Officials have cancelled further orders from Baxter, and are finalising a deal to limit purchases from GlaxoSmithKline, in an effort to recoup part of a £500m deal with the two companies for sufficient vaccine to cover the entire population.

Ministers have decided to abandon the aim of a universal flu vaccination programme, although they are pursuing the drive to vaccinate children under five as well as pregnant women, people with underlying health problems and health and social care workers.

The mild nature of the swine flu virus, the need for only a single rather than a double dose of vaccine and public suspicion and indifference to vaccination have led to lower take-up than anticipated in the UK and other countries.

The government’s decision – in the context of severe pressure on public spending – comes at a time of similar moves by other countries including France, Germany, the Netherlands and Spain.

Sir David Salisbury, director of immunisation at the Department of Health, said a break clause had now been activated in the contract agreed with Baxter of the US, while discussions were under way with GSK, from which most of the vaccine had been purchased.

Similar formal break clauses were not included in many countries’ contracts with vaccine suppliers, because they were drawn up at a time when governments and manufacturers expected demand would substantially outstrip supply.

However, GSK, like other large suppliers, including Sanofi-Aventis of France, is coming under political pressure to accept a scaling back of previously agreed volumes of orders.

GSK stands to lose tens of millions of pounds alone from the UK renegotiations and smaller amounts from other large purchasers such as France.

The drugmaker had previously estimated total sales of its pandemic flu vaccine across more than 70 countries at £2bn over 2009 and 2010.

It may be able to recover some losses from sales to other countries including in Latin America. Sanofi-Aventis, the world’s largest supplier of flu vaccine, stands to lose significant sales, with smaller losses from Novartis, while other suppliers such as Baxter, CSL and MedImmune – part of AstraZeneca – had lower initial sales and much lower exposure.

The UK and other countries are in talks about making donations of surplus vaccine stocks available to poorer countries and selling excess stocks to richer ones – although there are concerns about the issue of liability in such cases.

Sir David said the UK would keep some surplus stocks, both to prepare for any possible third wave of the pandemic and for a future different infection.

The vaccine contains an antigen to protect the body against the current H1N1 virus which would not be useful against future mutations.

But it has an adjuvant stored separately until just before vaccination, which enhances the body’s immune response and could be stored over longer periods to help fight a future pandemic.

The latest figures from England show that fewer than 3.8m people have been vaccinated against pandemic flu since last autumn, although 12.5m doses of vaccine have been sent out for health services ready to be used.

Already hospitals have been told that they will receive no increase in the amount of money that they are paid per procedure, essentially a real terms cut in the cash they will receive.

Overall, the health service has also been set a goal to make between £15 million and £20 million of efficiency savings over the next four years.

The fact that McKinsey, the management consultancy firm, estimates that to achieve such that a goal would take making 10 per cent of NHS staff redundant and abandoning procedures such as varicose vein operations suggests the scale of the challenge.

Patients’ groups will continue to keep a close eye on the labour government’s drugs rationing body NICE in 2010. Over the last year the National Institute for Curbing Expenditure (NICE) began looking more favourably on drugs which prolong life for terminal patients, as it was instructed to do so by Government.

2009 also saw a number of drug companies come forward with innovative deals that allowed the NHS to pay less for some medicines.

But with expensive drugs for cancer and other illnesses coming through the pharmaceutical pipeline at all times patients will continue to monitor how Nice makes decisions about which drugs it will allow on the NHS.

The Government will scale up its Change4Life campaign, which so far has concentrated on children and families, to focus on adult obesity.

Despite data which suggests that rises in childhood obesity could be levelling off, ministers and health planners are still worried about the strain on the NHS if predictions that half of adults could be heavily overweight by 2050 come true.

2010 should be the defining year for the Swine flu pandemic. Will cases continue to drop or will swine flu return either early in the new year or next winter?

Sir Liam Donaldson, the Chief Medical Officer, warns that we cannot be complacent about the threat that the virus still poses and points to pandemic flus in the 1960s in which death rates were higher in the second winter than the first.

The H1N1 vaccine could be the deciding factor, but to what extent remains to be seen.

Writing on bmj.com, Dr Grills said: “Santa only needs to affect health by 0.1 per cent to damage millions of lives.”

He said the image of a healthier Santa could be very effective in promoting a positive message about diet and lifestyle to the young.

Dr Grills carried out a review of literature and web based material to assess Santa’s potential negative impact on public health.

The investigation revealed very high Santa awareness among children, with children in America stating he was the only fictional character more highly recognised than Ronald McDonald.

Dr Grills also claimed the image of Santa was often used to promote unhealthy products such as soft drinks.

He wrote:”Like Coca-Cola, Santa has become a major export item to the developing world.”

While Santa is now banned from smoking, images of him enjoying a pipe or cigar can still be found on Christmas cards.

Father Christmas could also potentially promote drink driving, argued Grills, referring to the tradition of leaving Santa Claus a brandy to wish him well on his travels.

