Healthcare 'reset' needed to avoid year-on-year funding deficit

A total reset of the healthcare system in Northern Ireland is needed to avoid a year-on-year funding deficit of hundreds of millions of pounds, the new permanent secretary of the Department of Health has said.

Mike Farrar said he had "every reason to believe" Northern Ireland's health and social care system "could be fantastic", but said there were significant challenges.

There is currently a £600m deficit in the health budget - a third of which is earmarked for the annual pay award.

On Wednesday, Health Minister Mike Nesbitt said his department could be on course to overspend as a result of growing financial pressures.

The money for the pay deal has yet to be found and Nesbitt has now issued a ministerial direction to finance officials to release the funding anyway.

Nesbitt said he would do everything he could to achieve a "break-even budget".

"I do not believe an overspend should be viewed as inevitable," he said in a written statement.

"The risk can be countered through a combination of factors including in-year additional monies, executive-wide prioritisation and a sustained drive by the Health and Social Care system to secure savings and efficiencies.

"I can assure the assembly that I will drive forward savings to reduce the projected shortfall. Members of this house cannot have it both ways – telling me to make savings while also demanding on a daily basis that I increase spending in many different areas."

He said the failure to maintain pay parity for health workers in Northern Ireland with their counterparts in Great Britain would "undoubtedly lead to industrial action", and negatively affect the focus to tackle waiting lists and reform.

"In short, the risk of a potential budget overspend must be balanced against the significant risk to service provision," he added.

Speaking ahead of the Department of Health (DoH) publishing an implementation plan for elective care framework, Mr Farrar said "nothing is off the table" when it comes to cost-saving measures.

"The challenges mainly are expressed as the money that we have available and the challenge that we have in terms of waiting times for care - that's the big one that I think people are concerned about," he said.

The DoH is "determined" to get waiting times "to a place where people aren't being damaged", he added.

In March 2025, Nesbitt said there would be a "cocktail of delivery" to begin tackling Northern Ireland's hospital waiting lists.

The DoH is expected to publish "detailed plans and assessments on the financial pressures this year and the measures that will be needed in both the short and medium terms" in the coming weeks.

Following a series of major building issues in the Belfast Health Trust, Mr Farrar said individual trusts needed to take more responsibility and be accountable when things go wrong.

"[There] isn't any reason why we should accept that these big capital projects need to slip in the way that they have been doing," he said.

Mr Farrar also said the culture within clinical teams within the trust had to change.

It follows an internal review into the culture within the cardiac surgery unit at the Royal Victoria Hospital, which the health minister has described as "appalling" and "entirely unacceptable".

"The responsibility there lies with the leadership of the trust - I'm looking to them first and foremost to deal with that," Mr Farrar said.

The senior civil servant added he would be "giving them space to put this right" and he would be "holding them to account".

"Inevitably if we don't see the progress that we would hope to make… then the special measures regime would come into play."

A former senior leader in the NHS in England, Mr Farrar took up the interim role in April, replacing Peter May who has retired from the Northern Ireland Civil Service.

Mr Farrar was previously the chief executive of the NHS Confederation and Head of Primary Care at the Department of Health in London.

He has also served as chief executive for health authorities in North West England, Yorkshire and Tees.

He has recently worked as a management consultant specialising in healthcare.

In Northern Ireland, he has worked with health service leaders and has also worked internationally on healthcare in the Middle East, Japan, Russia, US, Spain and Australia.