this way."
Mr Nicholson said PCTs had exercised caution in the past because of financial concerns and one-year funding allocations.
But he added they now had allocations for two years and "a view" about the three years after that, meaning they had "no excuse" not to work on longer-term contracts.
"We're going to monitor it and enforce it," he said.
The NHS has entered into a "compact" with the voluntary sector to work to three-year contracts.