The NHS is required to make £20bn in efficiency savings by 2015 – an average of 5% each year – to cover the costs of increasing demand for services and new technologies. This is ‘the biggest efficiency challenge the NHS has faced’, the report says. It is also being undertaken as trusts face a real-terms freeze in government funding.

Trusts should not make ‘short-term reactive decisions, particularly if they may compromise services and safety’, according to the report, Delivering sustainable cost improvement programmes.

A ‘more strategic approach is needed’ to cost-cutting, as recruitment freezes and reductions in agency staff are already in place, the inspectors say.

But they found that savings plans across the health service, called ‘cost improvement programmes’, vary greatly in their focus on achieving sustainably high quality services.

Andy McKeon, managing director for health at the Audit Commission, said that ‘success varies greatly from trust to trust’, but there were ‘higher performing trusts’ that have so far been able to ‘deliver savings without reducing quality or patient safety’.

A guide has been launched today, aimed at executive and non-executive directors and finance staff in the NHS, highlighting best practice. It covers 16 organisations – five NHS trusts, ten NHS foundation trusts and one primary care trust.

McKeon said the guide contained ‘proven techniques’ to make savings. These include better engagement with staff around the plan alongside strong clinical leadership and engagement, with ‘clear lines of accountability and performance management processes’.

It also includes a checklist that will ‘help trusts test how well they measure up’, McKeon said. 

Monitor chair David Bennett added that foundation trust boards ‘must put clinical staff at the heart’ of their plans.

‘Delivering cost savings is likely to remain one of the key challenges facing foundation trusts – and the rest of the NHS – for the foreseeable future.

‘The financial challenges facing the economy as a whole means that all trusts need to make sure that they are making every pound go as far as possible so that patients receive the quality care they deserve.’