NHS capital

Introduction

The Spending Review 2025 (SR25) and the government’s 10 Year Health Plan for England together set out some of the most significant reforms of NHS capital in recent history. The NHS has a 4-year capital settlement, extending to 2029/30, and a further 5 years of certainty for estates maintenance. This stability is designed to provide the confidence needed for long-term investment decisions and to support delivery of the 10 Year Health Plan’s radical vision for care.

This guidance sets out a capital framework that is more transparent, devolved and integrated than before. The SR25 settlement provides the NHS with over £44 billion of capital over the 4-year Spending Review period, including real terms protection of operational capital, £750 million annually for estates safety, and dedicated programmes for technology, return to constitutional standards (covering diagnostics, electives and urgent care), reinforced autoclaved aerated concrete (RAAC), community, mental health, learning disability and autism (MHLDA) and the New Hospital Programme (NHP). This provides the platform for the NHS to move decisively from short-term response towards more strategic investment.

Several significant changes are being introduced through this guidance:

• multi-year operational capital envelopes allocated directly to providers for the first time, providing firm funding until 2029/30 and indicative assumptions for a further 5 years
• a new balance between national control and regional autonomy, giving regions a lead role in strategic estates planning and delivery oversight
• expanded capital freedoms and flexibilities, including greater delegated authority and the ability for high-performing providers and newly authorised foundation trusts to reinvest surpluses
• streamlined approvals and higher delegated limits, with HM Treasury approval required only for schemes above £300 million, and no further approval required at Full Business Case stage unless total costs exceed £1 billion or scope changes materially. This enables faster delivery of capital schemes (see Capital approvals and delegated limits section)
• integration with the 10 Year Health Plan shifts – hospital to community, analogue to digital, sickness to prevention – ensuring that capital investment underpins the long-term transformation of NHS services

Taken together, these reforms establish a rules-based, transparent system that enables accountable organisations to plan and deliver investment over the long term, while maintaining affordability within the national Capital Departmental Expenditure Limit (CDEL).

Capital implications of the 10 Year Health Plan

The government’s 10 Year Health Plan sets out a fundamental reimagining of NHS care, centred on 3 radical shifts: moving care from hospital to community, transforming services from analogue to digital, and shifting the focus from sickness to prevention. Delivering these reforms has direct implications for the way capital funding is planned, prioritised and deployed. They should be a central consideration for providers, systems and regions as they shape their capital strategies and plans.

Neighbourhood health service – shifting care closer to home

The 10 Year Health Plan commits to a neighbourhood health service, with local multidisciplinary hubs reducing reliance on hospital outpatients and expanding access to primary care. SR25 provides £426m over 4 years through the utilisation and modernisation fund, with up to half supporting delivery of 40 to 50 neighbourhood health centres this Parliament through refurbishment of existing buildings. The longer-term goal is a centre in every community supported by a combination of new capital investment, disposals and repurposed estate.

Digital and technology transformation – “from bricks to clicks”

The 10 Year Health Plan aims to make the NHS the most AI-enabled health system globally, with hospitals fully AI-enabled within the plan period. Priorities include a single patient record under patient control, the NHS App as the universal digital front door, large-scale use of AI scribes and robotics, and HealthStore for approved tools. SR25 supports this shift through a dedicated technology and productivity ringfence of around £1bn a year, aligned to the NHS 2% productivity ambition. Digital proposals must consider both capital and revenue impacts within delegated limits.

Estates safety and maintenance

The government’s 10 Year Infrastructure Strategy (10YIS) commits at least £64 billion over the next decade to maintain the health estate, with NHS allocations protected in real terms until 2035. Within this, a £6.75 billion Estates Safety Fund (equivalent to £750 million per year over 9 years) will continue through SR25, targeted at reducing critical infrastructure risks, improving statutory compliance and reducing incidents that impact the operation of clinical services. This sits alongside dedicated funding for the RAAC eradication programme (£1.6 billion) and the New Hospital Programme (rising to a steady state of £15 billion over 5-year cycles), which together represent the largest sustained investment in NHS infrastructure for a generation. The 9-year funding certainty across operational capital, estates safety and RAAC enables providers and systems to plan over longer horizons.

Regions will lead allocation and prioritisation of the Estates Safety Fund, supported by national frameworks and assurance. This regional model is designed to maximise value for money by combining strategic schemes with smaller operational projects.

Capital freedoms and flexibilities

The 10 Year Health Plan sets a clear direction for greater provider-level autonomy. By 2035, all providers are expected to become foundation trusts, retaining surpluses, reinvesting in schemes, and, in some cases, holding budgets for whole populations.

Reforms are already in train: delegated limits have risen to £300m, and high-performing providers (NHS Oversight Framework segments 1 and 2) can reinvest surpluses more freely. Alongside allocations, new financing models such as Public Private Partnerships are being explored for neighbourhood health centres. While systems and regions will continue to prioritise strategic programmes, the expectation is that providers will take growing responsibility for operational capital.

Spending Review 2025 (SR25)

The SR25 confirmed a 4-year NHS capital settlement for 2026/27 to 2029/30 on a broadly flat real basis. This guidance sets the broad framework to 2029/30 and will be refreshed as needed, no more than annually. Through the planning process we will provide firm allocations for 4 years and planning assumptions for a further 5 years on operational capital and estates safety. Allocations will be available here: NHS England » Capital guidance approximately one week after this guidance is published.

To support integrated planning, we are publishing allocations or indicative allocations for as many funding streams as possible to inform the planning process. ICBs and providers should develop coherent long-term capital and revenue plans, aligning schemes across programmes, and making best use of existing estate to drive productivity and efficiency and deliver the best possible performance outcomes for patients within the funding available.

