NHS Confederation and NHS Providers demand £3 bn in extra funding ahead of the Budget, warning that failure to cover redundancy costs could force service cuts and worsen waiting times
NHS Confederation and NHS Providers are urging the government to allocate £3 billion in the upcoming Budget funding to cover redundancy and other unplanned costs — or face damaging cuts across the health service. Without this support, key waiting time targets, reductions in corporate expenses, and planned service expansions risk being derailed, say health leaders.
Unexpected costs are unravelling the NHS budget
The NHS has faced three unprecedented cost pressures that were not accounted for in its 2025/26 budget. The series of unexpected costs is slowing key waiting-time targets and derailing the government’s 10 Year Health Plan agenda.
The three unaccounted for cost pressures are:
- Redundancy costs: Over £1 billion is needed to enable integrated care boards (ICB) to reduce their running costs by 50% and for NHS trusts to deliver reductions in their corporate costs. The government asked both in March, after the NHS budget was set, but its upfront refusal to cover the extra costs of the job cuts means NHS leaders cannot cut back as planned and release the efficiencies required.
- Strike action: Recent strike action by resident doctors has led to further unplanned cost pressures, which have been estimated to be £300 million so far. Further strike action, announced late October, is likely to place additional financial strain on the government.
- Higher drug prices: The NHS is facing higher medicine prices due to the US government’s attempts to influence the threshold that NICE sets for a medicine to be regarded as cost-effective for NHS use.
Calculated together, the NHS Confederation estimates that this would put pressure on costs of up to £3bn, which the NHS may be expected to absorb this year.
Waiting times will be jeopardised
In a joint intervention ahead of the Chancellor’s Budget in November, the NHS Confederation and NHS Providers are calling on the Chancellor to cover the costs or risk the NHS having to cut staff and services to make up for the shortfall.
Waiting times will be jeopardised if no intervention is undertaken. The knock-on effect means more patients will wait longer for care, many of whom cannot work without the treatment, reducing tax revenues and increasing benefit costs.
One NHS trust chief executive said that reducing expenditure would undermine the ability of services to cut waiting lists, such as running weekend theatres or adding additional operating lists to boost productivity.
They added: “These are the easiest things to stop when money is difficult, but they have an immediate impact on waiting times.
“The other impact is trusts and ICBs being much stricter on what the NHS will and won’t do, so reviewing procedures for clinical effectiveness and not doing things which we once did. This is affecting procedures which impact quality of life but aren’t life-saving.”
One ICB chief executive said that the December target of implementing the redundancies was now looking “unrealistic”.
They added: “We need to move quickly to confirm a change programme that is realistic within the available resources and provides clarity to staff.
“Distraction and lack of focus at a time of uncertainty remain a significant delivery risk for the second half of 2025/26.”
Another ICB chief executive said that they were concerned about the lack of clarity on how to fund redundancy costs, as well as the “level of psychological harm being caused to the workforce who have been left unclear about how the change requested in March is to be delivered, given the absence of funding for redundancy costs”.
Matthew Taylor, chief executive of the NHS Confederation, said: “NHS leaders are playing their part by delivering record levels of activity and the highest productivity improvements seen in years. They want to crack on with delivering the government’s NHS reform agenda, but they have one hand tied behind their backs because they don’t have access to the up-front money they need to make redundancies that will save the taxpayer money down the line.
“The threat from un-budgeted redundancy payments, higher drug prices and renewed industrial action risks derailing progress on key waiting time targets and the wider reforms that are essential to getting the NHS back on track.”
Daniel Elkeles, chief executive of NHS Providers, said: “The NHS is being left with a stark choice. Either balance the books or cut waiting lists, or face more deficits that threaten services.
“This isn’t where we want to be. NHS trusts are doing all they can to make big savings and to boost productivity. That includes making tough decisions to shed staff while protecting patient services. But redundancies cost money, making it harder to make long-term savings without government support. As the government prepares its Budget, it’s time for an honest assessment and discussion about what the NHS can really achieve this year in these challenging financial circumstances – and about what is ‘doable” to meet ministers’ ambitions in their 10-year plan for health.”
