Labour's plan to abolish NHS England and integrate its functions into the Department of Health and Social Care (DHSC) is encountering significant challenges, primarily due to substantial pay and conditions differences between the two organizations. Ministers are now reportedly considering the creation of a new, separate body, dubbed 'NHS England 2.0,' to accommodate NHS England staff, a move that appears to contradict the original pledge to scrap the 'world's biggest quango.'
This shift comes as officials have warned Health Secretary Yvette Cooper that the initial plan is unworkable. A primary obstacle is the disparity in compensation; NHS England managers can earn up to £45,000 more than their counterparts in the civil service. Under current government finance rules, such pay discrepancies would require explicit permission from the Treasury for each staff member exceeding standard civil service pay levels. Cooper is expected to make a decision on how to proceed before legislation is presented to Parliament next week.
The original proposal, announced by former health secretary Wes Streeting in March of the previous year, aimed to return NHS England's functions to the DHSC. However, integrating approximately 9,000 staff has proven complex, with only 1,700 having departed, all through voluntary redundancy. The target deadline of April next year for completing this merger is now considered by sources to be unattainable.
Senior civil servants at the DHSC have a pay band of £86,000-£117,800, while equivalent senior NHS England managers can earn between £112,782-£129,783. At a level below the most senior roles, NHS England employees can earn up to £108,814, compared to a maximum of £78,721 for civil servants in similar positions. Furthermore, NHS England staff have the ability to progress through their pay bands while in post, unlike civil servants who typically remain at the lowest point.
Sources indicate that current Health Secretary Yvette Cooper and Prime Minister Andy Burnham are less inclined towards further centralization within the DHSC than their predecessors but remain committed to the formal abolition of NHS England. The King's Fund, a health think tank, noted the difficulty in merging two entirely separate organizations with differing pay scales, pensions, and contract terms. Siva Anandaciva, director of policy at The King's Fund, warned that implementing such a merger without aligning pay scales could lead to resentment among staff doing similar jobs but earning significantly different salaries.
Anandaciva suggested that creating a 'mini NHS England' within the DHSC could be a solution, allowing for two distinct pay scales. However, he also commented that this approach should have been thoroughly considered before the decision to abolish NHS England was made, citing a lack of clarity from the outset. He described Cooper as being in a challenging position, inheriting a policy she did not originate but must now navigate through Parliament.
Despite reassurances to NHS England staff that they will not face pay cuts under Transfer of Undertakings (Protection of Employment) regulations, their pay progression could stagnate until civil service salaries catch up. A DHSC spokesperson stated that the aim is to reduce duplication and bureaucracy, allowing more resources to reach the frontline and create a leaner, more agile central operation, and that details are being worked through with affected staff.