Overview of the NHS capital settlement for 2026/27

For 2026/27, the NHS capital allocation will be split into 3 broad categories:

1. Provider operational capital and integrated care board (ICB) allocations (circa £4.0 billion) – covering day-to-day operational investments, including regular maintenance, renewal and replacement of plant, IT and equipment, and minor building works. This supports the 10 Year Infrastructure Strategy commitment to invest at least £64 billion in maintenance by 2034/35 and includes funding for International Financial Reporting Standard (IFRS) 16 leases. Around £320 million per year will be directly allocated to ICBs to continue support for primary care business-as-usual and GP IT, and to enable local hospital-to-community and demand-management initiatives consistent with the 10 Year Health Plan.
2. Nationally allocated funds for major programmes (circa £2.6 billion) – covering major national projects already announced and in delivery. This includes the New Hospital Programme (around £1 billion in 2026/27, rising to over £3 billion by 2029/30), the RAAC eradication programme (£432 million in 2026/27 as part of a £1.6 billion programme through to 2029/30), completion of existing upgrade schemes and the ring-fenced national technology and productivity programme (around £0.9 billion in 2026/27, supporting the NHS 2% productivity ambition).
3. Other national capital programme investments (circa £3.0 billion) – supporting delivery of constitutional standards and wider reform priorities. This includes diagnostics, elective and urgent and emergency (UEC) investment (around £2.0 billion in 2026/27 as part of a £5 billion 4-year programme to deliver the March 2029 92% RTT standard and improve UEC performance); the continuation of the additional £750 million per year Estates Safety Fund (£6.75 billion over 9 years) targeted at reducing critical infrastructure risk and supporting statutory compliance; and £426 million across the SR25 period for primary care modernisation and neighbourhood health centres, around half of which we expect to invest in delivering 40 to 50 neighbourhood health centres this Parliament through refurbishment and better use of existing estate.

NHS operational capital

Methodology for core provider allocations 2026/27 to 2029/30

As described above, from 2026/27, operational capital allocations will flow directly to individual providers rather than through systems. This strengthens transparency and accountability by ensuring the organisations directly responsible for maintaining assets have long-term certainty over the available resources. It also responds to feedback that system-level allocations required integrated care systems (ICSs) to develop an understanding of the relative priority of maintenance issues in providers’ core estate and created distortions, particularly for providers operating across system boundaries or delivering nationally or regionally commissioned services.

Long-term certainty will be provided through 4-year firm allocations and 5-year planning assumptions, with an expectation that all providers use this horizon to undertake strategic, multi-year capital planning to maximise value for money and deliver sustainable improvements in their estate.

Allocations are determined via a data-driven formula comprising 85% depreciation (a proxy for asset base scale) and 15% critical infrastructure risk (a proxy for condition of the asset base).

Previously, the formula has deducted Private Finance Initiative (PFI) capital repayments from depreciation, which has tended to penalise providers with a higher-than-average proportion of PFI assets. This year, we will deduct depreciation on PFI assets instead of PFI repayments, as this more fairly delivers on our intention of not providing operational capital in relation to PFI assets whose acquisition and maintenance costs are paid for via the unitary charge. Similarly, this year we deduct 10% of lease repayments (rather than 100% as in previous years), recognising that under IFRS16 providers do now need to cover replacement, renewal and remeasurement costs of leases, even if generally not the maintenance costs. From the depreciation figure, we will also deduct the depreciation on IFRS 16 right of use assets with other DHSC (Department of Health and Social Care) Group bodies. This is to reflect the change in treatment, agreed for 2026/27 onwards, where intra-group leases will be eliminated from the DHSC’s group accounts, and there will be no CDEL charge at the group level. The benefit of this elimination will pass through to providers and ICBs. Further details are set out in the section below.

As a result of these changes and the rising overall level of deprecation, it is no longer affordable to fully fund depreciation pound-for-pound, but the new model delivers a fairer distribution of capital across providers.

Total operational capital will be maintained in real terms over the Spending Review period to 2029/30. In line with the practice some systems have adopted, we will redirect 5% of the funding available each year from provider operational capital into ICB allocations so that it is available to help maintain the ICB-held asset base and support hospital-to-community and demand-management initiatives aligned with the 10 Year Health Plan and recognise.

Prior agreements and brokerage

We have made adjustments to a small number of allocations generated by the formula to meet the commitment made in last year’s guidance that systems could plan on the basis that they would have at least 80% of their 2025/26 allocation in future years.

We have worked with regions to reflect previously agreed multi-year brokerage agreements between or within systems as far as possible. As part of the transition from system to provider level allocations, we are clear that we need to ensure those previous agreements are honoured to avoid undermining pre-existing and known capital commitments and strategic capital planning across the system.

At plan stage, and during the year, brokerage of allocation between providers is permitted where there is the explicit approval of all parties involved. This will work in the same way as brokerage between systems, permitted in previous years. As part of the planning process, providers will be expected to identify, plan for and manage any large one-off costs (for example, lease renewals) from within their allocations. This may require them to make brokerage arrangements with other providers, and failing that, they should discuss with their region.

The table below sets out what expenditure is included and excluded from the provider operational capital allocations in 2026/27. The allocations themselves will be available here: NHS England » Capital guidance approximately one week after this guidance is published.

As in previous years, any overspends against the final 2026/27 allocations will be deducted from 2027/28 capital allocations. Part of the allocation is based on critical infrastructure risk (CIR), and it is expected the operational capital will be utilised in part to support smaller scale investments required to reduce CIR to maintain levels of investment and ensure the safety fund is additive to investment via operational capital.

Capital freedoms and flexibilities

NHS England will continue and expand the capital freedoms introduced in 2025/26, in line with the 10 Year Health Plan, as part of increasing autonomy for high-performing providers and ICBs.

Policy from 2026/27

All providers in NHS Oversight Framework (NOF) segments 1 and 2 will continue to be able to deploy their prior-year surplus as additional CDEL in the current and subsequent financial year.

ICBs in NOF Segments 1 and 2 will also be able to spend any prior-year surplus as additional CDEL within the following 2 years, recognising strong financial management and reinforcing local accountability for investment decisions.

We will shortly be consulting on extending additional freedoms as part of reinvigorating the foundation trust model. These freedoms will sit alongside the significant increases to delegated approval limits (see Capital approvals and delegated limits section).

Governance and safeguards:

• the usual arrangements for business case and approvals on self-funded investment apply, noting the threshold for national approval is now £100m
• NHS England reserves the right to withhold freedoms where evidence suggests manipulation of intra-system flows to generate artificial surpluses
• freedoms are non-cash backed; providers are expected to fund from their own cash reserves and manage their own liquidity accordingly. Providers cannot access additional revenue working capital or provider capital support (PDC) to fund any capital expenditure linked to these flexibilities.
• trusts must notify NHS England of planned use of capital freedoms as part of their capital planning returns.

