A tough year has ended with news that is no less painful for being inevitable - there are likely to be thousands of job losses in 2010. But despite the implosion of public finances the omens are not all bad.

Both health secretary Andy Burnham’s strategy paper published last week and the 2010-11 operating framework set a target for strategic health authorities and primary care trusts to reduce their management costs by 30 per cent over the next four years. The Department of Health wants about half of this delivered in the next financial year. Natural wastage will not be enough. Money for redundancy costs is being stashed away.

PCTs are an easy target on paper but there will be a price

This means PCTs will have to deliver three difficult objectives simultaneously - continue to improve their performance, use their commissioning skills to drive quality and productivity in hospitals, and do both of those while shrinking by a third.

PCTs are an easy target on paper but there will be a price.

Commissioning will inevitably be compromised, hobbling the ability of the NHS to drive efficiency in the acute sector, which is where the overwhelming majority of the £15bn-£20bn of savings will have to be found.

But the prospects for frontline staff are more encouraging. The unions, the employers’ side and some trusts and SHAs are feeling their way towards no redundancy deals.

This would be a big prize for the unions, and is encouraging the staff side to be open minded about flexible working and retraining.

The DH, trusts and unions are united in believing that spending vast amounts of money on redundancies is a poor deal for patients, taxpayers and staff. NHS Employers is pushing for much closer staff engagement as an essential prelude to finding a better solution.

The alternative to widespread redundancies is tough pay restraint coupled with retraining to deliver a workforce better able to respond to our straitened times, especially the need to move more care out if hospitals.