And in a further blow to one of the central symbols of Christmas, Dr Grills claimed Santa also had the potential to spread harmful diseases.

“If Santa sneezes or coughs around 10 times a day, all the children who sit on his lap may end up with swine flu as well as their Christmas present,” he said.

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GPs are already immunising people with health problems and pregnant women.

But the British Medical Association and labour government have ended talks on children after they failed to agree a deal.

Health visitors and district nurses are now to be asked by local NHS managers to step in – but the programme may will now start in December as planned.

However, the vaccination of the first wave groups, which also include health workers, is continuing as normal as they were covered by a deal that was brokered in early autumn.

It is thought the latest talks broke down over the amount of flexibility the government was willing to give doctors over the rest of their workload.

Negotiators had offered doctors £5.25 per dose – the same as they are getting for the first priority group.

But the BMA had argued doctors should be given leeway over fulfilling their obligations on access to appointments.

Under the terms of their contract, doctors are paid bonuses to give most patients appointments within 48 hours as well as allowing them to book in advance.

Without this, the BMA argued vaccinating 3m children during the busy winter period would leave doctors out of pocket – doctors consider young children to be time-consuming as parents often have to be reassured.

Dr Laurence Buckman, chairman of the BMA’s GPs committee, said: “We sincerely wanted to be able to reach a national agreement. Unfortunately this has not been possible, because the government would not support adequate measures to help free up staff time.”

“At the busiest time of the year for general practice, with surgeries already dealing with the additional work of vaccinating the first wave of at-risk groups, we felt this was vital in order to ensure this next phase could be carried out quickly.”

Health Secretary Andy Burnham said the breakdown of talks was “disappointing”, but he still hoped to get the vaccination of children going by Christmas.

It is still possible that some doctors will agree to vaccinate children if they can reach individual deals with their local health managers.

However, the government has asked health chiefs to focus their attention on other NHS workers.

District nurses routinely carry out vaccinations for housebound patients as part of other immunisation programmes, but it remains to be seen whether they will be able to vaccinate large numbers of children.

Health visitors are also likely to be asked to help, but many of them do not have experience of vaccinating and will need extra training.

The British Medical Association believes it will be “very difficult” to get this all in place this year.

And David Stout, of the Primary Care Trust Network, which represents local health managers, agreed there was still a lot of work to do.

“It is more complicated to get separate agreements in place and will take several weeks. We don’t know who will want to do this so from that point of view it is untested. I can’t see it happening before Christmas.”

The number of confirmed deaths for the week ended November 26 were 21, three higher than the week before and two higher than the previous high a fortnight ago.

However at the same time the overall number of people catching swine flu in England fell to an estimated 46,000 new cases in the last week, 7,000 less than the week before.

There has also been a drop in the number of people in hospital, from 783 to 753.

A total of 154 of those being cared for are in intensive care.

The figures are dropping so low that the government said that it was reviewing its online and telephone flu service with a view to withdrawing it after Christmas.

Sir Liam Donaldson, the chief medical officer for England, said that the number of people who have had swine flu or died means the current pandemic is comparable with a normal winter flu season.

But he said: “If you look at the levels you would say they are comparable with a winter flu outbreak but a winter flu outbreak does not kill young people and does not take under-fives into hospital and intensive care on this scale.”

Meanwhile more than a million people at high risk from swine flu have been vaccinated, according to Government estimates.

About a million people in England and thousands more in Scotland, Wales and Northern Ireland have received their jab in the first month of the programme.

GPs are currently vaccinating people at risk – such as those with asthma, heart disease and diabetes – before moving on to the under-fives.

The number of deaths in England now stands at 163 and the UK total stands at 242, up from 214 last week.

Sir Liam said the one million figure did not include health care workers, who have also been having the vaccine.

One million is about one in 10 of all the people in at-risk groups who are being offered the vaccine.

So far, 10 million doses of the jab have been sent out to GP surgeries, primary care trusts and acute hospitals in England.

A total of 14 million doses of the vaccine Pandemrix have been delivered to the Government, with another 2.3 million doses of Celvapan also delivered.

Two of the five have recovered and have been discharged from hospital, one is in critical care and two are being treated on the ward.

The service said the resistant strain does not appear to be more severe than the swine flu virus circulating since the spring.

All patients on the unit have been tested and patients diagnosed with Tamiflu-resistant swine flu have been given other antivirals.

Patients have been isolated or are being cared for in a designated area for influenza cases.

Cardiff and Vale University Health Board has put appropriate infection control measures in place on the unit, the NPHS added.

Staff and patients have been offered swine flu vaccinations, and patients due to come into the unit for treatment are being warned to get the jab from their GP.

Close contacts of the patients are being warned to make sure they are treated quickly if they show any symptoms.