These expanded freedoms will continue to operate within the existing statutory framework until wider legislative changes are enacted, with system capital limits and joint planning duties flexed as necessary to accommodate newly authorised foundation trust arrangements (see Capital planning section).

Finance business rules arrangements from 2026/27

For 2026/27 onwards, NHS England will not apply additional capital adjustments based on system or organisation revenue performance. The capital regime will continue to incentivise strong financial and operational performance through the new freedoms and flexibilities framework set out above.

We will, however, honour any 2026/27 capital bonuses earned under the 2025/26 scheme as per the criteria previously set out in the 2025/26 revenue and contracting guidance. Systems’ performance in delivering their 2025/26 revenue plans will still inform the final distribution of capital for that year, in line with the methodology previously communicated.

Provider capital support (PDC)

Cash availability should not be a barrier to the delivery of capital works that are affordable within CDEL allocations. While the revenue cash regime has tightened, NHS England and DHSC will continue to ensure that where approved capital investments are affordable within CDEL limits and consistent with plans, providers will be able to access the necessary cash to deliver them.

Where providers have insufficient cash to self-finance investments, with the exception of those covered by capital freedoms and flexibilities, they may apply for provider capital support PDC to fund prioritised investments that are affordable within their allocations. Systems should include estimates of capital support requirements in their plans.

Funding will only be available where trusts have insufficient cash to self-finance investments. Where cash balances are low and other working capital metrics support a request for system capital support PDC, these will be assessed on a case-by-case basis before seeking DHSC approval.

Funding for national programmes (including strategic capital) will be issued as PDC.

ICB operational capital – Business as usual (BAU and GP IT) and strategic capital

The Spending Review 2025 provides £122m per annum of capital funding to support primary care investments, including GP IT and premises improvement grants and ICB capital requirements, as well as IFRS 16. This funding will be allocated to ICBs using a weighted population basis. ICBs cannot transfer their share of this BAU capital funding to provider operational capital; it is ringfenced for investments in primary care and ICBs.

As set out above, we are supplementing this BAU capital with the addition of £195m from provider operational capital (based on 2026/27 – growing in real terms over the Spending Review period) to support the shift from hospital to community, for example, through strategic primary care and ICB investments; this is in line with the practice previously adopted in some systems. This funding will also be allocated based on ICB footprints using weighted populations. ICBs are able to transfer this funding back to providers in line with their local view of priorities.

The National Programme funding for Primary Care covered below is in addition to the ICB operational capital allocations above; ICBs should consider these in the round in their planning.

NHS national strategic capital

Estates safety

The government has allocated £750 million per year for estates safety from 2026/27 to 2029/30, with planning certainty for a further 5 years, totalling £6.75 billion. This investment is dedicated to tackling critical infrastructure risk, improving safety and reducing the likelihood of service disruption caused by estate failures. This should be additive to expected investment funded by operational capital where levels should be maintained.

This long-term certainty provides an unprecedented opportunity to plan strategically over a 9-year period and prioritise the schemes that deliver the greatest impact, maximising value by aligning estates safety funding with operational capital and other national programmes.

To achieve the greatest impact, funding will be used both to address urgent operational risks and to deliver a small number of larger strategic schemes. To enable this, allocations are being made at regional level, based on the reported relative levels of critical infrastructure risk across the country (on the most recent published ERIC data) and estates related incidents. The allocations are available here. We are providing 4 years’ firm allocations and a further 5 years’ planning assumptions to enable regions to work with providers to develop a 9-year programme and make funding commitments across that period as needed to deliver the programme objectives. The 5 years’ planning assumptions will be updated into firm allocations in due course in light of the latest estate condition survey data and the outcomes of future Spending Reviews (given these may increase the total funding amount available).

Regions will be responsible for developing a balanced portfolio of strategic schemes and continued targeted investment in maintenance to address urgent operational risks. This will include consideration of other project benefits such as transformation, productivity, net zero and opportunities to maximise impact by combining with operational capital and other national programme funding.

During the planning period, regions will need to confirm which allocations they are passing to providers to fund smaller schemes so that providers can reflect those schemes in their plans, and what funding they are holding for the development of larger schemes (above £10 million). We expect regions to have a clear plan for schemes they intend to move into full construction during the first 4 years of the period, and indicative plans for a second wave of schemes they will prepare for the following 5 years, drawing on the long-term planning certainty provided by HM Treasury.

National teams will take an active interest in the prioritisation and delivery of larger schemes that must meet objectives for the Estates Safety Fund. Regional proposals will be subject to national and DHSC approval for assurance of achieving the required outcomes of the fund.

As part of the planning process, regions will need to set themselves stretching targets for reducing critical infrastructure risk, reducing operational incidents and improving estate safety. They will be held accountable for the delivery of their portfolio and will need to provide evidence of meeting these targets; they will be responsible for managing pressures and slippage within their allocation while ensuring agreed outcomes are delivered. Regular reporting through the national capital assurance process will enable review of progress, and underperformance or material deviation from approved plans may trigger further scrutiny or influence future allocation decisions.

This approach reflects the strengthened role of regions under the new operating model and is intended to create the right incentives for strategic prioritisation. It will require regions to engage effectively with systems in their role as strategic commissioners, and manage expectations where not all providers can receive funding. National teams will provide a common framework and support across the country.

To achieve the objectives of the Estates Safety Fund, trusts must continue to use their operational capital to address critical infrastructure risk. The Fund is intended to be additional to, not a substitute for, the historic levels of investment in CIR through operational capital.

RAAC

A dedicated allocation of £1.624bn has been made available to continue the national RAAC programme, (£432m in 2026/27, £402m in 2027/28, £391m in 2028/29 and £399m in 2029/30), as part of the SR25 settlement. This funding is ringfenced to support the eradication of RAAC across the NHS estate by 2035 and to ensure that immediate safety mitigation works can be carried out to keep services safe and operational for patients.

