NHS: Finance

The National Health Service priorities and operational planning guidance 2025/26 made it clear that living within budget, reducing waste and increasing productivity is a priority. This year’s financial framework changes include making deficit support funding conditional on performance, implementing a financial override in the Oversight Framework, and introducing additional support for efficiency and productivity through the new Financial Performance and Improvement Programme. The 10-Year Health Plan also made several longer-term commitments to strengthen the NHS financial foundation, which are now being taken forward, including:

(a) A commitment to deliver 2% annual productivity growth, which will unlock £17 billion in savings over 3 years.

(b) A new approach to NHS financial management including multi-year settlements, and phasing out deficit support funding;

(c) Sharper financial incentives including the use of best practice tariffs, and changing the funding model to encourage urgent and emergency care to shift to the community;

(d) A fairer geographical distribution of funding, to target areas with disproportionate economic and health challenges; and

(e) Reform of the capital regime, giving more power to the frontline and speeding up the capital approvals process.