Dr Roland Salmon, director of the NPHS Communicable Disease Surveillance Centre, said: “The emergence of influenza A viruses that are resistant to Tamiflu is not unexpected in patients with serious underlying conditions and suppressed immune systems, who still test positive for the virus despite treatment.

“In this case, the resistant strain of swine flu does not appear to be any more severe than the swine flu virus that has been circulating since April. For the vast majority of people, Tamiflu has proved effective in reducing the severity of illness.

“Vaccination remains the most effective tool we have in preventing swine flu so I urge people identified as being at risk to look out for their invitation to be vaccinated by their GP surgery.”

It comes after it was announced that more than 3million healthy children under five across the UK are to be offered the swine flu jab.

Parents will be invited by their GPs to bring their children into surgeries, with vaccinations expected to start in December.

Health ministers across the UK agreed children aged six months to five years should be included in the next phase of the vaccination programme after GPs have finished vaccinating at-risk groups, including people aged six months to 65 with conditions like asthma, diabetes and heart disease. Pregnant women and frontline health workers are also currently being given the jab.

Figures released on Thursday showed an estimated 53,000 new cases of swine flu in England in the last week, down from 64,000 in the week before. In Scotland, the figure was 21,200, down from about 21,500 in the previous seven days.

The rate of flu-like illnesses diagnosed by GPs in Wales dropped to 36 cases for every 100,000 people from 65.8 the previous week.

Seven swine flu-related deaths were recorded in Wales in the previous week, taking the total to 21.

Wales’s Chief Medical Officer Dr Tony Jewell said people with suppressed immune systems were designated as a priority group for vaccination because they were known to be more susceptible to the virus.

“We have stringent processes in place for monitoring for antiviral resistance in the UK so that we can spot resistance early and the causes can be investigated and the cases managed,” he said.

“Identifying these cases shows that our systems are working so patients should be reassured.

“Treatment with Tamiflu is still appropriate for swine flu and people should continue to take Tamiflu when they are prescribed it.

“It’s also important that good hygiene practices are followed to further prevent the spread of the virus.”

Meanwhile, Norwegian health authorities said they had discovered a potentially significant H1N1 mutation that could be responsible for causing the severest symptoms.

The mutated virus was found in the bodies of two people who died of the virus, although medics do not believe it has been transmitted between humans.

The overall number of new cases showed a second successive weekly fall. Health officials estimate there were 55,000 new cases this week in England compared with 64,000 last week. There was a slight drop in Scotland.

The number of people who have died from swine flu in the UK has reached 214. There were 18 deaths in England last week. The figures since the start of the outbreak in May are 142 fatalities in England, 21 in Wales, 38 in Scotland and 13 in Northern Ireland.

The number of people needing hospital care for the virus is 783, down slightly from 785, in the previous week. Of those in hospital, 180 were in intensive care, up from 173 in the previous week.

The Conservative party has been pressing the government to give vaccinations to healthy children because those under the age of 16 are in one of the more vulnerable groups.

So far the priority groups have included those with pre-existing medical conditions, their carers and pregnant women. Children with asthma or diabetes are already being vaccinated. Now, children aged six months to five years are to be offered the vaccination from next month.

Currently people in priority groups – including young children with asthma or diabetes – are being vaccinated.

But the programme will now be rolled out to children with no underlying health issues, aged over six months and under five .

The UK-wide policy was officially confirmed by the Scottish Government today ahead of a similar announcement in England, expected later.

Nicola Sturgeon, the Scottish Health Secretary, said: “I am able to announce today that the next group in the population that will be vaccinated, or offered vaccination, is children aged over six months and under five years.”

The announcement came as it emerged that an 11-year-old girl from Berkshire who had tested positive for the H1N1 virus died on November 11.

NHS figures show that children under 16 are the age group most likely to be admitted to hospital with swine flu, and 21 per cent of deaths in England are among under-14s.

Last week, the death toll in the UK stood at 182, with 124 deaths in England, 33 in Scotland, 11 in Northern Ireland and 14 in Wales.

Currently nine million people in priority groups are being vaccinated against swine flu including those with long-term illnesses and pregnant women. Frontline health and social care workers are also being offered the vaccine.

Britain has ordered enough vaccine for everyone to have two doses, but data from clinical trials has shown that one dose is effective.

Children have been hardest hit by swine flu and are the under fives are the most likely age group to be admitted to hospital with the virus.

Researchers warned that intensive care beds for children could run out in Britain this winter due to swine flu.

All of Britain’s 303 intensive care beds for children could be filled with swine flu patients this winter and this would leave no beds available for children suffering other illness, recovering from surgery or accidents, according to a study conducted by Dr Art Ercole, of Cambridge University and colleagues.

The research was published online ahead of the print edition of the journal Archives of Disease in Childhood.

Dr Ercole said over half of admissions to paediatric intensive care units (PICUS) are unplanned and respiratory illness is the second largest cause of admission, accounting for around one in four cases.