Implemented in 2003, the contract aims to improve the working lives of consultants while giving the NHS more control over its professionals.
Since the contract came into place, the NAO report found that consultants' pay has increased significantly.
In 2005/06 the average annual pay of consultants was £110,000, an increase of over a quarter in three years. However, the number of hours they worked for the NHS decreased by 1.4 hours a week, from 51.6 to 50.2 hours.
The NAO's report also found that the number of consultants has increased since 2003, transparency about hours worked has improved and there is greater recognition of the work consultants do.
In negotiating the contract, the NAO claims the DoH did not collect sufficiently robust evidence on the actual hours worked by NHS consultants, leading to workloads being underestimated and undermining the DoH's ability to cost the new contract accurately.
NHS trusts also come under fire in the NAO report; most were found to have not set clear boundaries when negotiating consultant job plans under the new contract. Therefore they agreed more hours than they had budgeted for, leading to cost-overruns, the NAO said.
Sir John Bourn, the comptroller and auditor general, said today: "Consultants are central to the work of our national health service and deserve to be paid properly for the work that they do. However, the new contract was introduced to benefit not only consultants, but patients and the health service in general.
"Although a new contract was needed it is regrettable that the costs are higher than expected and that we are not yet seeing any clear evidence of improvements in productivity or services for patients.
"It is important that trusts are clearer about what they need from their consultants and plan within their resources."
Defending the pay increases, the British Medical Association (BMA) said that consultants are working long and intensive hours for the NHS.
Dr Jonathan Fielden, chairman of the BMA's consultants committee, said: "It has never been easy calculating exactly how many hours consultants work for the NHS. It is clear that their workload remains high, is intensely demanding and exceedingly complex.
"NHS consultants have led on delivering reductions in waiting times and strive to introduce new treatments and efficiencies for patients. If trusts are failing to realise the benefits of the contract it is because they have been distracted by the pressure to balance their books and meet political targets."
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