The Department of Health has announced £617m has been put into a contingency fund for NHS reform redundancy payments and restructuring costs during 2011-12.
The statement is made in public spending estimates published by the Treasury yesterday. They are published routinely to notify Parliament of spending changes. Supplementary Estimates 2011-12 says that for the DH there has been “an increase in the level of provisions for redundancy costs”.
A DH spokesman said the “increase” referred to was in comparison to the level outlined in the 2010 spending review.
However, the £617m figure never appeared in the impact assessment for the Health Bill.
The statement says the sum “is based on an element of the redundancy and non redundancy costs set out in the revised impact assessment for Health and Social Care Bill”.
The figure given for the increase is £617m. It is recorded as annually managed expenditure, which departments use to account for unpredictable spending. If it were spent this year it would represent a huge jump on the redundancy costs expected.
However, the DH said declaring the contingency did not mean the money would be spent in 2011-12 and it was likely it would not be. A spokesman said: “It is a provision for a future cost.” The spokesman said the contingency was being recorded now because the potential need to spend it was getting closer.
A DH spokesman said in a statement: “This is not new money. Our planned cost for NHS reform remains exactly the same as we published in the impact assessment in September 2011. The short term costs are dwarfed by the £4.5bn we will save over the course of this Parliament and £1.5bn every year after that.”
It is unclear how the change relates to the revised impact assessment for the Health Bill which was published in September and revised down the estimate for the total cost of redundancies linked to the bill, from £1.4bn to between £1.2bn and £1.3bn.
The huge bulk of the redundancies are likely to be for primary care trust and strategic health authority staff. The organisations are due to be abolished next year and the NHS Confederation has warned that low staffing levels are putting the safety of services at risk.
The DH’s overall resource requirement for the year has also increased by around £700m, according to the new estimates.
In October 2010 the DH estimated the total redundancy costs linked to the reforms at £900m.