Unpopular decisions about NHS spending should be made locally by primary care trusts, the Social Market Foundation said.

The foundation’s health researcher Barney Gough said the McKinsey report had highlighted the scale of the challenge and some “unpalatable choices” that had to be made.

“With a general election coming up, [difficult government decisions] are going to be put off but it will be important for local managers to start making those decisions [earlier] to make sure they are in the best position to cope with the cuts.”

Mr Gough said PCTs with increasing local accountability were best placed to plan potentially unpopular changes.

He said PCTs needed the power to improve performance within their own areas: “The case for decisions will be made more strongly and credibly by local clinicians and employers.”