The Operating Framework for the NHS in England 2011-12 has detailed the full extent of the financial constraints faced by the health service.

NHS chief executive Sir David Nicholson said that the NHS tariff will be cut in cash terms by 1.5%, but he also outlined a number of further restrictions on funding.

As soon as next April, the tariff will become a maximum not a set price for treatments, while emergency work will be pegged at 2008-9 levels and payments for additional work will be made at only one third of the tariff rate.

This is likely to lead to haggling over price and cause pain for large trusts; particularly in London where A&E admissions are rising rapidly.

In addition, from next year, hospitals will not be reimbursed for emergency readmissions within 30 days of discharge; although primary care trusts are given the job of securing post-discharge support.

The financial allocations published alongside the framework say PCTs will receive an average cash increase of 2.2% after top-slicing to support social care.

There will be no routine capital allocations, and NHS organisations will be told that they must make "maximum benefit" from any investment decisions; a requirement that will presumably apply to IT decisions.

However, Sir David underlined his commitment to ensuring financial control in the NHS, by saying that PCTs would need to hold back 2% of their allocations – or around £1.8 billion in total – to “create financial flexibility and headroom to support change.”

He also widened the focus of management cost savings, saying that "NHS superstructure running costs" must be cut by a third – or £1.7 billion – by March 2015.

The DH has now given the same date for the NHS to make the much-trailed £15-£20 billion of Quality, Innovation, Productivity and Prevention savings necessary to cope with rising demand and costs.

Alongside this budget detail, the annual managers’ ‘to do’ list focuses on how the reforms outlined in the ‘Equity and excellence: Liberating the NHS’ white paper will be introduced.

In moves that effectively strengthen the centre, it says that the NHS Commissioning Board will be in place in shadow form by the end of 2011-12.

It also indicates that strategic health authorities will continue in more or less their present form through 2011-12.

But it says “it is unlikely that we will be able to maintain 151 fully functional, separate [PCTs]" and a “managed consolidation” into clusters with "single executive teams" will be needed as early as June 2011.

The ‘pathfinder’ programme for GP consortia will be extended and a development fund of £2 per head created.

At the same time, the framework steps up the pressure to push all trusts into foundation status by 2013-14 by requiring them to have a timetable in place by the end of the year.

And it attempts to push the ‘John Lewis model’ of employee ownership in community care, by promoting social enterprises as one future for community services.

What is absent from the document is some of the practical detail of healthcare delivery that has been present in some recent Operating Frameworks.

For example, this year’s makes no mention of the National Programme for IT in the NHS, IT at a trust level, and makes only general remarks about the potential for IT to support change.

Two years ago, the Operating Framework encouraged trusts to invest in infrastructure and wireless networks and was instrumental in starting to shift attention from NPfIT to the ‘Clinical 5’ suite of information systems.

Last year’s framework placed specific focus on the need to take advantage of the NHS’ Enterprise wide Agreements, such as those signed with Microsoft and Novell; both of which have been scrapped by the new government.

However, the framework does say there is an urgent need for better systems in community care and for better information throughout the health service.

Although it says that the forthcoming information strategy will be a “key component” in helping to provide this, the framework says that to encourage its use, the NHS Number will be linked to contractual payments from commissioners by 2012-13.

It says that there is a need for the use of real-time patient and service user feedback to improve quality of care and suggests that SMS texting, kiosks, and patient experience trackers to collect it.

In addition, it says technology can be used to support the Quality, Innovation, Productivity and Prevention agenda.

It flags the use of telehealth and the introduction of digital or online services to deliver greater convenience for patients and to free up face-to-face clinical time “for those who really need it.”

It also reiterates the role of Choose and Book, saying that organisations will need to list services on Choose and Book in a way that allows users to book appointments with named consultant-led teams.

In the foreword, Sir David says: “We must meet these challenges at a time when staff and leaders across the NHS face personal and professional uncertainty about their futures.

“I do not underestimate the scale of what lies ahead, but I have confidence, based on our track record of delivery, that we can succeed.”