About £80billion will be distributed to family GPs in a move that will see strategic health authorities and primary care trusts scrapped.
The plan, contained in a white paper to be published next week, is designed to place key decisions about how patients are cared for in the hands of doctors who know them. Tens of thousands of administrative jobs in the health service will be lost as a result.
At present, funds are given by the Government to primary care trusts, which pay for patients from their area to be treated in hospital.
Under these plans, GPs — who are currently not responsible for paying for hospital referrals — would receive the money instead and pay the hospitals directly.
The change will be compulsory.'