Allocations will continue to be made directly to trusts within the national RAAC programme, based on the approval of robust and deliverable business cases, reviewed by the NHS England RAAC team. Trusts must ensure that plans demonstrate value for money and deliverability against the agreed national eradication trajectory.

While 7 hospitals requiring full replacement remain within the New Hospital Programme (NHP), they will continue to receive funding for interim failsafe works through the RAAC programme. Multi-year funding profiles are being agreed for projects that span across years, recognising the scale and complexity of RAAC eradication schemes. Once approved, funding will be issued as PDC.

New Hospital Programme (NHP)

The government remains committed to delivering all schemes within the New Hospital Programme and has confirmed this in the strategic review of the programme. This programme will continue through SR25, with funding profiles agreed with HM Treasury and included within the NHS capital settlement (£979 million in 2026/27 rising to £3.0 billion by 2029/30).

The NHP will replace the most outdated hospital buildings and provide modern, digitally enabled facilities designed to meet future clinical needs. Funding is ringfenced for delivery of the agreed programme and multi-year allocations will be confirmed directly with participating trusts through the national programme team. Trusts should ensure business cases are deliverable to profile, achieve value for money, and comply with the national standardised design and commercial approach.

Hospital Upgrades Programme

Alongside the NHP, the NHS will complete delivery of more than 70 hospital and community upgrade schemes initiated under previous Spending Reviews. These schemes, focused on addressing the most urgent critical infrastructure and safety risks, are expected to complete by 2028/29, with funding tapering from £223 million in 2026/27 to £103 million in 2028/29. This funding remains ringfenced to enable trusts to bring in-flight schemes to completion and ensure the benefits of these investments are fully realised.

Constitutional standards and hospital to community shift

The Spending Review settlement provides circa £6.0 billion across the Spending Review period to help fund transformation and additional capacity needed in primary, community and acute settings to support the return to elective constitutional standards and improvements in UEC performance through delivering a shift from hospital to community.

This section sets out how providers, ICBs and regions should approach planning. It builds on the rules-based approach introduced last year: early planning certainty via capital allocations in the round at the planning stage rather than separate bidding processes; clear requirements on performance and affordability; and a nationally-led approvals process that assures value for money.

Planning approach

Regions will oversee strategic capital planning, working closely with ICBs to develop proposals for investing in transformation and increased capacity which align with ICBs’ strategic commissioning plans and are on an ICB footprint. They should take an integrated capital and revenue planning approach that first prioritises productivity of existing capacity (so that RDEL goes further), then targets new capacity where required to meet constitutional standards.

Allocations for 2026/27 to 2029/30 have been calculated at regional level in the first instance, based on the agreed methodologies for each programme area. These regional allocations form the basis for ICB and provider planning and will be available here approximately one week after this guidance is published.

Regions will work with ICBs to develop proposals for use of funding. National approval will be contingent on evidence that proposals are:

• Affordable within available CDEL and RDEL allocations, including demonstrating revenue affordability (PDC and depreciation) and identifying mitigations where workforce capacity is a constraint.
• Deliverable to time, cost and quality, with credible phasing of spend to profile, clear critical path milestones and risk mitigation arrangements in place.
• Aligned with national programme objectives and expected performance impact – for example, improvements against constitutional standards such as RTT (18 weeks), diagnostic (6-week), A&E (4-hour and 12-hour), and ambulance response times.
• Targeted at measurable performance improvement, setting out how the investment will deliver specific outcomes by quarter and by site or network (RTT, diagnostics, UEC, cancer).
• Value for money, demonstrating efficiency, productivity and benefits realisation.
• Focused on productivity gains, including theatre utilisation, MRI / CT throughput, and same-day emergency care conversion rates, and on reducing unwarranted variation across sites and providers.
• Aligned with local infrastructure and provider strategies, ensuring coherence between ICB infrastructure strategies, site development plans and provider strategies.
• Optimising use of the estate, supporting rationalisation and maximising utilisation of existing assets wherever possible.

Overview of allocation methodologies

The funding secured at the Spending Review is divided into separate notional allocations for diagnostics, elective recovery, UEC, mental health, learning disability and autism (MHLDA), community services, and primary care, in line with a transparent rules-based model.

Diagnostics (including community diagnostic centre capacity and productivity): Indicative regional allocations are based on modelled capacity growth required to achieve the diagnostic standard and support referral-to-treatment (RTT) delivery, with an adjustment to account for variable construction costs across England. ICB shares of the regional allocation will be determined on a similar basis but will take account of independent sector opportunities (which deliver capacity without CDEL) and other relevant regional intelligence.

Elective recovery: capital in 2026/27 will be targeted at completing delivery of elective hub and surgical schemes commenced in 2025/26 and not yet completed.

Urgent and emergency care (UEC): regional allocations will be based on general and acute weighted population (as used in the formula for RDEL) with adjustments for building cost index and health inequalities weighted population components. Regions will then tailor ICBs’ shares of their allocation to target investment in material bed capacity additions and same day emergency care where it delivers the greatest performance impact per pound, to support co-located urgent treatment centres (UTCs) with proximity to emergency departments and the forthcoming Model ED approach and standards for the first 72 hours.

Mental health, learning disability and autism (MHLDA): Regional allocations will be based on total population (adjusted for the building cost index) with adjustments to reflect distance to travel to meet the commitment to 50% coverage of mental health emergency departments (MHEDs, also known as crisis assessment centres). We anticipate this funding being used to enable delivery of MHEDs and 24/7 neighbourhood mental health centres, eliminate inappropriate out of area placements (OAPs) and locked inpatient rehabilitation, expand learning disability and autism crisis accommodation capacity where capital is the primary constraint. Digital mental health investments, specifically rolling out bed management software and digitising the Mental Health Act pathway, is also in scope.

Primary care: allocations will be based on primary medical care weighted population (adjusted for building cost index and health inequalities weighted population components). We anticipate this funding being used to renovate and repurpose existing estate to increase primary care capacity. Note also that around £50m per year is being held back to support delivery of neighbourhood health services. This funding is not part of the allocations we are making available now, further information on how to access will be provided in due course as the neighbourhood health programme develops. But we encourage ICBs to begin considering their estates requirements for neighbourhood health as part of their strategic planning taking account of the neighbourhood model.

