Controversial plans to reform the NHS are costing up to £363 million in the West Midlands.

The region’s primary care trusts have been ordered to set aside the money from budgets in order to meet the costs of reorganisation.

The funds will be used partly to meet the costs of making staff redundant when existing health trusts are closed.

West Midland health trusts have already spent £8 million in redundancy payments in the 2010-11 financial year, according to figures published by the Government.

Money put aside will also be used to set up offices for the new care commissioning consortia, led by GPs and other medical professionals, which will replace them.

Ministers say the money will be easily recouped in the long term, because the reforms will save the NHS £1.5 billion a year by cutting bureaucracy – allowing cash to be ploughed into front-line services.

But Labour claimed hospitals were being forced to hold back funds to pay for costly and unwanted re-organisation.

The potential cost of the reforms is revealed in documents which show primary care trusts have been ordered to hold back two per cent of their budgets for two years in a row.

A draft copy of the business case for the health reforms – which has not been published officially, but has been obtained by Labour – states that the changes will cut administrative costs in the NHS by a third, allowing an extra £1.5 billion a year to be spent on front line services by 2014-15.

In the meantime, local authorities are being asked to hold back £1.6 billion to pay for the reforms – for two years running.

The document states: “Strategic health authorities and primary care trusts are expected to fund their redundancy and other transition costs from local funding arrangements within the two per cent headroom for non-recurrent spend, accumulated reserves, and further savings identified from the budget bundle.

“The two per cent is worth approximately £1.6 billion.

“The costs are therefore funded from within strategic health authority and primary care trust allocations, and this is recognised in current NHS plans.”

The plan refers to the 2011-12 financial year. But a separate document, called the The Operating Framework for the NHS in England 2012-13, reveals that the same will happen in 2012-13.

Total redundancy cost for the NHS across the country will be more than £632 million.