NHS chief executive Sir David Nicholson has paved the way for primary care trusts to be merged as a means to make significant savings while implementing the health white paper.

Sir David sent his second letter on “managing the transition” to NHS chief executives at the end of last week. Although the letter warned against “actions that pre-judge” the outcome of the parliamentary process, he said he was “progressing the appropriate changes” to rules which currently prevent non-executive directors from serving on more than one PCT board.

A “frequently asked questions” paper published alongside his letter also described the “considerable flexibility” PCTs already have for joint management arrangements.

Sir David said existing strategic health authority powers meant they could “direct” PCTs to share functions.

Senior NHS sources told HSJ those two points were meant to be taken together as a signal to SHAs to order, where necessary, the de facto merger of PCTs in advance of their abolition from April 2013.

One said the message should be translated as: “The health secretary doesn’t want to lay intervention orders [formally merging PCTs] but we can basically do it anyway.”

NHS Confederation acting chief executive Nigel Edwards said the changes were also necessary to deal with situations where PCT and strategic health authority non-executives left or retired but it did not make sense to recruit a replacement.

The letter from Sir David follows discussions between NHS London and the DH on the merger of London’s 31 PCTs into their six geographic sectors - thought to be the only means by which the PCTs will achieve their management cost reduction targets (see news, page 7).

The NHS chief executive also confirmed the government plans for GP commissioning consortia to be made statutory bodies.

Sir David’s FAQ document states the Department of Health intends to discuss with the British Medical Association how primary medical care contracts for individual GP practices can “best reflect” that requirement and other responsibilities including “ensuring efficient and effective use of NHS resources”.

BMA GPs committee deputy chair Richard Vautrey said it was “clear” this would involve a separate pot of money to that set aside for management costs or the main contract.

PCT Network director David Stout said it was “highly unlikely and undesirable” that a separate pot for such non-management costs would be funded through extra resources. Instead, it would involve a reallocation of cash from parts of the £1bn quality and outcomes framework, he said.

Sir David also used his communication to underline how the changes would impact on the foundation trust regulator Monitor, which is set to become an economic regulator under the white paper plans.

In a statement that a senior source said had “caught Monitor on the hop”, Sir David said the requirement for the regulator to treat all providers the same meant “there would be no separate terms of authorisation and intervention powers in relation to foundation trusts. In particular, Monitor would not have approval rights over decisions… and would not have powers to remove FT board members”.

Nigel Edwards said moving Monitor away from its “eleventh SHA role” would be necessary in order to remove any conflict of interest with its new role in setting NHS prices and policing competition.

But the impact on foundation trusts could be profound as it could entail the end of Monitor’s regular checks into foundation governance and financial performance.

He said: “You’re on a tightrope and no one helps now. It does mean some people will get better at tightrope walking, although some will fall off.”

Sir David’s letter also announced the appointment of SHA level transition leads. Each SHA has appointed a director of provision, of commissioning and so-called “bridging” leads to ensure all parts of the NHS are focused on efficiency (see box and pictures).

Although many of the appointments were from within SHAs, a number were from PCTs and hospital trusts.

Comments left on hsj.co.uk were critical of the number of PCT heads who have now been made SHA provision leads.

However, West Kent PCT chief executive Steve Phoenix, who has been seconded to lead provider development at NHS South East Coast, told HSJ: “If you see the commissioning as predominately about system leadership then what you have is experience across the whole system.”