Millions of pounds from the system development fund (SDF) have been used to support other financial pressures across 26 ICBs in 2023/24, according to an exclusive investigation.
In total, 29 ICBs reported £182.3m of underspend from their SDF allocations. Of these ICBs, 26 of them – which reported £176m underspend in total – said this went to the overall financial position of the ICB or ‘other pressures’ and priorities in the system. The remaining three did not declare where the money was spent.
The data comes from an exclusive Healthcare Leader Freedom of Information investigation, to which 41 ICBs responded, looking into SDF funding for ICBs. SDF funding is allocated each year to ICBs on top of their ICB baselines.
This is intended to be invested in national objectives including supporting primary care to deliver ambitions for the access recovery plan, the additional roles reimbursement scheme (ARRS), GP IT, diagnostics, mental health, cancer, virtual wards, prevention, women’s health hubs and children and young people’s programmes.
The investigation found that two of the ICBs which reported an underspend – Cambridgeshire and Peterborough and Lancashire and South Cumbria - noted that targeted funds were sent back to NHS England and anything left over was used to support the ICBs finances. They did not specify how much of their respective £1.4m and £3m was recovered and how much was used within the system.
However, a spokesperson from Cambridgeshire and Peterborough clarified that 'all ring-fenced SDF funding was spent in full' against the priorities set out in the SDF in 2023/24.
NHS England guidance originally stated that the 2023/24 SDF funding ‘should not be used to fund business as usual staff or other ICB costs’.
However, five of the 20 ICBs (Dorset, Kent and Medway, North East London, South East London and Suffolk and Nort East Essex) said NHS England guidance had allowed them to reallocate the underspend to support the ICB’s overall financial position.
Dorset ICB said there was ‘in year additional guidance’ which meant that certain SDF spend types were ‘allowable for underspends to support the ICB control total in light of the very challenging financial position nationally in 2023-24’. It had almost £3m in underspend in the year.
A spokesperson from Dorset ICB said: 'National guidance released during the 23/24 financial year allowed ICB to utilise selected uncommitted SDF funding to support service costs in other areas of the ICB.
'At the time of the guidance release, NHS Dorset ICB identified a level of uncommitted SDF funding which, in line with national guidance and expectations, it was able to repurpose to support the costs of other commissioned services.'
Kent and Medway, which had the greatest amount of underspend at £54.4m, said in its response to the FOI: ‘This slippage was deployed in line with NHS England's guidance and contributed to the ICS system financial position.’
Staffordshire and Stoke-on-Trent said it was ‘instructed’ by NHS England to use its £3.6m underspend to reduce its deficit position, while South East London said it was ‘agreed’ that they could do this with their £1.7m. Although Greater Manchester did report its £24m underspend had gone to offset other pressures and overspends, it said that areas of overspending did ‘align to SDF expectations’, such as mental health.
Hampshire and Isle of Wight said their £8.6m of underspend was used for ‘supporting the operational pressures the system was facing such as high non-elective demand and improving category 2 performance’.
Of the other ICBs which reported an underspend, only one ICB mentioned primary care specifically in where this was invested, this was Bedfordshire, Luton and Milton Keynes which said their £1.1m underspend was spent on other areas of the ICB’s budget, which included but was ‘not limited to’ continuing care, prescribing and primary care services.
Devon ICB said their £1.7m was spent on ‘other priorities’, while Nottingham and Nottinghamshire ICB’s £9.5m underspend was spent on ‘other healthcare services’.
Marcus Pratt, acting director of finance at NHS Nottingham and Nottinghamshire, said: 'The ICB remains committed to investment in service development. In 2023/24 we spent over £26m of service development funding.
'The underspend in 2023/24 arose from a combination of delays in spending plans and decisions to prioritise expenditure to minimise overspends. The NHS in Nottinghamshire continues to experience financial pressures and we will need to make difficult decisions in this year and as we plan for next year as to how we use the limited resources available to us.'
Birmingham and Solihull said of its £2m underspend: ‘Whilst the majority of SDF resources were utilised in line with original plans, some redistribution of resources to other strategic priorities did take place in the second half of 2023/24, partly utilising unplanned slippage.’
Leicester, Leicestershire and Rutland said their £2.7m underspend was spent on ‘patient care’. Humber and North Yorkshire said their £10.1m of unspent funds was used to ‘support healthcare services’, but that the specific use was not recorded.
The three ICBs which declared an underspend but did not report in their FOI response where it was spent were Gloucestershire, which had £1.3m, Mid and South Essex with £4.1m and Northamptonshire with £878k.
Mid and South Essex subsequently confirmed to Healthcare Leader that its £4.1m unutilised funding 'was released to contribute to the overall financial position of the ICB and support the delivery of services for residents across mid and south Essex'.
Meanwhile, Cornwall and the Isles of Scilly did not report a figure for underspend, but said ‘substantially’ all of its funding was spent on areas defined by SDF funding, but that any residual underspend, for which it did not provide a figure, was spent on patient services and ‘not spent on management costs of the organisation’.
SDF funding, which is allocated to each ICB either on a fair shares basis or specifically targeted, supports the delivery of the Long Term Plan commitments and are allocated for identified programmes of work in line with the national priorities.
But, ICBs have been under pressure to cut their running costs by 30% by 2025/26, which was announced just before the start of the 2023/24 financial year.
In July last year, ICB leaders delivered a damning verdict into the state of their finances, with 15 out of 19 ICB chief financial officers saying their financial position had deteriorated in 2023/24.
The NAO NHS financial management and sustainability report 2024 estimated there was £1.4bn aggregated deficit in 2023/24 across the 42 integrated care systems (ICSs), with three ICBs in NHS England’s Recovery Support Programme alongside 21 trusts.
An exclusive Healthcare Leader investigation last year found that ICBs had saved £25m through redundancy since they were set up in July 2022.
Last week, NHS England announced that it was to remove ‘most’ funding ringfences from 2025/26 to give ICBs greater freedom to allocate their resources. This includes rolling the SDF into core allocations instead of being separate.
In its revenue and contracting guidance for 2025/26, NHS England said: ‘For 2025/26, most SDF bundles will move into ICB core programme allocations subject to a reduction to support overall financial balance.
‘Where funding has been transferred into ICB core programme allocations this is no longer ringfenced, and there are no additional performance requirements beyond those set out in the 2025/26 priorities and operational planning guidance.’
It added that cancer alliances, IT and technology, funding issued on a drawdown or reimbursement basis and funding allocated for a specific purpose by government departments will remain in the SDF.
It said: ‘Where funding remains in the SDF, ICBs must spend it on the purpose for which it has been allocated. Where SDF funding is not spent on its intended purpose this will need to be returned by ICBs at year end.’
On the changes to SDF, Ruth Rankine, director of primary care at the NHS Confederation, said there was some ‘anxiety’ among members.
‘We know from our members the anxiety regarding SDF for 2025/26, fearing that this vital funding could be used to support operational deficits elsewhere in the system.
‘We encourage ICS Leaders to recognise primary care's financial discipline, efficiency and productivity and the wrong message it sends to absorb vital development funds into other areas of the health system.’
NHS England has been contacted for comment.
The FOI was issued on 28 November and the majority of responses were received by 30 December. An additional response was submitted on 27 January.
