Labour government cut Hospital funding forcing staff layoffs

The Labour government has implemented a financial "reset" that forces hospital trusts to cut spending and reduce their workforce to balance their books, despite an initial funding increase. While the government provided an extra £22 billion in funding for the 2024-25 and 2025-26 financial years, NHS England has demanded that trusts make unprecedented savings to avoid a projected £6.6 billion deficit in 2025-26.

• Forced Cuts: Hospitals are planning to shrink their workforce by up to 1,500 posts each and cut services, with 37% of trusts already planning to cut clinical posts and 86% cutting non-clinical roles.

• Integrated Care Boards (ICBs): ICBs have been instructed to slash their costs by 50 percent from October 2025, a move that has led to the abolition of NHS England and the merger of its functions with the Department of Health and Social Care.

• Resulting Job Losses: Unison estimates that at least 21,000 roles are due to be cut across hospitals and other health facilities by 2028, with some individual trusts planning to axe thousands of jobs to achieve required savings.

• Funding vs. Reality: Although the budget was raised, the Spring Statement for 2026/27 reduced the average historical funding increase from 4 percent to just 1.8 percent in real terms, leaving the current spending envelope insufficient to match government ambitions.

Labour and the health secretary Wes Streeting argue these measures are necessary to fix a system that inherited a £4 billion gap between ongoing costs and reliable income, while critics claim the cuts threaten patient care and safety. 

Hospital trusts in England are cutting a range of specific services to meet financial targets, including:

• Rehabilitation centres are facing closure.

• Talking therapies and mental health services, including clinical psychiatry support for cancer patients, are being cut. 
• Diabetes services for young people are being scaled back. 
  
• Hospital at home-style "virtual wards", such as one for heart patients in Torbay, are being closed. 
• Beds for end-of-life care are being reduced. 
• Elective (planned) surgery is being reduced, with specific cuts reported in ENT, colorectal, upper GI, gynaecology, and urology procedures. 
• Community services like phlebotomy (blood testing), paediatrics, and sexual health clinics are being reduced or eliminated. 
• Specialist wards, such as a 24-bed unit for older people with dementia, are being closed, with care shifted to generic wards.

Is your local hospital cutting services or planning to close or move services out of hospital?