The NHS bonfire of bureaucrats was finally ignited today after Wes Streeting unlocked the £1billion needed to fund 18,000 redundancies.

The health secretary will use the money to axe layers of management across NHS England, the Department of Health and Social Care and local care boards.

Sir Keir Starmer announced in March that he would shut down NHS England - the ‘world’s largest quango’ - as it duplicates work done elsewhere.

It was intended to eliminate waste and free-up money for frontline care, cutting the total number of pen-pushers across all organisations by half.

But the process ground to a halt amid a row over who will cover the ‘eye-watering’ one-off cost of redundancy payments, leaving staff in limbo.

The Treasury resisted requests for extra money to cover the bill, while NHS officials argued they could not afford it from existing budgets.

It is now understood that the Treasury has refused additional funding for the departures over and above the NHS’s current three-year settlement.

Instead, the NHS will be permitted to overspend its budget this year to pay for redundancies in the hope of recouping the costs further down the line.

According to the Department of Health, the reforms will slash ‘endless red tape and bureaucracy’ and raise £1billion a year by the end of the Parliament to improve services for patients.

It said every £1billion saved in bureaucracy is enough to fund an extra 116,000 hip and knee operations.

The Department of Health and NHS England have now been told to press ahead with voluntary redundancies, while Integrated Care Boards, which plan health services for specific regions, will proceed straight to compulsory redundancies.

Chancellor Rachel Reeves is expected to make further announcements regarding the health service in the Budget on November 26.

Addressing the NHS Providers' annual conference in Manchester tomorrow, Mr Streeting is expected to say: ‘I want to reassure taxpayers that every penny they are being asked to pay will be spent wisely.

‘We have already cut waiting lists for the first year in 15 years, recruited 2,500 more GPs, and cut ambulance waits for patients with conditions like heart attacks and strokes.

‘Our investment to offer more services at evenings and weekends, arm staff with modern technology, and improving staff retention is working.

‘At the same time, cuts to wasteful spending on things like recruitment agencies saw productivity grow by 2.4 per cent in the most recent figures – we are getting better bang for our buck.

'We’re now pushing down on the accelerator and slashing unnecessary bureaucracy, to reinvest the savings in frontline care.

'It won’t happen overnight, but with our investment and modernisation, we will rebuild our NHS so it is there for you when you need it once again.’

Remaining NHS England functions will be brought into the Department of Health within two years, while Integrated Care Boards have been tasked with transforming the NHS into a neighbourhood health service, with more care delivered outside of hospitals.

Sir Jim said: ‘This is good news for NHS staff and patients – allowing our organisations to move forward and provide greater certainty about the future for all our staff and leaders.

‘It will free up resources to invest in frontline services and reduce unnecessary bureaucracy that slows us down and gets in the way of the improving care.

‘The NHS will continue to focus on the practical challenges ahead. We are pulling out all the stops to support the service through winter, making progress on elective and urgent and emergency care targets.’

Daniel Elkeles, chief executive of NHS England, said: ‘This is a pragmatic step that means planned redundancies can now go ahead.

'It reflects the flexibility of a three-year settlement, allowing some funding to be brought forward in order to generate future savings to go into frontline care.

‘However we must recognise the position of staff affected by these changes - people who have offered commitment and service to the NHS - who face a very uncertain future.’

Matthew Taylor, chief executive of the NHS Confederation, said: ‘This is a welcome move that provides certainty to NHS leaders who can now go ahead with planned redundancies.

‘It has been a difficult period of uncertainty for our members and we know this has placed a strain on staff.

‘We’ll await the full details but for now we are pleased to see that this situation has been resolved and that we can proceed with the redundancy programme.

‘This will provide clarity for staff and help release savings down the line.’