NHS England will be abolished with the loss of 9,000 jobs to divert more money to frontline services and bring management “back into democratic control”.
Sir Keir Starmer said an “arms-length” body should not make decisions about the more than £150bn annual NHS England budget as he promised the move would allow the government to deliver better care.
The prime minister warned the state was “weaker than ever” while the health service is operated by an independent body and said the NHS is “overstretched, unfocused, trying to do too much, doing it badly”.
Bringing it back under the department for health and social care would put an “end to the duplication resulting from two organisations doing the same job in a system currently holding staff back from delivering for patients”.
But how exactly does NHS England spend taxpayers’ money, and how much has the government claimed it would save?
What is NHS England and why is it being scrapped?
NHS England is a quango - Quasi-Autonomous Non-Governmental Organisation - an arm's-length body that oversees the budget, planning, delivery and day-to-day operation of the health service in England.
It employs more than 15,000 staff and was set up in 2013 by then-Conservative health secretary Andrew Lansley to give the NHS greater autonomy.
It is funded by taxpayers and is not controlled directly by central government.
Sir Keir said the move would free up cash for doctors, nurses and frontline services, and cut red tape to help speed up improvements in the health service amid frustrations about the pace of change. He added the cuts, which will see the workforce more than halved, will “refocus” the NHS on cutting waiting times across the board.
Where does the money from NHS England come from and how does it spend it?
Public funding for health services in England comes from the department of health and social care’s budget.
The Department of Health and Social Care (DHSC) is a ministerial department which is responsible for developing policies on health and social care in England.
In October, Chancellor Rachel Reeves announced the health and social care budget will increase to £200.5 billion in 2025/26 and its sub-budget for NHS England will increase to £192 billion.
Around 95 per cent of this spending is on daily costs such as staff salaries and medicines. The remainder is allocated to central budgets of the DHSC and its other arms-length bodies.
The NHS spends around £70 billion on salaries each year. According to NHS guidance, the 2024/25 pay grades range from £23,615 in Band 1, up to £121,271 at the highest end of Band 9.
It is unclear what distribution of salaries on the NHS England administrative staff are set to be cut; but even on the lowest end, slashing 9,300 jobs could save at least £219 million in staff pay each year. In the short-term, the government will likely face redundancy costs from letting staff go and reorganising the health departments.
What happens now?
Health Secretary Wes Streeting told the Commons on Thursday he wanted the transition of moving NHS England into the department of health to be completed within two years.
“Today we’re abolishing the biggest quango in the world,” Mr Streeting told MPs.
Mr Streeting said that half of the 15,300 jobs in NHS England’s administrative arm would be cut, alongside half of the 3,300 DHSC positions which work on the NHS.
The NHS is the largest employer in the UK, and the sixth largest worldwide, with 1.5 million staff as of November 2024.
The cuts – estimated to be around 9,300 positions – make up a minuscule fraction of the total NHS workforce, representing just 0.6 per cent of all employees.
Cutting staff “will deliver hundreds of millions of pounds worth of savings”, but the exact figures will depend on how the service is reorganised, Mr Streeting said.
Across the NHS, over 13,400 senior managers are employed as part of infrastructure support, according to NHS workforce statistics. These workers are likely part of the administrative staff at risk of losing their jobs.
The number of senior managers has risen substantially in the past decade, increasing by 51 per cent from 8,876 in November 2014, while the overall NHS workforce only grew by a third.
How long will it take?
The government said work would begin “immediately” to return many of NHS England’s functions to the Department of Health and Social Care.
But the process will not be a quick one and is expected to take two years, Mr Streeting told the Commons.
A new leadership team, Sir Jim Mackey and Dr Penny Dash, will oversee the transition, while “reasserting financial discipline and continuing to deliver on the government’s priority of cutting waiting times”., the government said.
How much will the government save?
Mr Streeting said the abolition of NHS England will generate £100m in savings.
The prime minister’s official spokesperson said: “A more efficient, leaner centre will free up capacity to help deliver significant savings of hundreds of millions of pounds a year, which will be reinvested into frontline services to cut waiting times for the government's change.”
However, Sir Keir’s spokesperson admitted it may need to make “one off capital investments or upgrades in order to release savings in the budget”.
