NHS organisations charged with both allocating and spending the NHS’s £5bn education budget will be “mostly” trusted to manage any “competing interests” themselves.

The Department of Health responded on Tuesday to the NHS Future Forum’s report on education and training and its own consultation on changes to the system.

The DH’s response addressed fears that conflicts of interests could arise in the new local education and training boards. The boards will be formed by NHS and foundation trusts, along with universities.

From April 2013, LETBs will set and uphold local training standards. They will also distribute money to member organisations, which will carry out the training, from a pot currently worth £4.9bn a year.

Concerns have been raised that the boards’ financial decisions will directly affect their member organisations’ budgets, raising conflicts of interest.

The DH document said: “The financial accountabilities must be robust for handling significant funds and the competing interests that LETBs will need to manage.”

It added: “Issues may arise of actual, or perceived, competing interests. It is expected that these will mostly be resolved by the LETB itself, but the system will need to include checks and balances that should prevent any one interest dominating.”

It says LETBs should establish boards with an independent chair in shadow form by this April, before being fully authorised by Health Education England by April 2013.

But information gathered by HSJ shows the majority of the 14 emerging LETBs are already or are planned to be chaired by acute trust chief executives.

South Central’s shadow LETB chair Ed Macalister-Smith, formerly NHS Buckinghamshire chief executive, said: “I do think there becomes significant conflict of interest issues if you have a powerful FT lead running things.

“A large teaching hospital is in a conflicting position… I think that would be quite difficult for others in the system to tolerate.”

University of Birmingham Hospitals Foundation Trust chief executive Dame Julie Moore, who wrote the Future Forum’s report on education and training, agreed an independent chair was best.

But she added: “It’s up to the LETB. I wouldn’t want to be too centrally prescriptive.”

The DH report said LETBs will be subject to “a limited number of national measurable outcomes”, as well as a previously announced outcomes framework that is being developed. An annual education operating framework will be produced.

Foundation Trust Network chief executive Sue Slipman said she was pleased the DH had in general recognised the need for local freedoms. Producing local outcomes measures would be a “negotiation process,” she said.