Sir Keir Starmer’s plan to overhaul the NHS has been thrown into chaos after it emerged that no money had been set aside to cover the costs of making thousands of redundancies.
The prime minister and Wes Streeting, the health secretary, announced the abolition of NHS England and cuts to regional boards in a major policy speech in March. They said the health service would be more efficient, faster and less bureaucratic as a result.
It was hoped the plan would release an estimated £1.1 billion back to frontline healthcare but the shake-up has stalled amid a row over who should pay the one-off costs of making 12,500 people redundant, estimated at between £600 million and £1 billion.
Integrated Care Boards (ICBs) operate in 42 English regions, overseeing and paying for NHS services at a local level, including those provided by GPs and hospitals.
The boards were ordered to halve their management budgets by December, and were assured by NHS England and the Department of Health and Social Care that the costs would be covered. But no central pot of money for this exists.
Now, some ICBs are refusing to proceed with the cuts and restructures, while others are considering paying for some job losses from local budgets — a move that hospital leaders fear could harm services.
Daniel Elkeles is the chief executive of NHS Providers, which represents English hospitals. He said: “We mustn’t expect redundancies to be funded from money that was supposed to be spent on patient care.”
NHS England is preparing a business case to try to persuade the Treasury to release more money, but any such funding could be delayed until April, the start of the next financial year. This would mean that the salaries of NHS managers who have already been told their jobs are surplus to requirements would have to be borne by the taxpayer in the short-term.
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Insiders said the uncertainty was damaging morale and ultimately putting patient care at risk. Staff affected by the situation said decisions on key services were being delayed because of the pause in redundancies and designing new structures.
“There is no doubt this will cause disruption that affects patients,” one senior manager said. “It will mean delays in decisions being made. In some areas like safeguarding, which is being really badly affected, it could have serious consequences and is a huge risk for patients.”
They said that essential services earmarked for cuts or transfers included emergency planning, special educational needs services for children and continuing healthcare decisions — NHS-funded care packages for patients with serious ongoing medical needs in the community.
One internal ICB document said the redundancy process was unclear owing to NHS England not agreeing the final structures of the boards and uncertainty about funding. Initially, NHS England had indicated there would be a central pot, but it has since become clear this does not exist, it said.
In Greater Manchester, there were plans to make 400 staff redundant, with average redundancy costs of £104,000 each, totalling £41 million. A report to its board said that although NHS England had “raised expectations of a centrally funded scheme, no such scheme has been issued”.
Wes Streeting, Rachel Reeves and Sir Keir Starmer pledged to overhaul the NHS
CHIEF SUNDAY TIMES PHOTOGRAPHER JACK HILL
Similar plans are being pursued at Cheshire and Merseyside, and at Lancashire and South Cumbria.
Herefordshire and Worcestershire, with a £2.2 billion budget, plans to cut up to 200 staff, saving £23 million and merging with Coventry and Warwickshire.
Boards are all aiming to cut their running costs to £18.76 per head of population in their areas. Some have running costs as high as £70 per head.
The false start for the NHS reforms is embarrassing for Labour. It has made fixing the “broken” NHS a key mission for both Streeting and the wider government, which is struggling to show it is delivering on promises made to the electorate.
Streeting promised his plans would make the NHS act faster with less duplication, helping to deliver “savings of hundreds of millions of pounds a year”.
The health secretary has said the measures will slash bureaucracy
CHIEF SUNDAY TIMES PHOTOGRAPHER JACK HILL
Since 2019, corporate costs in the NHS have risen by £1.85 billion, excluding pay and pensions.
In one of his first acts in the job, NHS England’s chief executive, Sir Jim Mackey, told ICBs and NHS hospitals they needed to cut spending because the health service faced a £6.6 billion overspend.
In May, Mackey, who trained as an accountant, told NHS England’s board that changes were needed to cut layers of bureaucracy. But he acknowledged the shake-up was ambitious: “There is no way of dressing this up — it’s a really big, complicated, risky change. We are making informed guesses about how things fit together.”
One senior director at a board in southern England said: “It feels like a total bin fire at the moment.
“I have known for weeks my role will be deleted and we have told other staff they will lose their jobs, and yet we’ve been told the national team is in chaos and there is no funding agreed to pay for it. But they have asked us not to tell the staff, who are all just left in limbo.
“This whole process is creating so much waste and inefficiency for the NHS, which is completely ironic.”
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One worker at a board in the Midlands said: “It is a complete disaster on many levels, and I believe it will set back system transformation work by at least two to three years. It seems clear from this whole initiative that the NHS is in a complete mess and the national leadership doesn’t value its non-clinical workforce at all.”
Online forums for NHS staff reveal similar frustrations. One manager said: “Half of my team of eight are off sick with stress or anxiety and the other half don’t see the point in doing work. It’s such a mess.”
NHS England said it was working out how to deliver redundancy costs as quickly as possible.
The Treasury declined to comment.