31 January 2025

NHS England and government flag challenging decisions ahead

NHS England has published its planning guidance for 2025/26. The guidance acknowledges that while there have been some improvements in NHS performance and efficiency, the "timeliness and experience of care is still not good enough".  

Regarding finance, it explained that despite a real-term increase in NHS funding, pay settlements, and higher employer NI contributions, NHS organisations must reduce their cost base by 1% and achieve a 4% productivity improvement to meet the growing demand within budget.  

Given the stated pressures, it continues: "To balance operational priorities with the funding available, while continuing to lay foundations for future reforms, the NHS will need to reduce or stop spending on some services and functions and achieve unprecedented productivity growth in others. Open and ongoing conversations will be needed with staff, the public and stakeholders at organisation, place and system level about what it's going to take to improve productivity, reduce waste and tackle unwarranted variation." 

NHS England also asked all ICBs to "take a forensic look" at what they spend money on. It shared an example of changes it had undertaken itself, "generating nearly £500 million of savings to support frontline services."  

The plan also focuses on tackling the 18-week referral to treatment backlogs, reducing the time people wait for A&E and improving access to GPs. 

The guidance also clarifies that the "contract default between ICBs and providers for most planned elective care will continue to pay unit prices for activity delivered in line with funded level". FODO has previously flagged how this might be necessary, given the research on how payment models impact hospital activity.  

Meanwhile, a Public Accounts Committee report into NHS financial sustainability said that DHSC and NHS England "seem complacent regarding the NHS's finances" and NHS England relies on an "extremely optimistic assumption that it will achieve unprecedented productivity improvements".