New NHS regional spending on research and development was halted with immediate effect from this week as the Department of Health diverted funds from central budgets to frontline services, in a bid to meet NHS plan targets.

HSJ understands that all central departments, including the Modernisation Agency, have been asked to find savings of 18 per cent in their budgets. A DoH spokesperson denied that cuts to R&D funding were a result of pressure on finances and claimed the move was a result of the forthcoming abolition of regional offices.

The effect of the ban on new spending, applying to all regions, was outlined in a letter from London region director of research and excellence Professor Sally Davies.

It said: 'As part of the implementation of the NHS plan, urgent consideration is being given by the DoH to ways that will ensure frontline staff in the NHS have the resources they need to improve the quality and responsiveness of healthcare services. In order to release additional funds for frontline services, the central Department of Health budgets, including R&D, have been required to make substantial savings.'

Professor Davies told HSJ that R&D commissioning would be centralised as regions were abolished. But she said: 'This government is looking to where it can make savings. It has been bubbling up for months. At some point a decision was taken to stop the bubbling.'

NHS Confederation policy director Nigel Edwards said: 'It is extraordinary that we become so short-term that we stop funding research in this way, and particularly when some of this work is aimed at how to improve services.'

King's Fund health systems programme director John Appleby said: 'It does appear to be, on the face of it, a decision has been taken that in order to meet the NHS plan targets, they are going to have to put a hell of a lot more money in.'

South Staffordshire health authority finance director Nick Webb said there were significant pressures on the service as it tried to meet targets such as waiting times.