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Wes Streeting has admitted that £1bn is a “reasonable ballpark figure” for the cost of redundancy payouts planned across the National Health Service in England.
The health secretary told MPs on the health and social care select committee on Tuesday that he could “justify” the cost given the long-term savings made by reducing the headcount of staff.
His appearance followed the announcement of the abolition of NHS England, which employed more than 15,000 staff, last month in a move the government said would save money and bring management of the health system back into democratic control.
NHS trusts have also been instructed to reduce their “corporate cost growth”, while integrated care boards have been instructed to cut their running costs by 50 per cent from October.
Department of Health accounts show the average cost of an employee redundancy package across the organisation and its agencies was £48,840, in the year to March 2024. The Observer newspaper reported this week that the latest round of staff exists could cost up to £1.2bn.
Asked about the report, Streeting said: “I didn’t think that was an unreasonable ballpark figure, and I would justify that cost on the basis of the fact we will more than pay for that in terms of the savings that are achieved year on year.”
He cautioned that exact figures would not be known until the health department had “confirmed what the ultimate size and shape of the organisation will be, the impact in terms of headcount and how much it will cost”.
Health leaders on Tuesday called on the Treasury to establish a “redundancy fund” for NHS organisations making cuts to staff.
Asked by MPs how the redundancy bill would be paid, Sir James Mackey, the interim chief executive of NHS England, told MPs: “We have just started a discussion with the Treasury about how the redundancy costs are managed, but that’s not complete yet.”
Pushed on whether the money might not come within the current health budget, Streeting replied any decision was “subject to discussion with the Treasury, whose servant I am”.
