Recommendations & Conclusions
11 items
2
Conclusion
5th Report - NHS financial sustainabili…
Accepted
Despite having last published a plan in January 2019, and the major disruption caused by Covid to the NHS since, DHSC and NHSE are yet to recognise the scale of transformation needed to make the NHS financially sustainable. The Government’s desire to publish a new 10- year plan is a …
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Despite having last published a plan in January 2019, and the major disruption caused by Covid to the NHS since, DHSC and NHSE are yet to recognise the scale of transformation needed to make the NHS financially sustainable. The Government’s desire to publish a new 10- year plan is a golden opportunity to take significant decisions for the longer-term benefit of the nation’s health and the sustainability of the NHS. Yet there seems a lack of readiness amongst senior health officials to take the radical steps needed. DHSC’s and NHSE’s approach 3 to NHS finances is typified by short-termism. NHSE needed £4.5 billion in extra funding from the government in 2023–24 to deal with issues such as staff pay and industrial action. DHSC has continued to prop up day-to-day spending by raiding precious capital budgets, reallocating £0.9 billion in 2023–24. We welcome the fact that new HM Treasury rules mean it will no longer be able to do this in future. There is a confidence among the NHS’s senior leadership that in the event of a significant challenge, such as another pandemic, government would provide all the extra funding the NHS needed. It appears that no one at the top of DHSC and NHSE has been preparing the NHS for the future for example by putting together a revised strategy or plans as part of the recovery following the pandemic when it was clear that the Long Term Plan 2019 was no longer valid. The Government’s aims to shift towards prevention, community and digital are not new, with previous plans and strategies having similar objectives but often failing to deliver as intended. Officials acknowledged that these changes are difficult and should take place only slowly, over the long term, and not at the expense of patients now. Even as they write the new 10-year plan for the NHS, DHSC and NHSE have not convinced us that they are ready to give the three big shifts desired by government the priority they need. This left the impression that there was no real urgent motivat
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Government response AI summary
The government welcomes the decision against capital-to-revenue switches and states record capital investment is agreed for 2025-26. It commits that every provider has been sent a bespoke pack for productivity opportunities for 2025-26, and a plan for 2026-27 will be set out after the Spending …
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HM Treasury
3
Recommendation
5th Report - NHS financial sustainabili…
Accepted
NHSE displays a remarkable complacency about the realisation of future NHS productivity improvements, which, if achieved, would be unprecedented. According to official ONS measures, long-term productivity gains in the NHS averaged 0.6% a year over the period 1996–97 to 2018–19. But productivity subsequently fell and has yet to recover fully. …
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NHSE displays a remarkable complacency about the realisation of future NHS productivity improvements, which, if achieved, would be unprecedented. According to official ONS measures, long-term productivity gains in the NHS averaged 0.6% a year over the period 1996–97 to 2018–19. But productivity subsequently fell and has yet to recover fully. The NHS has 19% more staff compared to before the pandemic but is only seeing 14% more patients. Workforce issues such as sickness and absence continue to impact productivity. NHSE is confident that the annual productivity gains that it has committed to of 2.0% by 2028–29 can be achieved because it contends the last two years have been affected by ongoing disruptions such as industrial action, and that further recovery is still possible, particularly through technology-enabled change. However, NHSE was unable to convince us that it has a detailed plan to achieve the promised productivity gains, and it does not yet fully measure and capture productivity in important areas, such as mental health and community services. recommendation NHSE should set out in detail which specific actions and initiatives it expects to contribute to the unprecedented increase in productivity it has committed to, and by how much. This should include specific measures to address poor staff retention and sickness rates, which contribute to low productivity.
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Government response AI summary
The government agrees, detailing actions including training over 20,000 NHS managers and clinicians, supporting the National Retention Programme, deploying Electronic Patient Record systems and the NHS App, shifting care to community settings, and aiming to save £1bn by 2029 through biosimilar medicines uptake. Additionally, providers …
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HM Treasury
4
Recommendation
5th Report - NHS financial sustainabili…
Accepted
In some cases, NHSE’s payment mechanisms can mean that local systems do not receive financial recognition when they prioritise hard-to-reach patients. GP surgeries receive a payment for every child vaccination. This vaccination funding mechanism favours areas where parents are more willing to inoculate their children, while areas with higher levels …
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In some cases, NHSE’s payment mechanisms can mean that local systems do not receive financial recognition when they prioritise hard-to-reach patients. GP surgeries receive a payment for every child vaccination. This vaccination funding mechanism favours areas where parents are more willing to inoculate their children, while areas with higher levels of vaccine hesitancy, which may be more deprived areas, receive less funding and therefore have fewer resources to carry out much-needed activities such as outreach and education, potentially leading to even fewer patients being vaccinated in those areas. NHS Providers notes that tackling wider determinants of health must involve the specific targeting of poor health in the most deprived areas. recommendation NHSE should review current payment systems and processes to ensure they incentivise local systems to work with those most in need of help.
