Steve Barclay ordered cuts to existing budgets to fund the pay increase given to NHS workers

Steve Barclay has been ordered to make cuts to help pay for a pay rise for NHS workers amid a dispute over where the money will come from.

The Health Secretary will need to find an additional £4bn within existing budgets to fund a new pay offer for nurses, ambulance workers and physiotherapists.

The Treasury can step in with new funds if cost cutting and redirection of existing spending are not enough to reach the figure.

Downing Street confirmed yesterday that the new offer will require an additional £2.7bn for this year (2022-23) and £1.3bn for next (2023-24).

But ministers stress that front-line services must be shielded from any cost-cutting measures.

Barclay is understood to believe money is still being wasted on unnecessary NHS bureaucracy and more can be cut to unlock funding.

There may also be lots of money in certain areas, like funding or research, that hasn’t been spent enough.

Yesterday there was confusion about where the money will come from to pay for the new offer.

The GMB union, which represents ambulance workers, said it was assured during talks that it would not come from the health department’s existing budget and that new money would be provided by the Treasury.

Rachel Harrison, the GMB’s national secretary, told the BBC’s Today program that union negotiators were assured that the funding for the 5 per cent pay increase for 2023-24 would not come from the existing health budget.

She said that this was a condition set by the GMB and some other unions.

She said: “We wanted to be sure that this was additional money and that it would not come out of current NHS budgets and that was the commitment that the government gave us.”

“We were told this would be additional money and would not come out of existing health budgets.”

But when Deputy Prime Minister Dominic Raab was asked to confirm this in his interview, he declined, suggesting it would come from existing budgets.

Pressed on whether the health department would get new money, he said: “I think the expectation will be that the budget is in place, provides enough resources.”

A spokesman for Number 10 said talks about where the money would come from were ongoing.

They said: ‘The Secretary of State has said that we will look at areas of underspending and discuss these things with Treasury in the normal way.

“As expected, the Treasury and Health Departments will now work together to resolve any new funding needs as normal, but we have made it clear that this will not affect frontline services.”

They added: ‘This [money] it will not come from patient-facing services… We are committed to ensuring that this has no impact on front-line services or the quality of care that patients receive.’

On Thursday Mr Barclay said: ‘We are very clear that this will not come from patient-facing aspects.

“Of course, we’ll look at areas of underspending, areas of administrative savings, and we’ll discuss this with Treasury in the normal way.”

Funding for a 3.5 percent salary increase next year has already been included in the existing health department budget.

The health unions agreed to pause the strikes and vote members on the new offer.

The ministers hope that it will be accepted and an end to the strikes that have caused the cancellation of more than 140,000 operations and appointments.

If the offer is accepted, the 1 million employees on the Agenda for Change contract will receive a 5 per cent pay increase in 2023/24, plus additional pay to the lowest paid to bring them in line with the national living wage.

Each worker would also receive a 2 per cent unvested back pay for 2022/23 and a ‘Covid recovery bonus’ averaging 4 per cent.

It means staff would receive a one-time payment of between £1,655 and £3,789, on top of the £1,400 consolidated pay increase already in place for 2022/23.

The new offer also includes midwives and stretcher-bearers, but not assistant doctors, who have a different contract and who staged a three-day strike this week seeking a 35 percent pay rise.

Downing Street asked them yesterday to stop strikes and enter into pay negotiations as nurses, ambulance workers and physiotherapists.