Keir’s Kitchen: NHS cuts served cold

Wow, what a week for the NHS. On the weekend of 8/9th March, I was dipping in and out of an HSJ podcast which had been published on 28th February and was titled “The decline and fall of NHS England.” The main topic of conversation at that point in time was the announcement of Amanda Pritchard’s rapid departure, but to give credit to the contributors, they questioned whether the writing was on the wall and whether this would mark the end of NHS England. I hadn’t seen the article, but apparently Wes Streeting has said in an interview with HSJ that “if NHS England did not exist, I would not feel the need to invent it.” He is very much on record also questioning why NHSE and DHSC co-exist, and I, for one, would also struggle to give you a list of key differences between the two. Certainly, their functions are similar enough whereby one of them could probably absorb the other, much like a Spanish language teacher could teach Portuguese with minimal additional study.

But I, for one, was not expecting the speed and severity of the announcements last Thursday, that NHS England would be abolished and ICBs will have to cut their costs in half by December 2025. I have spoken to a lot of contacts over the last week and what has become clear is that there was no real advance warning of what was coming. ICB chief executives were briefed in calls on Wednesday 12th March that they would need to cut 50% of their costs by December, and the next morning Keir Starmer announced the ICB cuts plus the abolition of NHSE on live television. That’s a pretty brutal way for the 19,000 NHS England staff to find out their jobs were at risk, and not exactly compliant with legal and HR frameworks, but the government clearly felt the need to make a big political announcement. My thoughts go out to all of those who are personally affected and are now in a state of limbo as organisations await further advice and guidance. Whilst there is undoubtedly duplication between NHSE and DHSC, and in Wes’ words, an imbalance of “doers vs checkers,” there are a lot of very talented and dedicated NHS managers performing valuable roles at regional and national levels, and they deserve to have been treated better.

The changes will also come as worrying news for the interim market. We have been experiencing low demand and rising supply for a couple of years now, and I came into 2025 with genuine optimism for 25/26, given the £22bn additional funding and the promised publication of the 10-year plan. But the £22bn will be swallowed up by pay awards and inflationary pressures, and I am even more sceptical about the NHS delivering any kind of strategic plan when it plans to cut large swathes of NHS managers at the same time. The changes to ICBs and NHSE will further exacerbate poor market conditions.

Firstly, we have been contending with a major workforce reduction agenda for a while now, and this is set to intensify in 25/26. Many organisations used COVID funding to grow workforce, resulting in larger pay bills and cost bases. This might have been fine had NHS activity grown in alignment with workforce growth, but by and large, it has not, which has represented a decline in productivity for many NHS organisations. You can imagine the conversations at Whitehall, as the Treasury observes a public service which is costing more and delivering less. Julian Kelly presented a report to the NHS England board in May 2024 highlighting this productivity problem, and the topic has featured heavily in our conversations with NHS Trusts in 24/25. Take it from me, selling recruitment solutions to organisations under heavy pressure to reduce workforce is like trying to pull off a table tennis serve into a gale.

Secondly, we are about to see a huge influx in supply.

A couple of people have estimated to me that circa half of NHS England staff will face genuine redundancy, and the other half will mostly TUPE to DHSC, with some functions potentially being delegated down to ICBs. That’s around 9,000 redundancies from NHSE.

ICBs, in a sense, have a tougher challenge. They have just about paused for breath after making 30% cuts, only to be told they must find another 50%. It must feel like finishing a half marathon, only to be told you need to keep going and run a full marathon — and can you pick up the pace as well, please? You can’t find 50% through tinkering and shaving, and so ICBs will need to review what functions they currently provide and which will need to go. Their predicament is made even more difficult by the lack of advice and guidance coming out of the centre. As a layperson, I assumed that somewhere in the depths of government, teams would have been working in recent weeks to produce guidance and policy for ICB leaders, to tell them what the government feels their future looks like — and thus what form and function they are likely to have in 1, 2 and 3 years, and what they need to restructure, and what functions and departments to cut. But apparently, there has been no guidance, and ICBs are not even sure what functions may TUPE down to them from NHSE, and thus what their starting point would be from which to cut the 50%. It must feel like cooking a meal with only half the ingredients and no recipe.

In reality, the 50% cost reduction target will force consolidation. The largest ICBs are five times as big as the smallest, and for the smallest, cutting 50% creates major inefficiencies of scale in terms of the cost of the leadership team, estates, and back-office costs, etc., as a percentage of overall budget. The sensible answer will be to merge with larger neighbours, and I think we will see a wave of ICB mergers, not dissimilar to the pattern of CSU consolidation we saw between 2013 and 2020, when the original 23 CSUs eventually consolidated down to 4.

It’s safe to assume that roughly half of the 25,000 staff currently employed by ICBs will face redundancy, which means that circa 12,500 ICB employees, plus the 9,000 redundancies from NHSE, is around 21,500 staff in total.

In the short term, the programmes of redundancy will happen on a staggered basis, but they will provide a gradual supply of NHS managers who are at risk, and these individuals will be first in line for any opportunities arising with trusts. This will mean those trusts have less need to come to the external interim market unless they require a real SME who does not sit in the pool of at-risk NHS employees.

In addition, when redundancies have been completed, there will be a large cohort of ex-NHS managers who will be thinking about what to do next, and many of them will consider interim work. I speak from 15 years’ experience in the market, and we know very well that redundancy and a financial cushion to support a search are the origin circumstances for many an interim career. I suspect we will see many enquiries in the coming months and, of course, we will be happy to register new candidates and provide frank and honest advice on working as an interim. But an influx of new supply represents increased competition for existing interims for new roles. Supply increases against fixed demand deflate prices. And this will be particularly true in the interim market because those newcomers will have greater familiarity with, and acceptance of, fixed-term contract arrangements, as they have never known an interim market of day rates — and for many of them, there is a lack of financial impetus to drive higher remuneration when they have received a redundancy payout.

So I feel we have another tough year ahead in 25/26, but if there is a positive, it could be this: at least this next round of cuts will be deep and it will be swift. When we come out the other side, perhaps then we will have finally reached a new baseline number for the NHS workforce, and when there are no further cuts, and when the 21,500 redundant staff have either retired or been seconded and employed, then the very next requirement after that might just need an interim manager.

As for me, I need a total diversion from all of this drama in the NHS. I’m off to watch more Beast Games on Amazon. Have you seen it? It’s a game show with an autocratic presenter who needs to whittle down the number of contestants as quickly as possible. Catch you next month.