Reeves rejects plea for £1bn of extra cash to cover NHS redundancy payouts | NHS

Rachel Reeves has rejected Wes Streeting’s demand for an urgent £1bn injection into the NHS budget to cover the cost of mass redundancies.

The chancellor’s decision is a setback for the health secretary, who has been lobbying behind the scenes in Whitehall to pay the wages of 18,000 staff who have lost their jobs.

The Treasury has instead allowed the Department of Health and Social Care (DHSC) to exceed its allocated budget by nearly £1bn this financial year. But this is based on the understanding that it will have less cash in 2026-27 and no new cash overall.

Streeting had spent months convincing the Treasury to provide additional funding to enable the NHS to start reducing the roles of its 42 integrated care boards. They were asked to lay off nearly half of their 25,000 staff.

£1bn was needed to enable boards to finally downsize their workforce; This process was expected to be completed by the end of December. It also covers payments to an unknown number of employees in NHS England, which will be abolished and merged into DHSC in 2027.

The process came to a halt due to disagreement over who would foot the bill for the layoffs. The job losses are part of a radical restructuring of health services in England that Streeting ruled out when Labor was in opposition.

NHS bosses in England told ministers last month they needed another £3bn this year to cover the cost of redundancies, junior doctors’ strikes (five days of industrial action starting this Friday) and drug price rises. They argued that all three could not have been foreseen when setting this year’s budget for the NHS.

Sources say the Treasury has offered to strike a deal with the DHSC in which it would provide extra money for redundancies if the department agreed to cover the cost of high drug prices.

However, no agreement could be reached due to the significant extra costs of the drugs.

Streeting will confirm the care board redundancy program has finally started when he speaks at the NHS Providers’ annual conference in Manchester on Wednesday.

The removal of “18,000 managerial posts” on care boards is part of a process to “cut through endless red tape and red tape” that will save the NHS £1bn a year by 2029, the hospitals group will tell.

DHSC confirmed that “funding arrangements have been agreed with HM Treasury and will be within the scope of the existing funding agreement.”

He added that NHS services would be protected: “We will not be cutting any investment in the NHS, frontline or backroom.”

Jim Mackey, chief executive of NHS England, said: “This is good news for NHS staff and patients, allowing our organizations to move forward and providing greater certainty about the future for all our staff and leaders.”

Jon Restell, of Managers in Partnership, a union representing many NHS bosses, said: “Today’s redundancy fund announcement brings to an end months of government inaction that has caused avoidable distress to our members as working people and put care board leaders in an unbearable position.

“The fate of key care board functions, such as maintaining health services, remains uncertain, and executives with digital and planning expertise will be sacked, damaging the government’s own 10-year health plan.”