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Government response AI summary
The government agrees and states that NHS England regularly reviews and updates funding formulas, committing to do so again before 2026-27 allocations to ensure greater deprivation receives higher funding. It also cites existing programmes like Targeted Lung Health Checks and Mental Health Support Teams as …
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HM Treasury
8
Conclusion
5th Report - NHS financial sustainabili…
Accepted
DHSC also noted that 2024–25 had been especially complicated due to ‘external shocks’ and, in particular, very high rates of inflation which made budget-setting very unpredictable.11 It accepted that it was preferable to give longer for local systems to plan their budgets, but said there was a trade-off between how …
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DHSC also noted that 2024–25 had been especially complicated due to ‘external shocks’ and, in particular, very high rates of inflation which made budget-setting very unpredictable.11 It accepted that it was preferable to give longer for local systems to plan their budgets, but said there was a trade-off between how early this took place and the extent to which guidance reflected an up-to-date picture of the wider fiscal and economic environment.12 It felt that to provide budget figures and guidance earlier in the face of significant externalities would do more harm than good because they would be based on unrealistic numbers.13
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Government response AI summary
The government will work to enable planning guidance to be published well in advance of the financial year, and NHSE is working with ICBs to have full plans developed before the start of the 2025-26 financial year.
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HM Treasury
9
Conclusion
5th Report - NHS financial sustainabili…
Accepted
We asked how local authorities and NHS bodies could be expected to work together and deliver a joint strategy when local authorities receive provisional budgets in December, and final ones by February, but NHS 8 C&AG’s Report, paras 1.6 and 1.8 9 C&AG’s Report, para 2.9 10 Q 57 11 …
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We asked how local authorities and NHS bodies could be expected to work together and deliver a joint strategy when local authorities receive provisional budgets in December, and final ones by February, but NHS 8 C&AG’s Report, paras 1.6 and 1.8 9 C&AG’s Report, para 2.9 10 Q 57 11 Q 57 12 Q 59 13 Qq 65, 68 9 colleagues receive their budgets months later.14 DHSC said it would ideally provide NHS bodies with budget certainty before Christmas each year, but this might not necessarily be exactly the same day as local authority settlements.15 However, it reiterated that, in the event of big external shocks, a judgement call would still be needed about whether these figures would be realistic and therefore helpful.16 Short-term funding decisions
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Government response AI summary
The government agrees with the Committee’s recommendation and will continue to work together and with HM Treasury to improve the planning process and ensure timely publication of guidance to the system, and earlier agreement of priorities and financial allocations for future years, with a target …
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HM Treasury
11
Conclusion
5th Report - NHS financial sustainabili…
Accepted
Resilience to shocks is a key element of financial sustainability. We asked how well the NHS would cope financially in the event of another pandemic. NHSE expressed confidence that in the event of another pandemic government would provide any additional funding the NHS needed, as it had done during the …
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Resilience to shocks is a key element of financial sustainability. We asked how well the NHS would cope financially in the event of another pandemic. NHSE expressed confidence that in the event of another pandemic government would provide any additional funding the NHS needed, as it had done during the previous pandemic. NHSE acknowledged that this had only been possible in 2020 through the suspension of some normal financial rules. It said that, with similar financial arrangements in place, it would not be worried about money in the event of another pandemic and would be more concerned about the resilience and capacity of the NHS workforce to respond to the challenge.18
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Government response AI summary
The government agrees with the recommendation, stating that new fiscal rules mean no further capital-to-revenue transfers will be used, and commits to a record £13.6 billion capital investment into health for 2025-26.
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HM Treasury
15
Conclusion
5th Report - NHS financial sustainabili…
Accepted
We asked witnesses why NHS productivity continues to be lower than before the pandemic. NHSE told us the NHS currently has 19% more staff compared to before the pandemic but is only seeing 14% more patients. It named several factors as contributing to the ongoing difference.24 NHSE highlighted that the …
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We asked witnesses why NHS productivity continues to be lower than before the pandemic. NHSE told us the NHS currently has 19% more staff compared to before the pandemic but is only seeing 14% more patients. It named several factors as contributing to the ongoing difference.24 NHSE highlighted that the population is getting older with more complex and acute health needs, meaning length of stay in hospitals are becoming longer, and increased post-pandemic infection control which limits efficiency. NHSE also noted the impact on productivity of workforce sickness levels which, while reduced significantly from a recent peak, still remained higher than pre- pandemic.25 They pointed to examples where progress had been made such as reducing the use of temporary agency staff and better use of generic 21 Q 29 22 Q 32 23 C&AG’s Report, paras 3.11, 3.15 and 4.26 24 Q 12 25 Qq 8, 49 11 pharmaceuticals. But the rise in average lengths of stay in hospitals, in part due to the lack of availability of social care and community health services, was a factor in preventing a return to earlier levels of productivity.26
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Government response AI summary
The government states that the NHS is working to recover lost productivity, with recent data showing improvement and ongoing efforts focused on clinical productivity, workforce retention, technology, care setting optimization, and maximizing spending value; bespoke packs identifying opportunities have been sent to providers.
