Health secretary Andrew Lansley appeared on Radio 4's Today to describe the new Tory-Lib Dem government's priorities for health policy.

A transcript appears below.

John Humphreys: The Tories wanted to ring-fence spending on the NHS; the Liberal Democrats didn’t. Whatever happens over the next five years, there are going to have to be cuts in the way in which the NHS is run, aren’t there?

Andrew Lansley: Let me put it in context. We have come together as two parties, each with our own mandate from the general election to secure the national interest. And that does include action starting soon to cut the deficit, the debt crisis.

’It will not protect NHS from the need to make efficiency savings and control pay and prices in the NHS.‘

The Conservative Party were very clear that our mandate was that we would not let the sick pay for Labour’s debt crisis; that we wouldn’t cut the NHS. If you look at the increasing population, doubling of number of over-80s in the next 15 years (and age is significantly associated with demand, as for social care), so we arrived at the position that we needed to secure the NHS by ensuring real-terms increases in resources each year.

JH: So that’s in real-terms allowing for NHS inflation, which is much higher than normal inflation?

AL: No, we will not allow for any level of inflation

JH: So there will be cuts?

AL: No I don’t think that’s fair to say either. If we protect the real value relative to inflation in the economy as a whole. It will not protect NHS from the need to make efficiency savings and control pay and prices in the NHS.

In the past, there has been a substantial increase in the NHS in pay and prices relative to the rest of the economy Five or six years ago, the NHS was having inflation rising 6-7% a year, where the private sector real economy was rising at 1-2%. That is not sustainable for the future.

What is sustainable for the NHS is that we deliver efficiency saving in the NHS in the same way as in rest of the public sector, but because of the nature of the demands on the NHS, if we reinvest them in the NHS we can use them to deliver improving outcomes for the public.

And it’s an example of the national interest coming through in our agreement is that the Lib Dems have agreed and recognise that NHS resources should increase each year in real terms, but that this will have an impact on other departments.

’If we are going to deal with the future problems and challenges of health and social care, it would be unsustainable if at the same time we were cutting the real value of NHS budget‘

It is very clear that if we are going to deal with the future problems and challenges of health and social care, it would be unsustainable if at the same time we were cutting the real value of NHS budget.

JH: But you are cutting the real value – you’re not going to match the inflation-proof spending of recent years (as in NHS inflation).

AL: No; I said we cannot carry on like that 6-7% inflation in the past. We need to change: so many people across NHS I’ve talked to understand this, and they actually say ‘we can’t go on like this’. There may have been in Agenda For Change a need for one-off increases in pay and comparability in the NHS, but that has happened.

There is not now a basis upon which people in the NHS can expect that it is exempted from the kind of broader pressures, but that doesn’t mean that people in the public sector working in the NHS should get pay rises in ways that are not available elsewhere.

’The real value of spending in the NHS is going to be maintained and enhanced. Real-terms increases means real-terms increases!’

JH: The kind of spending we have seen on the NHS over the past nine years specifically is not going to continue over the next nine years, or five, or whatever you like …

AL: The way you use language is very important. The real value of spending in the NHS is going to be maintained and enhanced. Real-terms increases means real-terms increases! What it doesn’t, and can’t possibly mean - in context, over the last 61 years, spending on the NHS has gone up 4.2% per annum in real terms. We know we cannot possibly do that over the next few years.

’3 to 3.5% annual efficiency savings each year … of course we do need to do that, and we may need to do more, because we have increases in demand in the NHS, and a need to improve the outcomes‘

JH: Labour promised £20 billion efficiency savings over the next few years; is that the kind of figure that you yourself have in mind?

AL: That was planned over the three coming financial years, and implied about 3 to 3.5% annual efficiency savings each year in the NHS. Of course we do need to do that, and we may need to do more, because we have increases in demand in the NHS and a need to improve the outcomes.

We're in a situation where our cancer survival rates are significantly below the European average; where we have 75 percent higher early mortality from lung disease than other countries; where we have a need to support people earlier with dementia and try to prevent their illness getting worse

’People across the NHS know that after a decade when there has been declining productivity and rising inflation in the NHS, the time has come for them to achieve efficiency savings - not to cut the budget but to reinvest”

JH: So to do all those things, you’re going to have to deliver greater efficiency savings than those proposed by the outgoing government?

AL: I think people across the NHS know that after a decade when there has been declining productivity and rising inflation in the NHS, the time has come for them to achieve efficiency savings - not to cut the budget but to reinvest to meet rising demand and improve the outcome.

I think people working in the NHS and who depend on the NHS recognise that in the current financial services, this is a remarkably positive thought. Every penny saved by doing things better in the NHS (which people across the service are keen to do - I’ve been on wards where nurses say ’look what we’ve been able to do by increasing patient contact time’) is a penny than can be reinvested for the benefit of patients.

JH: Experts suggest that you can save a lot by not spending so much money on fancy new hospitals (the Canadians blew up a brand new state-of-the-art hospital to demonstrate how they would save money). We have been obsessed in this country with new hospitals; and politicians are terrified of saying ’let’s close that hospital – really there is no need for it’. Are you going to grasp that nettle and be courageous?

AL: There’s been a pronounced tendency in the NHS in the past to talk about how much we spend on the hospitals budget, the drugs budget, the DH internal budget –

’We are going to stop the removal and closure of local services firstly where it is not justified by clinical evidence; where there has not been the public involvement and engagement necessary; and where GPs as local commissioners of services have not been engaged and it does not meet their demand on commissioning’

JH: There’s never been a single hospital closure that you lot haven’t campaigned against, is there?

AL: We have a healthcare budget and a public health budget …

JH: You’ve been obsessed with new hospitals; are you going to continue to be?

AL: I have campaigned against the closure of local hospital services for a number of reasons.

In our government together with the Liberal Democrats, we are going to stop the removal and closure of local services firstly where it is not justified by clinical evidence; where there has not been the public involvement and engagement necessary; and where GPs as local commissioners of services have not been engaged and it does not meet their demand on commissioning.

The point is not that we don’t have change; but that we have change which responds to local people.

’The issue is not whether hospitals close, but how do services best meet the needs of GPs and patients locally in terms of the services they want and their access to services ‘

JH: So some hospitals will close?

AL: No. Because the issue is not whether hospitals close, but how do services best meet the needs of GPs and patients locally in terms of the services they want and their access to services.

Of course things change in the NHS. In recent year, I have been twice to see the new services at Leeds General Infirmary, where the net effect of their providing new treatments treating heart attacks with balloons and stents rather than clot-busting drugs is that patients are brought there by ambulance where otherwise they might have goner to a local emergency department.

The issue is do you therefore say, ‘we’re changing our services, therefore you should remove access to local emergency departments for people?’. The answer is, no you shouldn’t. There is powerful clinical evidence that access to services, including hospital services, can be part of the most effective way of delivering healthcare.

The point is not to treat what is happening in hospitals as immutable status quo and can never change; the point is for hospitals and community healthcare services and GPs to work together to try and deliver more integrated services, sometimes doing new things in hospitals – sometimes doing new things in the community.

JH: Is it possible at some point in future that a hospital closure would be mooted that you could approve?

AL: Yes, because the issue is whether the local GPs and public are in favour or opposed to it, in terms of whether it delivers good-quality services.

JH: Of course they’ll be opposed.

AL: It doesn’t work like that actually.

JH: It has in the past.