Integrated care boards have been told to cut their running costs — most of which is their staff — by 30 per cent.
In a letter to local leaders, seen by HSJ, NHS England said the running cost allowances for ICBs will be subject to a 30 per cent real terms reduction by 2025-26, with at least 20 per cent to be delivered in 2024-25. The cuts will require large reductions in ICB staffing, including through redundancies.
The letter, sent on Thursday evening (attached), said: “This provides time for ICBs to reorganise and gives some flexibility on funding change, with scope for ICBs to go further and faster where possible, enabling resources to be recycled into front line care. No increases to the RCA to allow for inflation in this period are anticipated…
“Setting the central requirement in terms of the overall RCA (which is based on population) for each ICB gives maximum flexibility to determine locally how to configure teams, what functions to outsource, and where to work across multiple geographies. There is no intention to drive changes to ICS footprints through this work but rather to ensure that collaboration is strengthened to enable efficiency requirements to be delivered.”
ICB leaders have been told to expect no extra funding for redundancy packages, or for pay awards in the next two years, meaning cuts will in effect be even higher than the headline 30 per cent, senior sources said.
Some ICBs have already launched redundancy programmes in anticipation of the cuts.
Sarah Walter, director of the NHS Confederation ICS network, said the announcement provided “welcome clarity” but systems now needed “certainty, stability and an opportunity for recovery”.
The move follows months of speculation that ICBs would need to cut their running costs. The merged NHSE, NHS Digital and Health Education England are making a similar level of reductions, aiming to cut posts by 30-40 per cent by April next year, which they say will save about £400m.
HSJ understands there has been wrangling over the baseline, and therefore final target costs, for each ICB. There was variation in staffing levels inherited by each ICB, and some have made reductions during 2022-23.
The baselines are also being adjusted to include NHSE staff who commission primary care services, who are being transferred into ICBs next month.
Late last year, the health and social care secretary ordered ICBs to publish details of staffing numbers and costs. Steve Barclay said the “organograms” would help the “public and those on the frontline understand how money is spent”.
Meanwhile, NHSE CEO Amanda Pritchard has said ICSs will need to “rationalise roles” and use “economies of scale”.
Norfolk and Waveney ICS chair Patricia Hewitt is set to complete her review of ICSs later this month, after being tasked to consider greater autonomy for local bodies alongside a slimmed-down set of national targets.
Speaking to HSJ in December, she said international comparisons suggested the NHS had too few managers but too many administrative staff – which could be reduced with better use of technology – but she was still reviewing the issue.
Ms Walter said cuts to running cost budgets would be more difficult for some ICSs than others.
“Where a number will have already made efficiencies through clinical commissioning group mergers prior to ICB establishment, others who inherited several CCGs are just starting and the proposed flat percentage rate cut to costs should take this into account,” she said.
“ICS leaders will be concerned that this decision could create added risk when the system needs certainty, stability and an opportunity for recovery. Any further restructures will also potentially distract from core ICS business at a time when systems are still finding their feet, having only been established for eight months.
“We hope that following this announcement, ICS leaders will be given the time and space to establish their new working arrangements and focus on their core purpose supporting the improved health of the population that they serve.”
The Department of Health and Social Care was approached for comment.