Redundancy costs associated with plans to merge NHS England with the Department of Health and Social Care – cutting 18,000 jobs as part of the wider process, could reach £1.3bn, MPs have been told.
An update on the reorganisation plans from DHSC perm sec Samantha Jones to members of parliament’s Public Accounts Committee gives a redundancy-cost estimate of “approximately £1bn to £1.3bn” for the project, first announced in March.
July’s 10-year Health Plan for England confirmed the aspiration for a 50% cut in “central headcount” to result from the merger. As of March, DHSC had around 3,500 staff in the core department, while NHSE had some 15,000.
Jones told MPs that the government’s ambition remains for that 50% cut in staffing to be realised by March 2028.
The overarching job-reduction target of 18,000 includes headcount cuts at Integrated Care Boards, which are responsible for planning local health services, working with hospitals and GPs.
In her letter to PAC members, which was dated 11 December but only published by the committee on Monday this week, Jones said the “£1bn to £1.3bn” cost expectation related to DHSC, NHSE and ICB job reductions. She added that the costs would be borne by those organisations and Commissioning Support Units.
Jones said most staff exits were expected to take place in the remainder of the current financial year and in 2026-27.
DHSC launched a voluntary exit programme in April, weeks after prime minister Keir Starmer announced that NHSE would be scrapped.
Jones told MPs that the first 100 DHSC staff to go as part of that programme had done so last month. “Around 250 more staff are due to leave over the coming weeks,” she said. Jones added that final exits as part of the programme would happen in the first quarter of 2026-27.
The perm sec said that as an additional measure, tight recruitment controls had been put in place in both DHSC and NHSE, with work being “actively reprioritised”.
“Only critical roles are being recruited to, and these are being filled internally unless there is a critical skills gap,” she said.
An NHSE voluntary redundancy scheme was opened to applications from December 1-14. Jones said the first exits expected from that are expected from mid-March next year. A similar scheme for ICB staff is expected to be introduced.
“The intention is for as many staff as possible to leave via [a] voluntary mechanism over the next two years, with early exits prioritised,” Jones said. “Final numbers will depend on voluntary scheme applications.”
She said that DHSC was pointedly not looking to merely bring NHSE back “in house” at the department.
“This will not be a simple merger of DHSC and NHSE, where both organisations’ current functions are simply added together,” she told MPs. “Rather, it is a fundamental redesign of the centre to streamline priorities and accountability, eliminate duplication and maximise value, and free up time to focus on delivery.”
She added that the joint executive team for DHSC and NHSE, which went live last month, would “plan future structures to deliver a fundamentally different department”.
Jones said ministers are working with leader of the House of Commons Sir Alan Campbell on an “appropriate timetable” for the legislation that will be required to support the reorganisation.
“I anticipate that the bill will support most NHSE functions and associated resources transferring to the new DHSC, although some may move elsewhere in the health system (for example through the proposed transfer of some direct commissioning services to ICBs),” she wrote.
Jones said planning for the future department is “independent of current restructuring” for the 2025-26 and 2026-27 financial years.