NHS England sheds light on system development fund ringfence removal

Details have been revealed about which system development funding (SDF) ringfences will remain and which will be moved into core allocations from 2025/26.

In a letter to the Health and Social Care Committee (HSCC), chief executive of NHS England, Amanda Pritchard, outlined that primary care transformation, GPIT infrastructure and Community Diagnostic Centres (CDCs) would be among those areas that are no longer ringfenced within SDF (see box for full details).

These instead will be moved into core allocations from 2025/26, to ‘increase the freedoms system have to allocate their resources’.

Ms Pritchard also confirmed that Pharmacy First, GP fellowships and international GP recruitment would remain within SDF allocations, with the rationale being that ‘funding is issued as reimbursement based on actual activity’.

She said that funding for the additional role reimbursement scheme (ARRS), which allows primary care networks (PCN) to employ various roles including, GPs, nurses and pharmacists was ‘still in discussion’ with final arrangements to be confirmed in the GP contract 2025/26.

The letter was a response to a request for further information from the HSCC, after Ms Pritchard’s appearance before the committee on 29 January. They had asked for a list of areas that remain ringfenced and those that did not.

At the end of last week, a new contract deal was agreed with GPs to add £889m to core funding allocations, as well as adding practice nurses to the ARRS scheme and continuing with including GPs in the scheme.

The BMA added that there would be a joint review on the future of the scheme in 2025/26.

The letter from Ms Pritchard said that where funding is transferred to ICBs without a ringfence, that NHS England would ‘continue to monitor spend at the level of the specific SDF bundle, but delivery will not be performance managed centrally’.

She said: ‘We will also continue to collect and monitor relevant metrics, as well as overall spending data.

‘NHSE will continue to hold systems to account for delivery in line with the Oversight Framework.

‘To ensure maximum transparency, data on provider and ICB performance will be published – including key metrics such as in primary care, mental health, urgent and emergency care.’

The letter added: ‘In agreement with Government, we are giving local systems greater control and flexibility over how local funding is deployed to best meet the needs of their local population by releasing most funding ring fences.

‘We and Government have been clear that this does not imply those areas previously ringfenced are no longer important, but it is a shift away from central control to local ownership in line with the Government Mandate. SDF, which is already deployed to frontline service providers, will be rolled into core allocations.’

Earlier this year, NHS England announced that it was to remove ‘most’ funding ringfences from 2025/26 to give ICBs greater freedom to allocate their resources. 

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 comes after millions of pounds from the SDF was revealed to have been used to support other financial pressures across 26 ICBs in 2023/24, according to an exclusive Healthcare Leader 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.

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