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Rules tightened for health redundancies

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The Department of Health has tightened up the approval process for NHS redundancy payments as the abolition of primary care trusts and strategic health authorities approaches.

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Redundancies are the main tangible cost of the commissioning reform process, which will see primary care trusts and strategic health authorities abolished at the end of March, and there is likely to be high level concern about payments being made unnecessarily.

NHS chief executive Sir David Nicholson announced in a letter last week that DH approval will be required for all severance proposals for very senior managers at PCTs. Previously only SHA redundancies had to be approved.

Sir David’s letter says: “The [old] process was developed at a time when such occurrences were rare. However, the current reforms and subsequent movement of staff mean that there may be an increase in the number of cases over the coming months.

“I am sure you can appreciate that it is vital for me to have an overview of VSM capacity and any proposed changes to this during this critically important period for the NHS.”

The approval process also previously only applied to VSMs who reported directly to chief executives, but it will now also apply to all VSMs who do not. The clustering of PCTs and SHAs means there are more VSMs who fall into this category.

In September the DH’s revised impact assessment estimated the total cost of the reforms at between £1.2bn and £1.3bn, the vast majority of which would be redundancy costs.

However, the department’s most recent estimate – in a quarterly business plan review released in July – shows an apparent increase in the estimated cost of the “modernisation transition programme” to £1.5bn.

The DH has declined to say what makes up the estimated cost as, it said, it “may unduly influence decisions currently being made at local level”.

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