Shift from hospital to community: allocations will be based on community weighted population shares (adjusted for building cost index and health inequalities weighted population components). We anticipate this funding being used to expand out-of-hospital capacity to support the growth in demand for community health services.

Ringfencing and flexibilities

NHS England has developed separate allocations for each of the programme lines set out above, but they are not ringfenced as we want to enable regions working with ICBs to develop coherent integrated plans for how to best deliver the capacity increases and transformation needed to deliver the operational priorities set out in planning guidance within the available funding.

We are however setting 2 expectations:

• proposals should invest no less in diagnostics than is in the indicative allocation, unless the necessary capacity to support delivery of RTT can be created without doing so.
• proposals should invest no less in non-acute services than the indicative allocations for community and mental health, and no less in primary care than the indicative allocation. This is to help ensure we are making progress on the shift from hospital to community.

ICBs and regions are able to make the case for departing from these expectations, but this will need to be discussed and confirmed with national programme teams through regular engagement and the formal panel process to ensure alignment.

Governance and process

Robust governance is essential to ensure that strategic capital is deployed effectively and delivers measurable improvements in performance and productivity. Each tier of the health system has a defined role in the planning and approvals process.

Regions finalise ICB shares of the regional allocation, then work with ICBs to develop proposals for best use of the funding. As part of that, they have a role in identifying and brokering arrangements cross-region or cross-ICB. They should ensure that the proposed use of capital within each ICB footprint is aligned with wider regional strategies and is realistic in terms of being delivered to time and budget. Regions will also hold responsibility for identifying redeployment of underspends across the capital programmes, with plans for that redeployment to be confirmed at a national panel as part of re-forecasting exercises across the year.

ICBs are responsible for working with regions to develop planned use of capital that aligns with their strategic commissioning plans.  In general, they will lead the development of the case for change for each scheme and the identification of the most appropriate options across their providers. They should ensure that proposals are clinically led, sequenced alongside workforce and digital planning, and contribute to credible trajectories for delivery of constitutional standards. Plans must demonstrate that schemes are affordable within revenue allocations and that capital and revenue implications have been considered together.

Providers are in responsible for the detailed development and delivery of their capital schemes, and for reporting on scheme progress and benefits realisation. Providers should ensure that business cases and plans are developed in line with delegated authority and national approvals guidance, deliver best value for money, and are supported by credible delivery plans.

National programme teams will provide the data, modelling and standard archetypes needed to support systems in preparing their plans. They will maintain consistency with national policy, check that proposals contribute to agreed national outcomes and convene approvals panels on a rolling basis. These panels, with regional input, will assess whether schemes represent value for money, can be delivered to the agreed timetable, and are affordable within regional allocations. There will also be ongoing monitoring and reporting responsibilities for the programme team throughout programme delivery, utilising financial and delivery information provided by NHS England Finance and Estates (from the provider finance returns and the national capital reporting tool) to manage their portfolio and support national reforecasting exercises across the financial year.

Planning returns and approvals

• ICBs, with support from regions, will complete a standard strategic capital template alongside operational plans, setting out scheme list, costs and profiles, benefits, RDEL impacts, milestones and risks.
• Programme approval panels, led by national programme teams, but with representation from national estates and finance, and supported with regional input, will run on a rolling basis from March 2026 for schemes that are approval ready.
• Systems should plan to commit 100% of years 1 and 2 funding to named schemes and at least 80% of years 3 and 4 (with a credible pipeline for the balance). As a default, we would expect at least 80% of funding to be committed to schemes above £1m to focus national programme resource on schemes with substantial strategic impact. (Note this does not apply to primary care schemes).
• Schemes below £1m may be approved by schedule where RDEL neutrality or affordability is evidenced. (Note this does not apply to primary care schemes).

Redeployment of underspends and non-utilised headroom

To preserve overall delivery:

• if an ICB has not identified an approvable use for its indicative envelope by the final approval panel, the region will be able to redeploy the funding to replacement schemes that can best support delivery of operational objectives, subject to national approval.
• the same will apply to slippage and underspends identified in-year
• regions can agree brokerage arrangements between systems and across their schemes over the 4-year period, provided that overall delivery of schemes is maintained and performance trajectories are protected.

Data, reporting and assurance

ICBs and providers must report monthly delivery and benefits against their approved scheme schedules (activity, performance impact, milestones, and financials), including via the capital reporting tool. Regions will consolidate returns and escalate risks to national panels. NHS England will publish a national dashboard tracking capital deployment, capacity created, and progress towards constitutional standards. Over time, we intend to move towards a more outcomes-focused approach, ensuring capital is consistently directed to where it delivers the greatest benefit and value for money.

Further details on this direction of travel will be set out in the forthcoming DHSC Capital Strategy. NHS England reserves the right to withhold future funding if a provider or system does not comply with reporting requirements.

Interaction with operational capital and estates safety

As part of planning providers, ICBs and regions should consider the funding stream described above in the round with:

• provider and ICB operational capital (noting that national programme capital should be used for the intended purpose and not as a substitute for operational capital)
• the Estates Safety programme, which is intended to deliver both urgent risk remediation and a small number of larger strategic schemes that materially reduce Critical Infrastructure Risk.
• Where appropriate, schemes may be jointly funded across programmes where they deliver benefits to both estates safety and wider objectives such as meeting constitutional standards. Where schemes interact (for example, enabling works), funding sources and benefits should be clearly attributed.

Approvals contingency and affordability guardrails

Providers (for operational capital) and regions (for strategic capital and estates safety) should seek to develop and maintain a pipeline of schemes sufficient to ensure that capital can be deployed effectively and maximise the impact of available funding, even where some schemes experience delivery issues. Regions should use this pipeline to manage affordability within their overall CDEL limits and maintain delivery momentum across programme lines.

There are three further funding streams to support constitutional standards which will not flow as part of the process set out above:

• Ambulances: fleet replacement and “Make Ready” and logistics infrastructure will continue to be allocated directly to ambulance trusts in line with need.
• Digital diagnostics: Funding will be channelled through diagnostic networks, following the completion of regional digital roadmaps. These roadmaps will set out agreed priorities and investment requirements across a number of core workstreams, including delivery of networked pathology systems, optimisation of histopathology workflows, and implementation of networked imaging systems. Together, they will form the basis of a clear 4-year delivery plan that sequences investment and ensures alignment with regional and network priorities.
• Diagnostics screening: Funding will be managed through national screening and cancer programmes to meet increased demand.

