2 .10 Some provider savings will be driven by reductions in tariff prices. Payment by Results, introduced in 2003, is the main hospital payment system in England accounting for about 60 per cent of acute hospital income. Under Payment by Results, commissioners pay providers, such as NHS trusts, NHS foundation trusts and private sector providers a national price (tariff) for a given unit of activity multiplied by the number of patients treated. The tariff price varies for different groups of treatments and has traditionally been based on the average costs ('reference costs') reported by each hospital for providing individual treatments. The Department has set the national efficiency requirement for 2011-12 at 4 per cent, and the assumption for pay and price inflation is 2.5 per cent. This equates to an overall reduction in tariff prices between 2010-11 and 2011-12, of 1.5 per cent.
2 .11 The Department introduced a pay freeze for most NHS staff for two years, from 1 April 2011. NHS workers earning less than £21,000 will receive a fat pay rise worth £250 in each year.