In a sign that the NHS may not escape the future squeeze on government budgets, a health service watchdog has warned against making optimistic financial assumptions about the future.
While other Whitehall departments are already facing real terms cuts in spending, both Labour and the Conservatives have pledged to ensure rising budgets at the Department of Health.
But a report from foundation trusts (FT) watchdog Monitor indicated that the NHS is still likely to see budgets tighten.
In a review of the three-year plans set out by the 115 NHS foundation trusts, the watchdog said financial assumptions might "prove over optimistic".
The trusts had forecast continued growth in revenues after 2009/10 - rising by 2.1 per cent in 2010/11 and 1.6 per cent in 2011/12 - with costs rising by 1.6 per cent and 1.1 per cent over the same years.
"Planned growth in income is a continuation of historic trends, but may not adequately reflect the potential for lower future NHS funding in the later years of their plans," said the watchdog.
Monitor has now ordered the trusts to develop a 'downside' forecast for the financial year 2011/12, based on more pessimistic assumptions.
Stephen Hay, Monitor's chief operating officer, said: "Although we have found that NHS foundation trusts are consistently improving the quality and robustness of their financial planning, we are concerned that the plans prepared earlier this year may now prove over optimistic - particularly for the years from 2011.
"That's why we have required all FTs to submit a 'downside' forecast for 2011/12 to us by the end of September. These will outline what their financial plans could look like given a more pessimistic view on funding.
"As funding begins to tighten, areas of financial and operational weakness may start to appear in some trusts.
"It's crucial for foundation trust boards to address these situations early and effectively to meet increased challenges from 2011.
"Boards should be scrutinising plans and ensuring these reflect the possible future financial environment."
Monitor said it would continue to ensure that foundation trusts "are engaged in planning effectively for these future challenges and securing the skills required to meet them".