Technology transformation

The Frontline Productivity Programme will be a key source of national capital and revenue technology funding for providers of NHS care. The programme will provide funding envelopes at a regional level to support investments in electronic patient record (EPR) optimisation, cyber security, technology infrastructure and digital medicines aimed at driving productivity gains and in support of the 10 Year Health Plan.

Regional envelopes will be calculated based on ICB weighted per capita data and provider digital maturity scores across the investment areas. Regions, within a set of nationally provided rules, and supported nationally, will be empowered to work with systems and providers to create multi-year investment plans across the spending review period and support their delivery.

Frontline Productivity funding is for transformational investment. Providers are expected to utilise operational capital for the replacement of BAU legacy IT and should plan accordingly.

Capital approvals and delegated limits

The 10 Year Health Plan commits to simplifying capital approvals and expanding freedoms for high-performing providers. NHS England and DHSC have agreed increased capital delegated limits and streamlined the approvals process, which distinguishes between delegated limits for self-financed investment and arrangements for nationally funded programmes.

HM Treasury limits

HM Treasury has raised the overall capital delegated limit for DHSC from £50 million to £300 million, enabling faster delivery of schemes below that threshold. Full business cases (FBCs) for schemes under £1 billion will not require further HM Treasury approval where:

• total cost has changed by less than 10% from the approved outline business case (OBC)
• all OBC conditions are met
• there are no material changes to scope, risk or delivery approach
• the commercial outcome remains consistent with the OBC expectation

Projects of £1 billion or more, or any that are novel, contentious or repercussive, will continue to require HM Treasury approval at FBC stage.

Self-financed delegated limits for NHS trusts and foundation trusts

Revised limits apply to all capital investment and property transactions, including estates, equipment, IT and digital, disposals, leases and managed-service arrangements. The level of delegated authority is aligned with organisational performance under the NHS Oversight Framework (NOF).

Measurement against delegated limits is based on CDEL impact (and RDEL for digital schemes) rather than whole-life cost. Schemes wholly funded by disposals, charitable donations or grants that create no CDEL charge do not require approval if within delegated limits.

National programme and centrally funded schemes

All schemes funded in whole or in part through national capital allocations – for example diagnostics, elective recovery, urgent and emergency care, estates safety or other national programmes – continue to require central approval irrespective of provider segment or value. Approvals will be co-ordinated through the joint NHS England and DHSC Investment Committee or the relevant NHS programme board if below £50 million, providing a single route of assurance and avoiding duplication of process. HM Treasury engagement will be limited to schemes above £300 million or those that meet the criteria above.

Governance expectations

Trust boards remain accountable for ensuring robust local governance and sign-off of business cases. Documentation requirements will be proportionate to scheme size, with standard and short-form business case templates available for smaller or repeat investments. These revised arrangements are designed to empower high-performing providers with greater autonomy while ensuring that major or novel investments continue to receive appropriate national scrutiny.

NHS England » Addendum to the Capital investment and property business case approval guidance for NHS trusts and foundation trusts – capital delegated limits and capital approvals

Estate and commercial considerations

Investment proposals should consider alignment with ICS estate strategies and opportunities to maximise utilisation of estate, including use of void space and drive disposals. Combining different funding streams should be considered where it is possible to drive efficiencies and meet multiple policy objectives. Contribution to delivering net zero should be considered within all capital proposals.

• Providers must ensure their asset data is recorded on SHAPE, and this is kept up to date. Guidance can be provided by the national estates team if required.
• We are also asking that new schemes proposed to be funded as part of the planning process be recorded on SHAPE – to enable consideration and scrutiny of fit with existing estate.
• Providers should complete an annual update of the capital template supporting system capital investment prioritisation and timelines.
• Providers should have an up-to-date site development plan (DCP) for each of its sites. This should include consideration of optimisation of estate utilisation and a validated asset management plan by the end of 2026.

The phasing of capital investments within plans should consider a realistic phasing of costs, taking account of design development, planning and other requirement such as Building Safety Act approval.

Capital investment should only be directed to core or flex assets as defined within ICB infrastructure strategies and Trusts should ensure procurement routes are compliant with the NHS England framework accreditation requirements. More information can be found on the NHS England website.

In line with the 10 Year Health Plan commitment to prioritise the NHS’s 2040 net zero target, all organisations must have regard to the following:

• The Delivering a Net Zero Health Service report (2020) and subsequent progress report (2025)
• The NHS Green Plan Guidance (2025)
• NHS Estates Net Zero Delivery Plan (requires a Future NHS log in)
• The NHS Net Zero Travel and Transport Strategy (2023)
• The NHS Net Zero Building Standard (2023) which applies to all investments that are subject to the HM Treasury business case approval process.

As part of this:

• (As per NHS Green Plan guidance) all organisations must have plans in place for heat decarbonisation through upgrading heating systems, insulation, lighting, and ventilation (as part of addressing backlog maintenance where possible).
• Systems should ensure that electric vehicles (EVs) or ultra-low emission vehicles (ULEVs) are considered when replacing vehicles in an organisation’s fleet.
• Trusts should also continue to prepare for potential future proposals for cross-government capital investment in decarbonisation (e.g. similar to the 25/26 collaboration with Great British Energy), including by developing business cases.

Planning and oversight requirements for national capital programmes

The 10 Year Health Plan commits to reducing the number of layers of approval to a maximum of 3 for the largest schemes. The approval steps are local, national and other government departments, such as HM Treasury or Cabinet Office, where approval is required. This is irrespective of funding source or capital programme or type of business case. We will be refreshing the business case approval guidance to set this out in more detail, but in summary the requirements are as follows:

• capital schemes under £25 million will continue to be a single stage approval with a programme of works template (for less than £10 million schemes) or short form business case template and value for money template (for £10 million to less than £25 million schemes).
• capital schemes of £25 million to £100 million will require an OBC and FBC, including a comprehensive investment appraisal (CIA) model to demonstrate value for money at each stage of the business case.
• Capital schemes of £100 million and above will require strategic outline case (SOC), OBC and FBC, with a CIA model at each stage of the business case.

