The transfer of commissioning to consortia and the NHS commissioning board will cost £1.2bn in the next two years, according to the Department of Health’s impact assessment of the Health and Social Care Bill.

The DH estimates that “the future cost of commissioning will be £1.3bn less than existing costs”.

The expected savings mean that the benefits will outweigh the costs of transition by 2012-13.

An additional paper to the impact assessment says that the reforms will lead to at least 15,800 redundancies across PCTs, strategic health authorities, arm’s length bodies and NHS leadership and the DH. The total cost of the redundancies is estimated at £772m.

The assessment predicts that there will be an average of £1.06bn of annual savings made over 10 years due to the reduction in the cost of commissioning.

The DH factors in no costs or benefits for this year, but around £600m will be spent on the transition in each of the next two financial years.

The DH estimates existing costs for primary care trusts commissioning arms as £1.93bn for staff costs and £2.01bn for non-staff costs. While it expects that the annual “commissioning budget running costs” will fall to £2.63bn by 2014.

Non-staff costs for the transition to commissioning consortia are estimated at £323m, or £2.1m per primary care trust. This includes £950,000 per PCT for the transition of IT and £650,000 on double running costs during the changeover.

The impact assessment also outlines the key risks of the reforms to commissioning.  

These are: “GP consortia not having the capacity and capability to engage with and deliver clinical commissioning; Potential conflicts of interest between GP consortia as providers and commissioners of patient care; Potential higher transaction costs as we change the number of organisations commissioning services; The ability of GP consortia to manage risk; The ability of GP to deliver the potential financial savings outlined above.”

An impact assessment for the establishment of the new role for Monitor as an independent economic regulator estimates that this transition will cost £29m.