Sir Keir Starmer has announced that NHS England will be abolished to free up more money for frontline services and bring management of the health service “back into democratic control”.
The prime minister said the independent body which runs the NHS would go in a move to slash red tape and dramatically reduce costs by cutting duplication.
Ministers said the plans, which will mean more than 9,000 job losses, would help deliver savings of hundreds of millions of pounds a year, which would be used to cut waiting times.
The Tories tepidly welcomed the move, warning Labour it had to deliver, while health think tanks said that another reorganisation of the NHS risked diverting “time and energy” away from improving care for patients.
Announcing the reform, which marks the deathknell for the Tory reforms to the NHS more than a decade ago, Sir Keir said: “We’re going to cut bureaucracy across the state, focus government on the priorities of working people (and) shift money to the front line.”
In a dramatic and unexpected move during a speech in Yorkshire on slashing regulation and slimming the civil service, he said: “I’m bringing management of the NHS back into democratic control by abolishing the arms length body – NHS England.
“That will put the NHS back at the heart of government where it belongs, freeing it to focus on patients, less bureaucracy, with more money for nurses. An NHS refocused on cutting waiting times at your hospital.”
Under the plans, NHS England, which the government described as the “world’s largest quango”, will be brought back into the Department of Health and Social Care.
The move comes just days after a mass exodus of people at the top of NHS England, including its chief executive and medical director.
Sir Keir said the body had created a huge amount of “duplication” – at a time the NHS could least afford it.
He told his audience: “So if you can believe it, we’ve got a communications team in NHS England, we’ve got a communications team in the health department of government. We’ve got a strategy team in NHS England, a strategy team in the government department. We’re duplicating things that could be done once. If we strip that out, which is what we’re doing today, that then allows us to free up that money, to put it where it needs to be, which is the front line.”
The abolition was welcomed by health secretary Wes Streeting, who said: “This is the final nail in the coffin of the disastrous 2012 reorganisation, which led to the longest waiting times, lowest patient satisfaction, and most expensive NHS in history.
“When money is so tight, we can’t justify such a complex bureaucracy with two organisations doing the same jobs. We need more doers, and fewer checkers.”
The boss of NHS England admitted the announcement was “unsettling” for the organisation’s thousands of staff.
But Sir James Mackey, who will be taking over as ‘transition CEO’ of NHS England, backed its abolition, saying: “We know that while unsettling for our staff, today’s announcement will bring welcome clarity as we focus on tackling the significant challenges ahead and delivering on the government’s priorities for patients.”
Currently 15,300 people work for NHS England, with another 3,300 at the Department of Health.
The Department of Health said that plans to abolish NHS England and return many of its functions to the department would “begin immediately”.
However, the overall process is expected to take around two years.
In his speech, the prime minister warned that scrapping the agency was far from the only “tough choice” he would make.
He said: “Tough choices won’t just stop there. In this era, they will keep on coming. Our task is clear, national security, national renewal, driving change forward with a plan for change, focused on the interests of working people, securing our future together.”
But he also defended civil servants saying the problem was not that they had the “wrong mindframe, or anything like that”.
The Labour leader also confirmed plans to cut the cost of compliance with regulation for businesses by 25 per cent – following weeks of intense criticism from industry over Labour’s Budget hike to employers’national insurance.
He said: “Today I’m issuing a new target for our government. We will make sure compliance costs for businesses are cut by a quarter. That’s 25 per cent compliance costs that are going to go – and they will.
“That’s less red tape, more delivery, renewing our country with growth.”
But health think tanks warned that another reorganisation of the NHS, by scrapping NHS England, risked diverting and distracting staff from the job of improving the NHS for patients.
Hugh Alderwick, director of policy at the Health Foundation think tank warned: “History tells us that rejigging NHS organisations is hugely distracting and rarely delivers the benefits politicians expect. Scrapping NHS England completely will cause disruption and divert time and energy of senior leaders at a time when attention should be focused on improving care for patients. It will also eat up the time of ministers, with new legislation likely needed.”
Sarah Woolnough, chief executive of The King’s Fund, said: “The potential costs savings would be minimal in the context of the entire NHS budget, and so (ministers) must ensure that the changes produce the improved effectiveness which is sought by making this change. As with previous NHS restructures, structural change comes with significant opportunity cost, with staff who would otherwise be spending their time trying to improve productivity, ensure safety, and get the best outcomes for patients, now worrying about whether they will have a job.’
Union bosses hit out at the way the PM announced the job losses, with sources telling The Independent staff employed by NHS England received an internal email just three minutes before .
UNISON general secretary Christina McAnea said: “This announcement will have left NHS England staff reeling. Just days ago they learned their numbers were to be slashed by half, now they discover their employer will cease to exist.The way the news of the axing has been handled is nothing short of shambolic. It could surely have been managed in a more sympathetic way.”
Despite bringing in NHS England, the Tories appeared to cautiously welcomed its abolition.
Alex Burghart, the shadow chancellor of the Duchy of Lancaster, said: “We support measures to streamline NHS management and the principle of taking direct control.”
But he added: “Labour ministers now have nowhere to hide or anyone else to blame on NHS performance.”
In recent weeks two of the most senior members of NHS England staff have announced that they are standing down.
Last week Professor Sir Stephen Powis, the organisation’s national medical director, said he would go this summer, after more than seven years in the role, just a week after the surprise resignation of NHS England boss Amanda Pritchard.