NHS England will provide business case templates for national programme schemes and are available from NHS England regional teams. Templates continue to follow the HM Treasury Green Book Five Case Model and are proportionate according to scheme value. Providers should use the sub-£25 million business case checklist or the full NHS England business case checklist where over £25 million to ensure that their scheme is sufficiently developed and mature and their business case covers the required content before submission to regional teams.

Capital schemes below £50 million will be approved by NHS England programme boards and schemes of £50 million and above will be approved by the joint NHS England and DHSC Investment Committee.  

Once this approval is secured, a memorandum of understanding (MoU) will be set up to allow draw down PDC to deliver the scheme. The schemes will then be monitored through the capital reporting system and the provider financial returns and reported to the Capital Delivery and Oversight Group (CDOG).

Trusts and systems should note the following requirements will apply across national programmes.

• Where national programme funding is issued as PDC under a MoU, trusts must ensure that drawdowns are not made in advance of need. Trusts must also ensure that, unless NHS England and the DHSC grant exceptional approval, the funds are used exclusively for the designated national programme scheme. Any changes to the intended use of funds or spend profile must be managed through the agreed national change request process. Accurate profiling and forecasting remain essential to support effective in-year use of programme funding and ensure best practice reporting of actual spend.
• Trusts should consider the most effective procurement route in compliance with NHS England commercial guidance, including using only accredited frameworks. If trusts wish to deviate from national frameworks and compliance with NHS England’s commercial requirements, such as Procure 23, they should clearly demonstrate the benefits of doing so.
• Modern methods of construction (MMC) is a core government and NHS policy when developing modern infrastructure. There is a requirement that MMC be used as the default on all construction projects. There is a national NHS target that any scheme over £25m will look to achieve MMC at 70% for new builds and 50% for refurbishments. Where there are exceptions, and targets cannot be achieved, a full and complete explanation and justification must be provided, including the options explored to attain the required target. These targets will be reviewed at business case approval stages. MMC should be adopted for projects below the £25m threshold where practical.
• Progress on the delivery of outcomes and benefits from key national capital programmes are monitored monthly through the national Capital Delivery Oversight Group. The roll-out of the national capital reporting tool has now been completed. All estates schemes, which are part of a national programme delivered through PDC, must use this platform to report every month.
• All the operational outcomes and benefits resulting from the capital investment must be recorded, including efficiencies, savings and reductions in risk. This will provide lessons learnt for future allocations and an evidence base to support future funding requests to HM Treasury.

Capital planning

As part of the 2026/27 financial planning process, and separate to the national programme returns described above, NHS England will collect ICB and provider capital plans, and these should be completed in the following financial planning templates:

• provider – financial planning return (FPR)
• ICB – integrated planning return (IPR)

ICB and provider financial planning returns require the submission of 4-year capital plans that demonstrate compliance with their operational capital allocations for 2026/27 to 2029/30 in line with the multi-year settlement announced as part of the Spending Review.

Alongside these, regions will need to provide a schedule setting their proposed use of Estates Safety Capital, and a schedule of proposed use of constitutional standards and left shift capital for each of their Trusts and ICBs.

Plans for 2026/27 and 2027/28 are expected to fully commit operational capital allocations and national strategic capital. For later years, final plans should include at least 80% of operational capital allocations and a significant portion of national strategic capital.

The financial planning returns should incorporate planned use of national programme capital allocations. Within their financial plan submissions, providers should develop their capital plans for national programme schemes based upon the allocations for specific schemes notified to them as part of 2026/27 planning or upon previously agreed funding commitments and profiles as notified by NHS England.

The provider planning return templates will be prepopulated with the respective capital allocation value for 2026/2027 as well as the multi-year capital envelopes for 2027/28, 2028/29 and 2029/30. In addition, where possible, they will also be prepopulated with the allocations or indicative allocations for national programme capital.

As with previous years, we will accept providers and ICBs over-programming by up to 5% of operational capital allocation value at plan stage, so long as this is based on a clear plan that allows elements to be scaled back or deferred if necessary. The over-programming must be based upon the operational capital allocation after any brokerage between providers or transfers of operational capital between the provider and ICB.

Over-programming against national programme capital allocations is not permitted.

Overall, providers and ICBs have been set allocations for 4 years and indicative assumption for a further 5 years. Organisations should use these allocations to plan and prioritise their capital over the 9-year period. They will need to plan ahead to manage particularly large pressures in any one year within allocations, through flexing their wider capital programme or agreeing brokerage with other providers and ICBs, or both. Organisations need to ensure their plans honour previous multi-year agreements and known capital commitments and support strategic capital planning across the system.

They should contact their region in the first instance for support with this.

Providers and ICBs should refer to their respective technical guidance documents to support the completion of their multi-year planning templates.

International Financial Reporting Standard (IFRS) 16 CDEL Budget

For 2026/27 onwards, there is no longer a separate IFRS 16 CDEL budget, and the overall provider and ICB operational capital budget includes CDEL cover for IFRS 16 requirements. This means no separate IFRS 16 allocations will be issued to providers or ICBs, and IFRS 16 has already been taken into account when determining operational capital system allocations as part of the methodology outlined above.  As above, Providers and ICBs need to plan ahead for lease renewals with significant CDEL allocations and make arrangements to assure they can be covered within allocations.

Intra DHSC Group leasing

Working with colleagues at DHSC and with property companies, we have been reviewing the treatment and CDEL budgetary implications of leases within the DHSC group.

Agreement has been reached that for 2026/27 onwards, where those intra-group leases will be eliminated in the DHSC’s group accounts and do not incur CDEL charge at the group level, the benefit of this elimination will pass to providers and ICBs.

This means for 2026/27 onwards, a provider or ICB’s performance against their CDEL budget will be assessed net of expected intra-group lease eliminations, even though they should continue to report gross pre-consolidation figures.

Further guidance will be shared to confirm the principles as to how intra-group leases will be treated in CDEL terms, when these will be eliminated and the benefit can be correctly passed through and reported within provider and ICB capital positions.

