ICBs are to be given increased freedom to allocate their resources after NHS England revealed it would ‘release most funding ringfences’ in new guidance for 2025/26.
In the operational and planning guidance, published today, NHS England said 2025/26 needed to mark a ‘financial reset’.
It said that to help meet national priorities, more freedom would be given to ICBs around what funding could be spent on, for example the Service Development Fund (SDF) will be rolled into core allocations instead of being separate.
The guidance also said ICBs must demonstrate that all productivity and efficiency opportunities have been ‘exhausted’ before considering reducing or stopping services.
It said: ‘The government has made difficult choices to provide additional funding. While this provides effective real-terms growth in the NHS budget, it must cover final pay settlements for 2025/26, increased employer national insurance contributions, faster improvement on the elective waiting list and new treatments mandated by NICE.
‘Overall, this means NHS organisations will need to reduce their cost base by at least 1% and achieve 4% improvement in productivity, in order to deal with demand growth. NHS England will transfer a higher proportion of funding than ever before directly to local systems and minimise ringfencing, allowing local leaders maximum flexibility to plan better and more efficient services. And, to be clear, all parts of the NHS must now live within their means.
It added that ICBs must look at their workforce and what they spend money on.
Healthcare Leader revealed last year that ICBs have saved a total of £25m through redundancies since they were set up in July 2022.
The guidance today said: ‘We anticipate that both ICBs and providers will need to review their spend on non-frontline staff again for 2025/26 to prioritise frontline care.
‘NHS England will do the same and, in line with the NHS Operating Model, will again become a smaller organisation this year, further reducing our headcount and reprioritising spend to allocate more funding to systems.’
NHS England added that it would also change how the planning process works, saying it would ‘streamline the process’ to reduce the number of submissions that need to be made from systems. This will allow local focus to be on developing high quality and realistic delivery plans, it said.
‘Alongside a simpler process, we will continue to engage with you to evolve our operating model, and we will agree a ‘compact’ with each system, setting out how we will work together and what each organisation is committing to deliver, including how NHS England will support you,’ it said.
It comes after chief executive of NHS England, Amanda Pritchard, told the Health and Social Care Committee (HSCC) yesterday that NHS England was planning to reduce the amount of ringfenced funding so there was ‘more flexibility’ for local leaders to spend money how they want to.
Giving evidence to the committee, she said: ‘There is a bit of tension here, and it’s worth being transparent about that, because quite understandably, there is a desire to see particular things that people care about, written into national guidance, and often to see ring fenced funding around that.
‘But as you say, if you’re a local leader, the risk is, if you have lots of different targets and lots of different pots of money, that makes it very difficult to make some of those local decisions about actually how you do things and how you prioritise, and it does reduce the flexibility that you have to address things in a way that make most sense to your local population and to your patients.’
She said that they are trying to strike a balance between ‘national must dos’ and reducing the amount of ringfences to allow for local flexibility. And added that ‘just because something isn’t written in planning guidance doesn’t mean it’s not important, and it doesn’t mean the work won’t happen.’
Ahead of the guidance, the Government also published its mandate for the NHS this year today, which set out five objectives for NHS England. These include:
- To reform to cut waiting times,
- To reform to improve primary care access,
- To reform to improve urgent and emergency care,
- To reform to the operating model,
- To reform to drive efficiency and productivity.
It comes as the Government has begun pharmacy contract negotiations for 2024/25 and 2025/26.
Health leaders last week called for greater funding to be given to general practice in order to prevent another winter crisis next year.
