Redundancy payouts to NHS bureaucrats hit £1.6bn

28 July 2014 -

Coalition’s health-service reforms have led to huge spend on departures of bosses who often end up coming back

Jermaine Haughton

Around 4,000 NHS managers have received large payments to leave their jobs before being rehired later on, it has emerged, as new accounts reveal that government reforms have led to 38,000 “exit packages” costing the taxpayer around £1.6bn. According to the Department of Health, the substantial bill includes “revolving door” managers who left after May 2010 with large payouts – but have since returned, either on full-time or part-time contracts.

Health secretary Jeremy Hunt says that the cost of reform will eventually lead to savings of £1.5bn a year and make the health service more efficient, but Labour has accused the Coalition of putting the NHS deeper in the red by wasting public money on unwanted changes. A Department of Health spokesperson said: “Our bureaucracy-busting reforms put power in the hands of local doctors and nurses and are saving the NHS over £1bn a year. There are now nearly 7,000 fewer managers and over 16,450 more clinicians than in 2010.”

Since last year, a total of 6,330 “exit packages” were agreed for NHS staff, costing the state £197m and taking the total cost of the post-2010 reforms to £1.588bn. In 2013, 237 managers received payoffs of between £100,000 and £150,000, 83 of between £150,000 and £200,000, and 40 of more than £200,000.

Shadow Health secretary Andy Burnham commented: “Labour has consistently said that [David] Cameron's reorganisation would cost at least £3bn and this shows we were right. It explains why the NHS is now in such a financial mess. This scandalous waste cannot be justified when older people are being denied essential hip and cataract operations and when cancer patients are waiting longer for treatment.”

Although the latest figures are substantially lower than those recorded during the height of NHS reform in 2012 and 2013, they do demonstrate that any sweeping changes to the NHS do come with a hefty price tag attached. Most notable among the government reforms was the abolition of the strategic health authorities and primary care trusts last April, giving GPs more responsibility and choice in commissioning services. However, the latest revelations come just three months after press complaints that NHS senior managers have shared more than £300,000 in pay rises as a result of NHS reforms, despite remaining in almost identical posts.

Despite frontline medical staff such as doctors and nurses receiving real-terms cuts in their salaries, Department of Health managers have witnessed a rise in their pay thanks to transfers to new quango, NHS England. For example, figures revealed to Parliament show that John Holden – director of system regulation at the Department of Health – received a 50% pay hike of £40,000 to become director of systems policy at NHS England. Meanwhile, fellow department leaver Ben Dyson, who worked as director of commissioning policy and primary care, had a £30,000 rise even though his title at NHS England stayed exactly the same.

Senior Coalition MPs say that they are aware of the issue. Indeed, last month the government launched a consultation over whether there should be a procedure for recovering public-sector exit payments from high earners if they return to the same area of the public sector within 12 months of leaving. Titled Recovery of Public Sector Exit Payments, the consultation on a range of areas – such as compliance arrangements and taxpayer value for money – closes on 17 September.

Treasury chief secretary Danny Alexander, said: “Taxpayers are rightly concerned when they hear of highly paid public sector employees leaving one job with a substantial pay off, only to return to the same or similar work in the public sector within a short time on a high salary. These measures will reduce the costs of this ‘revolving door’ to make sure that taxpayers are getting value for money and also help protect frontline public services.”

The government has made it clear that exceptions will be made for the Armed Forces, National Museums and some public-sector financial corporations.

For more on the issues raised in this article, download this CMI whitepaper on the impact of management and leadership development in the health and social care sector.