Steve Barclay ordered to make cuts to existing budgets to fund salary hike given to NHS workers

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

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

The Treasury can step in with some new funding if cost cutting and refocusing existing spending aren’t enough to hit the mark.

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

But the ministers emphasize that first-line services must be shielded from cost-cutting measures.

Mr Barclay is believed to believe money is still being wasted on unnecessary NHS bureaucracy and more could be cut to free up funds.

There may also be pots of money in certain areas, such as finance or research, that are underused.

There was confusion yesterday about where the money should come from to pay for the new offer.

The GMB union, which represents ambulance workers, said in talks it was assured it would not come out of the health department’s existing budget and that the Treasury would provide new money.

Rachel Harrison, the GMB’s national secretary, told the BBC’s Today program that union negotiators were assured funding for the 5 per cent wage increase for 2023-2024 would not come from the existing health budget.

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

She said: ‘We wanted reassurance that this was extra money and that it would not come out of the NHS’s current budgets and that was the commitment the government had made to us.

“We were told this would be additional money and not from 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.

When asked if the health department would get new money, he said, “I think the expectation will be that the budget is set, it provides enough resources.”

A spokesperson for Number 10 said talks were underway about where the money would come from.

They said, “The Secretary of State has said we will look at areas of underspending and discuss these things with the Treasury in the usual way.

“As you would expect, the Finance and Health Department will now work together to resolve any new financing needs in the usual manner, but we have made it clear that this will not affect frontline services.”

They added, “This [money] will not come from patient-centred services… We are doing everything we can to ensure that this does not have any impact on primary care services or the quality of care patients receive.”

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

“Of course we’re going to look at areas of underspending, administrative cuts, and discuss it with the Treasury in the usual way.”

Funding for a 3.5 percent pay increase next year is already included in the health department’s existing budget.

Health unions have agreed to pause strikes and allow members to vote on the new offer.

Ministers hope it will be accepted and the strikes that have led to the cancellation of more than 140,000 surgeries and appointments will come to an end.

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

Each employee would also receive a non-consolidated 2 percent retroactive payment for 2022/23 and a ‘Covid recovery bonus’ worth an average of 4 percent.

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

The new offer also includes midwives and porters, but not junior doctors, who have different contracts and who staged a three-day strike this week to pursue a 35 percent wage increase.

Downing Street yesterday called on them to end strikes and start wage negotiations, as did nurses, paramedics and physiotherapists.