The Department of Health is keeping back up to £870m in NHS funding, HSJ has been told - and is suspected of hoarding the cash to pay for extra initiatives next year.

Uncertainty over those funds, and over the allocation formula for individual primary care trusts, means the NHS will find it even harder to plan in 2008-09.

The figure emerged as strategic health authorities were told that if their surpluses for 2007-08 exceed the£1.8bn projection, they may not be allowed to keep the excess.

Last week the DoH announced PCTs would be allocated an extra£3.8bn next year, an increase of 5.5 per cent.

But October's comprehensive spending review settlement awarded the NHS a 6.7 per cent increase before inflation, implying that there is an additional£870m left in the DoH's coffers.

NHS Confederation policy director Nigel Edwards said: 'Where has the money gone? People thought they were getting 4 per cent real terms, above inflation. You can't just bump it into the system mid-year. It just won't be spent.'

Mr Edwards said he suspected some of the extra funds were being saved to pay for a raft of new initiatives that will emerge from junior health minister Lord Darzi's review in the summer. He was also concerned that funds may have been set aside to pay GPs for extending opening hours, despite recent controversy over high GP pay.

Dr Richard Vautry, deputy chair of the British Medical Association's GPs committee, confirmed it was in negotiation with NHS Employers over the target set in the operating framework for all PCTs to ensure that at least half of GPs in their area have longer opening hours. He said: 'At no time has it been suggested there was more money to support extended hours, but we would be very interested if there was.'

Asked if the£870m would be allocated later, the DoH sent a statement from director general of NHS finance, performance and operations David Flory. 'PCTs will receive additional monies which have previously been held in central budgets and, in addition to this, we have also used the settlement to significantly increase the budgets for dentistry and education and training,' it said.

However, Mr Edwards said increases to training budgets, devolved central budgets and dentistry budgets were not enough to account for the full£870m.

Meanwhile, strategic health authorities have been told they may not be able to keep any extra surplus they generate over the£1.8bn they projected in October.

Mike Farrar, chief executive of NHS North West, which has the biggest projected surplus of£350m, told HSJ: 'We have now agreed a control total with the DoH of£350m. This is unknown territory for the NHS and therefore, if we go beyond our control total, we couldn't guarantee that that money would be returned, but that's not to say it's absolutely not going to be returned.'

At least one other SHA has been set a 'control total' at the level of its second quarter projection.

Mr Farrar said doubts over whether the North West would receive the same level of funding under a new PCT allocation formula in 2009-10 was one reason its health economy had accumulated such a large surplus this year.

In the past each PCT has received a different funding increase to move it closer to its target allocation, which is calculated using a formula that weights indicators of health need such as poverty and age. But for 2008-09 the DoH has awarded all PCTs a 5.5 per cent increase, regardless of whether they are over or under their target allocation. The formula is under review by an independent committee (for more background, click here).

NHS Alliance chair Dr Michael Dixon said it was a 'vote of no confidence' in the current formula. PCT Network director David Stout added: 'On the face of it, the freeze this year is at odds with the commitment to reducing health inequalities.'

Seven out of the 10 SHA regions will remain 'under target' throughout 2008-09. The most under target is NHS East Midlands, where PCTs are collectively 2 per cent, or£127m, under. The three 'over target' SHAs are: London, Yorkshire and Humber and South East Coast. London is the most over target at 4 per cent.