A total of £2.3bn has been cut from the predicted Department of Health revenue budget for 2010/11 as part of a £5bn efficiency plan across the public sector, it has been announced.
As part of the Budget, the chancellor (pictured) announced that the department's revenue budget for 2010/11 will be adjusted from £104.6bn to £102.3bn.
The government says the savings are a reaction to the current economic climate, but spending will nevertheless rise by 18% in this spending review period, which runs from 2007/08 to 2010/11.
Health Secretary Alan Johnson said: "Better quality, safe health care goes hand in hand with better value for money. Getting it right first time for patients means better care, but also better value for money as it avoids costly follow-ups to put mistakes right.
"For example, our drive to reduce healthcare-associated infections has improved the experience of thousands of patients and has saved the NHS £75m in the last year."
Primary care trusts will still receive the money promised to them in December 2008 for the commissioning of local health services in 2009/10 and 2010/11.
And the NHS will also be able to spend up to £800m of its accumulated £1.7bn surplus over these years for the benefit of patients.