Source · Select Committees · Public Accounts Committee
5th Report - NHS financial sustainability
Public Accounts Committee
HC 350
Published 29 January 2025
Recommendations
3
Accepted
Set out detailed plan for unprecedented NHS productivity gains, addressing staff retention.
Recommendation
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. …
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Government Response 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 received 2025-26 productivity packs, and future plans will follow the Spending Review.
HM Treasury
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4
Accepted
Review NHSE payment systems and processes to incentivise local systems supporting hard-to-reach patients.
Recommendation
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 …
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Government Response 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 evidence of reaching those most in need.
HM Treasury
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Conclusions (8)
2
Conclusion
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 …
Government Response 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 Review.
8
Conclusion
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 …
Government Response 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.
9
Conclusion
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 …
Government Response 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 implementation date of December 2025.
15
Conclusion
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 …
Government Response 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.
17
Conclusion
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 …
Government Response 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.
18
Conclusion
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 …
Government Response 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.
23
Conclusion
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 …
Government Response 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 needs of their population. NHSE will soon publish a revised NHS oversight framework that will reward those ICBs and providers that are doing well with greater financial freedoms and flexibilities. ICSs already have a duty to base their integrated care strategies upon local joint strategic needs assessments.
25
Conclusion
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 …
Government Response 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.