So it’s official: the rumours of Treasury refusal to pay up the costs of redundancy and early retirement payments for staff whose jobs were to be axed in the planned abolition of NHS England (NHSE) and the halving of staff numbers employed by England’s 42 Integrated Care Boards (ICBs) were true.
Back in June the Health Service Journal reported that the Treasury had explicitly turned down a request for additional funding to cover exit packages in 2025-26; by August ICBs were holding back on redundancy announcements, which they could only afford with Treasury help.
In September NHSE CEO Sir Jim Mackey, who had tried to force the pace of the cuts, and initially demanded they be completed by the end of December, told MPs that he never promised funding would be available to cover the redundancies.
And as October began, Mackey began to broadcast a completely different message, stating that there is now “no rush” to push through the cuts. The result is the worst of all worlds. According to the HSJ Mackey has said:
“We’re still heading towards a similar sort of objective, around the scale of the reduction and… joint working with DHSC, but it’s going to be more of a gradual, managed process now over the next couple of years…”
Thousands of staff, many of them quite senior, have been through the demoralisation of being listed for redundancy, then left dangling in uncertainty across the summer – only to be grudgingly told that they have a limited stay of execution … because the Treasury won’t pay up.
But it’s also because ministers have not yet even got their act together to table the required legislation to push through a shambolic reorganisation (reorganisation being something Labour had always previously said they did not want to carry out).
The NHS has not been given either the funding needed to rebuild services and repair the damage done by 14 years of Tory governments, or the up-front funding needed to cut its running costs. So despite Labour’s massive majority in Parliament, the abolition of NHS England, announced by Keir Starmer, seems set to slip back from the original plan of October 2026 to April 2027.
This must mean increased pressure will fall again on to ICBs and local trusts to make even bigger cash savings if previous NHSE tough talk of balancing the books regardless of the consequences are not also to be discarded in this latest ‘reset’.
Policy Direction?
It’s all a terrible mess. Tough policies are being adopted and then abandoned at increasing pace. Jim Mackey call in March for all trusts that had not done so to outsource their non-clinical staff to wholly-owned companies (subcos): but this policy was publicly abandoned in September.
Ministers don’t seem certain whether they want to integrate the NHS – or go back to the Blairite model of a market, in which all trusts compete with each other, with the weakest going to the wall. But it does seem that they want to exert more direct top-down control over the NHS, even though this will put ministers in the frame for blame when policies go belly-up, waiting lists refuse to fall, and the inadequacy of Labour’s budget funding boost to the NHS is exposed.
In July a hard hitting Health Foundation analysis aptly summed up Labour’s 10-Year Plan, describing the various contradictory proposals within it – many of them resuscitated from the New Labour period (1997-2010) – as “Dazed and Confused”.
It began by highlighting the 10-Year Plan’s focus on turning ICBs into “strategic commissioners” and giving extra powers top high-performing foundation trusts, commenting:
“While New Labour’s market reforms in the 2000s coincided with big improvements in NHS care, the main ingredient was likely the substantial cash injection into the system – around 6.8% real-terms growth in spending each year – that will not be available this time.”
The analysis also gave corrective warnings on other 10-year Plan’s proposals – ‘Transparency and choice will drive performance;’ ‘Shift to provide continuous, accessible and integrated care’; ‘Pushing power out to patients and the public;’ and ‘A ‘more devolved’ NHS’.
At the end of last month a more detailed 83-page Health Foundation report on Labour’s first year in office concluded that Labour might just achieve its promise to reduce waiting lists by the next election in 2029, but warned the direction of the various government decisions and ‘reforms’ so far is unclear:
“Labour was elected on a promise to transform the NHS and reform social care to create a National Care Service in England. The government is only a year in, so it is too early to assess impact. But our analysis illustrates how far the government is from having a coherent policy agenda to make these promises a reality.”
One of the report’s authors, Health Foundation’s director of policy and research Hugh Alderwick told HSJ:
“It’s not clear what the [government’s] guiding theory is. That sounds abstract but it’s quite important. For example, while some of the measures are about competition, [such as] league tables, plurality of providers and patient choice, at the same time, they want to introduce big integrated health organisations and a legacy of collaboration remains. Then there’s the principle of shifting services outside of hospitals, but at the same time a lot of the proposals seem to give more power to hospitals.
“So, when you stand back and try to work out ‘what’s the story for how the health system is going to improve’, it looks muddy, and it doesn’t look like a coherent programme yet.”
Another warning has come from one of the two permanent secretaries of the Department of Health and Social Care, which is set to take complete and direct control over the running of the NHS when NHS England is finally scrapped.
According to the HSJ, Tom Riordan, previously CEO of Leeds City Council, told a Health Innovation North event the only way forward is to “get the NHS up and out and to work in partnership, to work in systems.” He added:
“Alan Milburn is, as you’ll know, an amazing, talented former secretary of state, a really wise, experienced voice. [His] greatest hits are coming out at the moment – the league tables, the performance and oversight …”.
“That’s fine, but it’s not 2001.”
While he is absurdly over-generous in his summary of Milburn, Riordan has a point. Austerity, covid, Brexit – and now Trump – are among the many factors that have made 2025 a different and more complex world from 20 years ago.
Repeating the formulae from the past, however they may have appeared to work then, will not solve today’s problems. And Alan Milburn is no longer a New Labour health secretary, he is a millionaire who has spent two decades enriching himself in the private sector. He works to a different agenda; and he is carefully doing so from a position (as lead non-executive member of the DHSC Board) that means he takes no responsibility if things go wrong.
While Labour dithers, and time slips by, none of the major problems it inherited in July 2024 have been seriously addressed. The crumbling hospitals are still crumbling, with the maintenance backlog still growing; the new hospital plans are still no more than a pious wish for the future; junior doctors still can’t find the specialist training posts they need; newly qualified midwives, physios and other professionals struggle to find work despite staff shortages, GP services are desperately short of GPs, while qualified GPs are unemployed because practices cannot afford to take them on.
Far from opening up a new period of NHS integration and collaboration, Labour has instead followed Milburn, and turned back to the New Labour mantra of competition, private providers, league tables and “patient choice.”
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