The Department of Health is preparing to announce that NHS organisations will be compelled to implement guidance issued by the National Institute for Clinical Excellence, but it has said no new money will be made available to fund the provision of drugs and treatment recommended.

A DoH spokesperson said: 'The government does not feel that there should be any administrative or financial blocks to patients receiving the treatments that NICE recommends. We are, therefore, preparing to implement our [sic] manifesto commitment to place statutory obligations on the NHS to fund drugs and treatments recommended by NICE.' But money already in the system will have to fund the decisions, she said.

NICE chief executive Andrew Dillon admitted that the impact of the institute's guidance to date is still difficult to assess. Data on the level of prescriptions issued following the guidance has in some cases not been subtle enough to draw firm conclusions. However, given the 'level of noise' following the publication of NICE guidance, he said it was safe to assume it wasn't simply being ignored.

Researchers at York University are to carry out a two-year study into individual clinical departments to assess the significance of the institute's work, with interim results expected next year. According to Professor Alan Maynard, director of York's health policy group, NICE guidelines are already distorting clinical priorities.

'We have a situation where health authorities are having to decide which services they are going to cut in order to fund the recommendations coming from NICE, ' he said. 'I would like to see some system where the funds for the recommendations are given to NICE itself. It would then have to take on the responsibility for this question of resources.'

The view was echoed by Nigel Edwards, policy director at the NHS Confederation: 'If guidelines do become compulsory then when NICE does have a topic to examine, it has got to ensure all the possible treatments are examined. Otherwise, with a limited number, it is just going to become a big gain for a small group of drug companies whose product is being recommended.'

The King's Fund has reservations about the future role of NICE. It praises the institute's work on examining cost-effective treatment, but says topic selection and subsequent guidance in the context of limited resources raise issues about what the clinical priorities of the service should be.

'For all NICE guidelines there is always the issue of whether there are enough resources available, ' a spokesperson said. 'What we really need is someone to stand up in government and admit that rationing takes place in the NHS.'

The institute has dismissed proposals that it should become independent of government control, with Mr Dillon arguing that politicians are ultimately accountable to the public and should have the final say on the work the institute carries out. With the parliamentary recess over, health secretary Alan Milburn is due to respond to recommendations from the Kennedy report into heart surgery at Bristol Royal Infirmary which called for NICE to 'be at arm's length from government'.

But while Mr Dillon broadly supports the report's view that NICE should have an exclusive say over clinical standards, he is keen for the organisation to retain its status as a special HA and 'remain within the NHS family'. 'I do not have any complaint about ministers setting what we should do - after all, they pay for us, ' he added.