NHS bosses offered £160k redundancy allowed back after six months

NHS managers will be able to return to the health service six months after being paid up to £160,000 to quit.

Some 18,000 office-based jobs are set to be scrapped as NHS England is abolished, while local health boards have been told to cut their staff by half.

Rachel Reeves’s Budget confirmed that the mass redundancies were estimated to cost £860m, which The Telegraph first revealed in March.

The Treasury refused to fund the redundancies out of hand, but has agreed for the money to be brought forward from future Department of Health budgets, documents confirmed.

Thousands interested in redundancy

Thousands of staff at NHS England, the quango which runs the health service and manages the £200bn annual budget, expressed interest in voluntary redundancy earlier this year.

Under the terms confirmed this month, they will be offered a month’s pay for every year served up to a maximum of 24 months.

Salaries will be capped at £80,000, meaning the absolute maximum on offer would be £160,000 for someone who had worked continuously for the NHS for 24 years and now earns more than £80,000 a year.

A previous round of 951 voluntary redundancies and early retirements at NHS England in the year 2022-23 cost the health service £75m, amounting to an average of £79,000 per employee.

However, the majority of staff will be able to rejoin the health service six months later in another role, such as at a hospital trust, without any penalty.

The NHS will only claw back money from those agreeing to leave if they return to a job in the health service, central Government or other health quango within six months.

This increases to 12 months for very senior managers such as executives and directors, or those earning more than £100,000 per year.

Unions have complained about the tough terms on offer, and that only the first £30,000 will be tax free.

The functions of NHS England are being merged into the Department of Health and the move is scheduled to be finalised before April 2027.

Staff from both organisations are expected to leave as part of reforms to improve efficiency and reduce duplication of roles.

However, some employees could choose to wait for compulsory redundancy, the terms of which could be more lucrative.

‘Stand-off’ over the bill

The Treasury confirmed the expected £860m costs would be split equally between this financial year and the next.

The majority of the money will then be recouped in 2028-29 heading into the next general election.

Health officials believe the move will quickly pay for itself, saving £1bn per a year by 2029 – the equivalent, they say, of 115,000 hip and knee operations.

Siva Anandaciva, the director of policy at the King’s Fund think tank, said the “bombshell” decision to abolish NHS England led to a “stand-off over who would foot the bill”.

He said the outcome was “a little unusual” with the Department of Health “given extraordinary permission to reopen and re-profile its Spending Review settlement to front-load redundancy payments”.

“Will this be enough to cover all the costs of redundancy? It is difficult to tell,” he added.

“The best guess is that the redundancy funding will be phased, with a focus in 2025-26 on reducing staffing and running costs in [local health boards], and a greater focus on national body redundancies in 2026-27 as the NHS Reform Bill starts and hopefully ends its journey through Parliament.”

He said if eventual costs are higher than planned, the funding arrangements would have to be revisited again.