NHS England » Financial performance update

Action required

The Board is asked to note the month 1 system position in 2025/26.

Month 1 system financial positions 2025/26

2025/26 plans

1. Systems submitted revised 2025/26 financial plans on 30 April. All systems now have plans set and agreed by integrated care board (ICB) and provider boards that balance to the resource available.

2. As in 2024/25, systems with a deficit plan limit will receive non-recurrent deficit support funding in 2025/26, to match the size of the agreed limit. Without this support, system plans would show a £2.2bn deficit.

3. Delivering against plans will be challenging. The Planning guidance sets ambitious productivity and performance goals for the NHS, but provides no additional funding to cover rising demand or activity. The NHS aims to take the next step in reducing waiting lists and improving access to emergency care, GPs, and NHS dentists. To achieve this, systems must collectively deliver £11.0 billion in efficiencies – 7.1% of total allocation – compared to the £8.7 billion achieved in 2024/25.

Month 1 system financial position

4. Table 1 below sets out the system revenue position for month 1, 2025/26. The year-to-date (YTD) system position, which includes ICB and provider data, shows a £62m overspend. Nine systems account for 80% of this total. In the systems with the largest overspends, there is a correlation between the YTD variance, pay variance, and efficiency shortfall.

Table 1: YTD system financial position at month 1

5. At month 1, YTD variances are mainly due to a £110m shortfall in efficiency plans, including workforce increases beyond planned levels. Reported provider pay remains flat in real terms compared to months 11 and 12 of the previous year. Total headcount has decreased from 1,509k to 1,492k, a 1.1% reduction. Compared to the plan, providers are showing an overspend of £95m, representing a 1% variance.

6. The proportion of schemes rated as high risk continues to fall, from over 50% in the March plan submissions, to 44% at the end of April and 40% as reported for month 1. We continue to see progress, with all systems continuing to further develop savings plans and de-risk plans.

7. The systems with the highest levels of overspend at month 1 are not necessarily those systems with the highest risk of overspend for the year. This depends heavily on the phasing of plans and the ability of local leaders to successfully implement major efficiency programs.

8. Further restrictions on cash-borrowing have been introduced since the start of the year, to help make sure that spending is kept under control as far as possible and to strengthen appropriate financial discipline. Systems in receipt of deficit support funding will receive the funding on a quarterly basis contingent on continued delivery of their plans.

Other risks to the financial position

9. In addition to the risk system plans not being fully delivered, there are other significant risks to the financial position in 2025/26. Pay settlements set by Government following the recommendation of the Pay Review Bodies have now been announced. We have provision in the funding settlements for a 2.8% pay settlement. We are currently working with DHSC to address the additional costs resulting from the announced pay increase.