HEALTH

Intro: The Labour Government’s shake-up of the NHS in England aims to cut waste and shift resources, but the looming funding gap raises doubts about its impact

THE UK Government’s decision to abolish NHS England – the world’s largest quango – was cast as a bold strike against bureaucracy. The move is designed to cut waste, “shift money to the frontline”, and by placing the NHS in England under direct democratic control. It is a declaration of intent from Sir Keir Starmer who wants Labour not to be the party of bigger government but the party of smarter government. That’s the theory, at least. The reality, as with most things in government, is more complicated.

The announcement happens to be less of a grand health reform and more a strategic positioning exercise. Wes Streeting, the Health Secretary, and the architect of this plan, is engaged in a delicate balancing act: convincing the Treasury that the NHS can stay within budget, while simultaneously lobbying for more money that he knows the health service will inevitably require. The cull of NHS England is a useful and headline-grabbing moment. It is one that will allow Mr Streeting to claim that he is shifting cash from managers to patient care, a necessary concession when preparing to argue for more Treasury investment.

The problem is that the numbers don’t add up. The savings from axing NHS England will be modest. The organisation’s cost to the Treasury is £2bn, a tiny fraction of the NHS’s £183bn budget for 2025/26. Of this, about £400m is spent on staff who work directly with local NHS bodies, and these roles will probably continue in some form. The savings come nowhere near enough to fill next year’s estimated £6.6bn funding gap. At best, it frees up a few hundred million pounds. At worst, it shifts costs elsewhere while causing months of upheaval in an already overstretched system.

The NHS faces mounting pressure to cut costs, with the Chancellor, Rachel Reeves, insisting that it must live within its means. Hospital trusts will need to tighten their belts even further. It does not take a health economist to recognise that when resources are cut, patient demand does not magically disappear – it simply resurfaces elsewhere. If community services shut-down to balance the books, then the pressure on GPs and A&E departments will only intensify. If the health service is told to do more with less, the risk is that it simply ends up doing less with less.

Sir Keir’s embrace of Mr Streeting’s reform agenda is a calculated gamble. The PM is backing an NHS overhaul that may not deliver as promised. His endorsement, however, bolsters Mr Streeting’s standing with the Treasury, which faces a looming fiscal shortfall. With tax rises off the table, and Ms Reeves’ fiscal straitjacket firmly in place, spending cuts after 2025/26 seem an inevitability.

The NHS may have won big in the last budget, but as the Darzi report warned, it remains in “serious trouble”. Years of under-investment and overcrowded hospitals, with no relief from an overstretched social care system, have left it desperately struggling. Without greater funding, it cannot meet the rising demand of an ageing population, let alone expand its workforce. The Health Secretary must keep pressing the Treasury for the resources he needs, cloaking each plea for cash in the fashionable language of “modernising reform”.

Such rhetorical agility is a skill that Westminster normally rewards. Consider, for example, how Universal Credit came into being. But whether he delivers on his three big shifts – moving care out of hospitals, prioritising prevention, and digitising the NHS – remains to be seen. If the health service deteriorates further, the government will soon find that it has not only failed to fix the NHS in England but has taken ownership of its decline.