Concern is growing over government plans to streamline the NHS that would fundamentally alter the allocation of a "crucial" funding package to universities.

Under the proposals from Andrew Lansley, the health secretary, strategic health authorities (SHAs) - which arrange contracts with universities to train nurses, midwives and other professionals such as physiotherapists - would be abolished.

According to experts, the contracts are worth hundreds of millions of pounds to the ÖйúAƬ sector and no firm plan is yet in place laying down who would plot future training and allocate funds.

It is thought that about 80 or 90 ÖйúAƬ institutions could be affected, with eight universities currently having a "considerable" reliance on funding from the Department of Health.

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One senior university manager, who did not want to be named, said he believed Mr Lansley had largely ignored the effect on ÖйúAƬ when drawing up his White Paper, Equity and Excellence: Liberating the NHS.

Under the proposals, control of many funding decisions taken by SHAs would be handed to local GP consortia, but critics argue it would be too complicated for them to negotiate with universities. Alternative arrangements have been mooted, under which decisions on nursing and midwifery training would be taken nationally, but there are worries that important regional planning would then suffer.

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Howard Catton, head of policy at the Royal College of Nursing, said a consultation on the proposals was planned, but he was "very concerned" about the issue.

"We think the pressures that local employers are under often mean that they will be looking more in the short term. In terms of workforce planning, that national oversight is very important," he said.

Les Ebdon, vice-chancellor of the University of Bedfordshire, which receives about ?8 million a year under current arrangements, said it would make sense for the ÖйúAƬ Funding Council for England, which deals with training budgets for doctors and dentists, to allocate funds.

Whatever solution was agreed, he said, the problem could be timing and avoiding yet more funding uncertainty for universities as they deal with massive government cuts.

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"There is a danger that you could end up with a year or two where there aren't clear arrangements; SHAs are abolished and among all the other things the government has on its plate, something else is not put in place," he said.

In Universities UK's submission to the Treasury on the Comprehensive Spending Review, it warns the coalition not to forget the sector's reliance on funding from other government departments.

It said that in 2008-09, 12 per cent of all public funding for the sector came from outside mainstream budgets, including ?740 million for health training.

"The impact of policy decisions outside of the immediate ÖйúAƬ and science budgets thus has serious implications in terms of the availability of funds in future years," the document states. "Future arrangements for funding in key areas need to be made clear."

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simon.baker@tsleducation.com.