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Government to withhold £500 million of healthcare funding

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The healthcare sector is facing a £500 million shortfall as the government freezes proposed funding for hospital building and refurbishment

In a letter seen by The Times, health chiefs say: ‘the Treasury is unlikely to agree further releases of funding’ for the building of a new generation of community hospitals, which was announced three years ago.

It is the first sign of a number of severe cuts likely to be forced on the NHS in the recession, said the paper.

Andy Burnham, who is due to give his first speech as Health Secretary today at the NHS Confederation annual conference, said yesterday that the NHS would face a challenge over the next five to 10 years. However, Burnham sought to allay fears of job cuts or closures following a confederation report warned of a multi-billion pound budget shortfall over the next decade.

In The Times, a spokesman from the Department of Health said there were no plans to withhold funding from the programme, which was assessed on a case by case basis. It was unclear why the department had advised otherwise, he added.

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