While not all transactions will be eliminated, a significant number are expected to do so, and we hope this will remove any barriers to lease agreements and therefore support the utilisation and efficiency of the NHS estate.

Guidance will also set out the treatment and impact of intra NHS leases which will follow similar principles.

Joint capital resource use plan for ICBs and their partners

The National Health Service Act 2006, as amended by the Health and Care Act 2022 (the amended 2006 Act), sets out that an ICB and their partner trusts:

• must, before the start of each financial year, prepare a plan setting out their planned capital resource use
• must publish that plan and give a copy to their integrated care partnership, health and wellbeing boards and NHS England
• may revise the published plan – but if they consider the changes are significant, they must republish the plan; and if the changes are not significant, they must publish a document setting out the changes

The 10 Year Health Plan sets out that 5-year organisation plans together with neighbourhood health plans will be the core outputs of integrated local planning processes, and as set out in the planning framework, NHS England will work with government to review the requirement for ICBs and their partner trusts to prepare a joint capital resource use plan (JCRUP).

For at least 2026/27, the requirements of the amended 2006 Act will still need to be met and for support in doing so, ICBs should refer to the Guidance on developing joint capital resource use plans 2026/27 document, this will be published soon after this guidance.

In line with the amended 2006 Act, ICBs are required to prepare these plans before the start of the financial year (by 1 April), before then publishing and sharing the final plans, and reporting against them within their annual report.

Any further queries on completing ICB plans, not already covered in Guidance on developing joint capital resource use plans 2025/26, should be directed to england.capitalcashqueries@nhs.net

Until the broader legislative changes are enacted, newly authorised foundation trusts will remain subject to existing statutory duties under the NHS Act 2006, including:

• the joint duty with their ICB and partner trusts to act with a view to ensuring that system capital resource use does not exceed the limit set by NHS England (s.223M)
• the requirement to agree a joint capital plan with their ICB and partner trusts (s.14Z56)

In practice, these requirements will be managed through adjustments to system capital resource limits. Where a newly authorised foundation trust is granted additional capital freedoms, the relevant system limit will be flexed upwards to reflect this, ensuring compliance with s.223M and avoiding any perception of conflict with the joint duty.

From a planning perspective, ICBs and newly authorised foundation trusts should reflect these additional freedoms within their joint capital plans, so that they are embedded in local prioritisation and planning processes.

Communications to systems and providers will emphasise that these freedoms are consistent with the current legislative framework: they do not override system duties but are accommodated within them by adjusting the system control total.

Depreciation

As in 2025/26, additional revenue funding will be available for in-scope depreciation and amortisation costs above system-level baselines. Arrangements for revenue funding will be set out separately in the Medium-term planning framework: Revenue finance and contracting guidance.

The 2026/27 to 2028/29 baselines have been calculated based on 2025/26 baselines, uplifted for growth funded through ICB core programme allocations. System limits will not apply to the resource that systems can access for expenditure above their baseline. However, where systems have high levels of growth, they will be asked to explain how their expectations align with their capital position before resources are confirmed.

Indicative allocations for financial reporting purposes will be based on plan expenditure, and final allocations will be confirmed at year end based on the latest available forecast outturn expenditure. Where depreciation funding is issued that is not required for depreciation expenditure, the allocation will be recovered by NHS England. ICBs and trusts may therefore need to adjust the fixed element of their Aligned Payment and Incentive (API) arrangement in year to reflect a change in funding where actual spend differs from plan.

Land and property disposals and multi-year CDEL credits

The 10 Year Health Plan reaffirmed the freedoms available to trusts and systems to retain full receipts from disposals and to deploy these flexibly across financial years to support better value for money. Detailed guidance was issued in 2023/24. We remind systems and providers that they will need to notify NHS England at planning stage of the planned disposal, the proposal to carry forward any CDEL credit, and the resulting underspend against system allocations. If this is not possible, they will need to notify at the earliest opportunity in the financial year and, at the latest, in advance of the month 6 financial monitoring submission.

Including plan submissions, or monthly monitoring submissions, does not mean any carry forward of disposal credits has been approved, nor should it be assumed they will be automatically provided in subsequent years. The formal approval will be sought from HM Treasury as part of the supplementary budget setting process undertaken every autumn, and a request will need to be made to DHSC and HM Treasury in October 2026, with a formal decision expected thereafter.

Where disposals are linked to, or facilitate, schemes within the New Hospital Programme, providers should not assume that proceeds can be carried forward or redeployed locally. In such cases, CDEL credits will need to be ringfenced to the programme. Providers should contact the NHS England Capital and Cash team to confirm the appropriate treatment and ensure alignment with national approvals.

Further guidance is provided within the Technical Guidance for Financial Planning templates. 

PFI and Local Improvement Finance Trust (LIFT) transactions

Trusts should notify NHS England at the earliest opportunity where there is a risk of a PFI or LIFT project terminating due to default of the Project Co party. Trusts should not enact any option to terminate a contract for Project Co default without the consent of NHS England and DHSC, who will advise trusts about the steps that need to be taken should this risk arise.

Voluntary termination of PFI or LIFT projects will only be considered in exceptional circumstances and where these demonstrate value for money and will require a Green Book compliant business case. Any proposal would need regional support and identified funding for any associated cash and capital or revenue consequences. Trusts considering voluntary termination of a PFI or LIFT contract should contact NHS England at the earliest opportunity. These transactions will be considered novel and contentious and require NHS England, DHSC and HM Treasury approval.

Trusts need to ensure they are aware of the expiry date of any PFI or LIFT agreements, key dates for decisions and any consequential financial costs, for example, payment for assets and condition review requirements. Where trusts are in PFI or LIFT facilities or other leased premises where NHS Property Services is the head tenant or freehold owner, these properties should also be captured in their long-term estates strategies.

Providers should ensure they have fully assessed the capital and revenue financial impact of any PFI expiry or termination within their own financial position and work with DHSC to assess the departmental impact. In addition to any required approvals, providers should ensure confirmed funding is in place for any revenue or capital impact.

Queries on this guidance should be sent to: england.capitalcashqueries@nhs.net

Publication reference: PRN01629