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HM Treasury
17
Conclusion
5th Report - NHS financial sustainabili…
Accepted
We asked about the equity of NHS funding mechanisms and the risk of perverse incentives, using as an example the distribution of money for childhood inoculations. GP surgeries receive a payment for every child that gets a vaccine.29 In our view, this funding mechanism favours wealthier areas where parents are …
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We asked about the equity of NHS funding mechanisms and the risk of perverse incentives, using as an example the distribution of money for childhood inoculations. GP surgeries receive a payment for every child that gets a vaccine.29 In our view, this funding mechanism favours wealthier areas where parents are more willing to inoculate their children. At the same time, more deprived areas, known for higher levels of vaccine hesitancy, receive less funding and therefore have fewer resources to carry out much-needed activities to boost uptake, such as outreach and education.30
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Government response AI summary
The government states that NHS funding allocations already account for deprivation and health inequalities, and that NHSE regularly reviews the formula used to set allocations, noting evidence that NHSE investment is reaching those most in need.
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HM Treasury
18
Conclusion
5th Report - NHS financial sustainabili…
Accepted
NHSE informed us that it relies on primary care networks working with their local ICBs to identify harder to reach cohorts. It accepted that local authorities often have better links into communities than NHS bodies. It said many lessons were learned from the COVID-19 vaccination campaign about where take up …
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NHSE informed us that it relies on primary care networks working with their local ICBs to identify harder to reach cohorts. It accepted that local authorities often have better links into communities than NHS bodies. It said many lessons were learned from the COVID-19 vaccination campaign about where take up was good and not so good, and how to reach populations that were not proactively coming forward.31 In its written submission to this 26 Q8 27 Q 9 28 Q 77 29 Q 45 30 Coronavirus and vaccine hesitancy, Great Britain - Office for National Statistics 31 Qq 45, 46 12 inquiry, NHS Providers noted that addressing the wider determinants of health had to involve specific targeted improvements in the most deprived areas to tackle health inequalities.32 32 NFS0012 13 2 Three big shifts required for the long-term sustainability of the NHS
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Government response AI summary
The government states that NHS funding allocations already account for deprivation and health inequalities, and that NHSE regularly reviews the formula used to set allocations, noting evidence that NHSE investment is reaching those most in need.
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HM Treasury
23
Conclusion
5th Report - NHS financial sustainabili…
Accepted
Local areas would value more flexibility about where they can direct their resources to achieve greatest impact, including how they fund measures to prevent ill health. ICBs were supposed to have greater autonomy in determining how to allocate resources locally compared to their predecessor bodies, including freedom to shape future …
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Local areas would value more flexibility about where they can direct their resources to achieve greatest impact, including how they fund measures to prevent ill health. ICBs were supposed to have greater autonomy in determining how to allocate resources locally compared to their predecessor bodies, including freedom to shape future local health services. However, there is widespread agreement that NHSE’s approach to planning and governance, in particular the all-encompassing nature of its top-down guidance, has meant negligible autonomy in the real world for local health systems.40 NHSE told us there are certain prevention programmes, such as for diabetes prevention or targeted lung health checks, where it made sense to fund activities nationally rather than giving local areas discretion over whether to deliver those services.41 Moving care from hospital to community
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Government response AI summary
The department and NHSE recently announced changes to the NHS operating model to move power from the health centre to local leaders. 2025-26 Operational Planning Guidance removed many ringfences, giving local systems greater control and flexibility over how funding is deployed to best meet the …
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HM Treasury
25
Conclusion
5th Report - NHS financial sustainabili…
Accepted
NHSE assesses that sustained increases in capital investment are needed to replace ageing equipment, expand capacity to meet demand, and enable staff to benefit from new technologies.48 However, NHSE told us its investment in technology between 2022–23 and 2024–25 could have been greater had it been able to use underspend …
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NHSE assesses that sustained increases in capital investment are needed to replace ageing equipment, expand capacity to meet demand, and enable staff to benefit from new technologies.48 However, NHSE told us its investment in technology between 2022–23 and 2024–25 could have been greater had it been able to use underspend against its central budgets for that purpose, but it had to use those underspends instead to mitigate ICBs’ spending deficits.49
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Government response AI summary
The government agrees that sustained increases in capital investment are needed, states that no further capital-to-revenue transfers will be used due to fiscal rules, and highlights that a record £13.6 billion has been agreed for capital investment in health for 2025-26.
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HM Treasury