Overview
The elective care capital incentive scheme aims to incentivise and reward providers who make significant improvements to their referral-to-treatment (RTT) position, while also ensuring continued progress is made towards reducing the waiting list, including long waits.
Total budget: The £40 million capital departmental expenditure limit (CDEL) uplift is being divided into 2 rounds of £20 million with the first round being allocated to providers in Q1 2026/27 based on performance from April to September 2025. This allocation is not cash-backed.
In the first funding round the scheme will reward the 10 most improved providers who make the greatest improvements towards meeting the RTT standards. To qualify, these providers must also be on track to deliver the waiting list reductions they committed to in their planning submissions*, including specifically meeting their targets for reducing the number of patients waiting over 52 weeks for treatment. Providers must also be demonstrating progress towards meeting their plan for RTT performance as of the end of September 2025.
The scheme complements wider elective finance reforms, including amendments to the payment scheme and performance incentives.
* Providers who submitted plans for growth in their waiting list are being asked to submit new trajectories which will need to show a reducing waiting list size. These providers will need to be on plan against these trajectories, rather than their original planning submissions.
2025/26 scheme structure
The £40 million will be divided into 2 £20 million funding rounds.
The first round will be allocated to providers in Q1 2026/27 based on April to September 2025 performance. Providers will be notified in Q3 2025/26 if they are successful and will receive the capital as an uplift to their 2026/27 operational capital allocations. If providers want to spend some or all of the incentive in the final quarter of 2025/26, they can request this from the national capital team once allocations have been confirmed.
The details of a second round of funding will be shared later in the year.
The CDEL uplift associated with this incentive scheme is not automatically cash backed. If a provider does not have sufficient cash to fund capital investments from the CDEL uplift, they will be able to apply to NHS England and the Department of Health and Social Care for system capital support public dividend capital (PDC) financing. The request will remain subject to the normal tests on operational capital allocations and CDEL affordability, as well as an assessment of the purpose of funding and the organisation’s ability to finance the expenditure from its own cash reserves or depreciation.
Background and rationale
The scheme supports the strategic direction set out in both the Elective Reform Plan and the 10 Year Health Plan, which calls for a return to the 92% RTT Constitutional Standard and transformation in how elective care is delivered.
Reform cannot be achieved using existing approaches alone but requires systematic change through innovation and redesign. The scheme recognises this effort by rewarding providers who deliver the biggest measurable RTT performance improvement, helping to support providers to deliver improved productivity, modernise pathways and invest in local solutions to enable a return to RTT Constitutional Standards.
The scheme is part of a three-year commitment designed to align short-term incentives with long-term reform, helping the system shift towards a more productive, efficient and patient-centred approach to elective care.
Eligibility criteria
The scheme is aimed at rewarding meaningful improvement toward the RTT standard beyond existing trajectories.
NHS England will utilise the formal monthly RTT submissions to assess performance. To be successful for the scheme, providers will need to meet the following criteria:
- demonstrate percentage-point improvement in RTT performance towards the 92% standard between 31 March and 30 September 2025
- have met their planned overall waiting list size for the end of September 2025** (the size they expected the waiting list to be in their submission) and shown a reduction in waiting list size during the first half of the financial year
- have achieved their planned target for the number of patients waiting over 52 weeks as of September 2025, reflecting expected progress at this stage of the year
- have delivered their planned level of RTT performance for September 2025, as agreed at the start of 2025/26
** Providers who submitted plans for growth in their waiting list are being asked to submit new trajectories which will need to show a reducing waiting list size. These providers will need to be on plan against these trajectories, rather than their original planning submissions.
The top 10 providers who meet the above criteria will be selected. Successful providers will be identified in Q3 2025/26, with funding allocated in April 2026 unless providers request earlier transfer, in which case funding can be released in January 2026 for utilisation in 2025/26.
All NHS acute providers delivering elective care will be automatically included – no application is required. This includes providers receiving support through the elective tiering framework.
Provider data will be collected and analysed through existing reporting mechanisms via the formal monthly RTT submission. No additional reporting is required.
Funding distribution
Each of the 10 most-improved providers who meet the eligibility criteria will receive £2 million in capital funding.
There are no mandated requirements for how successful providers use the capital funding, though they are encouraged to use it to support elective performance and transformation.
Expected outcomes
- national sustained improvement in RTT performance
- national reduction in elective care waiting list size
- increased hospital capacity and efficiency
- greater innovation in elective pathways without restrictive funding conditions
- improved productivity
- reduced variation in RTT delivery
Timeline and milestones
| Phase | Activity | Date |
|---|---|---|
| Performance review | RTT performance is tracked monthly | April to September 2025 |
| Launch | Scheme is announced | June 2025 |
| Scheme design | Details confirmed on how the scheme will run and how the capital funding will be allocated | August 2025 |
| First funding round | 10 most improved providers identified | Quarter 3 2025/26 |
| Funding allocated | Capital funds allocated to successful providers | April 2026 (unless agreed otherwise) |
| Evaluation and refinement | Early impact insights and scheme refined prior to H2 funding | Quarter 2 2026/27 |
Evaluation of the scheme
NHS England will assess whether the capital allocated has successfully contributed to a national improvement in 18-week RTT performance. It will also explore the wider impact of the capital funding on elective reform.
The impact of the scheme will be reviewed to allow further refinements of the criteria ahead of future funding rounds.
Evaluation method:
- quantitative analysis of RTT and activity data versus plan
- comparative analysis
- qualitative feedback from providers and regions
- review of how the capital is used where applicable
The evaluation will be led by the National Elective Care Programme, supported by Strategic Finance and the Analytical team, and will inform the design for further funding rounds.