NHS faces more cuts to avoid £10bn shortfall, report warns

Exclusive: Leaked Whitehall document says cancer research and social care could be hit

Health secretary Andrew Lansley has come under pressure from David Cameron to prove he can deliver his NHS reforms. Photograph: Lewis Whyld/PA

A "complacent" Department of Health will face an annual £10bn shortfall unless it speeds up efficiency savings across the NHS and considers cuts to social care and cancer research charities, according to a secret Whitehall report leaked to the Guardian.

The damning report warns that ministers will face an "unpalatable trade-off" between longer waiting times or a massive increase in the NHS budget unless dramatic savings are found.

It also warns that the central reform proposed by health secretary Andrew Lansley – to devolve 80% of the NHS budget to GPs – could have "patchy" results.

The findings are outlined in a blunt letter to Danny Alexander, the Treasury chief secretary, from the Independent Challenge Group, which was set up at the time of the budget in June to question Whitehall thinking.

Departments told to draw up plans for 40% spending cuts

The Treasury has told most government departments to prepare "illustrative plans" to cut spending by 40% - as well as the expected 25% - within the month.


Education and defence have been given some protection, and must produce plans to cut 10% and 20%. International aid and health budgets are being protected.

The full 40% plans are unlikely to be implemented but will inform future decisions on cuts, the BBC understands.

Labour says the news will raise fears about the future of frontline services.

'Swingeing cuts'

The government says cuts are needed to reduce the UK's £156bn annual budget deficit - the amount it must borrow each year to plug the gap between public income and spending.

However, public sector unions are threatening "co-ordinated industrial action" if ministers try to implement cuts as deep as 40%.

BBC political correspondent Gary O'Donoghue said ministers were told by the Treasury at a cabinet meeting in Bradford last Tuesday to draw up what are being called illustrative plans, and have them ready by the end of July.

Sources have stressed that Labour's pre-election plans had already implied cuts of 20% around Whitehall, he said.