The Healthcare Commission will have its budget cut by 17 per cent in 2008-09 because of the government's decision to delay the creation of a combined regulator by a year until April 2009.

The delay means the Healthcare Commission and the Commission for Social Care Inspection will have to share a combined pot of£145m intended for a single regulator. Healthcare Commission chief executive Anna Walker said: 'It will require us to do some remodelling of the way we carry out regulation. It is a very significant issue for us a year before the new regulatory team takes over the new functions.'

In 2008-09 the commission will have a budget of£45m, its part of the combined budget, down from£68m in 2007-08. The lower figure does not include£11m ringfenced for the complaints service.

The commission expects to be able make up some, although not all, of the shortfall through greater efficiency. Ms Walker said: 'We are not saying it is dire but we are continuing to talk to the Department of Health about the proper figure to do a professional job. If that is above£45m we will be asking for the money but we are not saying this is impossible.'

Ms Walker said the commission would continue its focus on the annual healthcheck but do fewer and less 'deep' service reviews, despite them 'proving very powerful'. 'We want to focus more and more on the big issues. The government's standards are very detailed and we have said we want to work with them to draw up simpler and more focused ones. It is absolutely crucial for the new regulator to have simpler standards.'

Ms Walker also said the increase in independent sector providers created cost pressures because they are more expensive to regulate. The money the commission gets from the government to regulate non-NHS providers is also capped.

The commission publishes its submission to the Department of Health's consultation on regulation and its merger with the CSCI today. It calls for a continuation of a statutory duty to drive improvement in performance.

Ms Walker said: 'When you look at what organisations such as the Audit Commission and Ofsted do to encourage improvement, it would be very odd for healthcare to only look at the basics.'

The submission makes the case for regulating commissioners as well as providers, something that has been opposed by strategic health authorities.

Ms Walker said this was vital given their monopoly status and to aid integration with social care services. 'There is no question that the regulator will assess social care commissioning, and that's why it should be healthcare as well. It is absolutely crucial and the DoH knows how strongly we feel.'

She also said the new regulator will need a gatekeeper role to oversee different bodies involved in regulation and reduce duplication: 'At the moment all we can do is exhort.'