The Department of Health is struggling to come up with meaningful measures for allowing access to the £250m performance fund and introducing the traffic-light bandings of trusts and health authorities this summer.

A consultation exercise on the earned-autonomy package and traffic-lighting has drawn sharp criticism from key organisations, including the NHS Confederation, the King's Fund and York University's centre for health economics, all of which are alarmed at the potential problems.

Civil servants are facing a huge task in trying to develop a methodology to determine trusts' discretion with the performance fund, while one HSJ source said the trusts themselves will be faced with having to apply 'Byzantine formulas requiring a higher degree in maths' to gain access to a relatively small amount of money.

John Appleby, director of the health systems programme at the King's Fund, was baffled by the unnecessary complexity: 'They are devising a system that is almost more complicated than that for the budgets allocated to health authorities in total. There must be a more straightforward way of doing it, ' he said.

There is pressure from members of the NHS performance taskforce for the DoH to consider access to the fund and traffic lighting on the basis of an entire health economy rather than individual trusts.

'It is about designing care round the patient, It is about the whole patient experience and not one institution in isolation, ' said NHS Confederation policy director Nigel Edwards.

The confederation has reiterated its concerns at the way trusts and health authorities may be rated, insisting that the idea that 25 per cent of organisations should be given green and 25 per cent red status is 'fundamentally flawed'.

'In three years' time it will be possible to claim that still only 25 per cent of NHS organisations are good enough to be judged green.

This seems to be a potential PR own-goal waiting to happen, ' Mr Edwards said.

Maria Goddard and Russell Mannion of the centre for health economics fear the proposal for several core targets which trusts and HAs must meet could lead to a trust being deemed 'red' because it fails on just one element.

'It may well be de-motivating to ask organisations to meet all of these or else be classified as red, ' they warn in their response to the DoH. In teaching, performance is based on individual departments rather than the higher education institution as a whole, they say.

The performance taskforce is pushing for red to apply to 'serious multiple systematic failure, not just bodies on the chapel floor', Mr Edwards added.

Must do better: the key indicators the DoH says will demonstrate improved performance

The government's consultative circular, Implementing the performance improvement agenda, suggests a combination of core tasks which all trusts must achieve, such as reducing waiting lists and cutting waiting times. On top of this, it suggests a second tier of indicators, such as the number of deaths in hospital for heart attacks and the number of day cases treated.

Health authority core tasks, it suggests, might be reducing delayed discharge from hospital, while additional targets might be reducing smoking and teenage pregnancy.

There are suggestions that some of the long-term performance indicators such as cancer mortality rates will be dropped - partly because they are unlikely to show sufficient improvements quickly enough, but also because these factors are not entirely within the control of the NHS and may be affected by social deprivation.

'In some cases It is what you use and in some It is how you use it, 'a DoH spokesperson explained.