NHS England » Financial performance update

Organisation objective

The Board is asked to note the latest financial position of the NHS.

Following the October Budget we have confirmed full funding for: agreed plans, the cost of the 2024/25 pay deals, the cost of June’s industrial action, and income to cover elective over-performance. Therefore we expect providers and systems to deliver the financial plans approved by their boards for the year.

Table 1 below sets out the revenue expenditure position to the end of December 2024. The bottom-line position is shown on a non-ringfenced Revenue Departmental Expenditure Limit basis, which is the key measure for financial performance. Compared to plan, the aggregate system position shows expenditure to be above plan by £1,032m (0.9% variance versus allocation), with a net year to date overspend of £618m.

Table 1: Financial position at month 9

The month 9 expenditure limit of £186.6bn includes additional funding for pay awards, to support elective recovery and the COVID vaccination programme.

The overall adverse system variance reported at month 9 compares to an overspend of £1.2bn to the same point last year, and is driven predominantly by overspends in providers with much of this due to slippage against efficiency plans and overall headcount (including agency and bank spend) being higher than plan.

The systems assessed as having the highest risk of overspending their plan have been directed to engage external support to ensure that spend controls are operating effectively, accelerate their efficiency plan delivery and ultimately to reduce their rate of spend to match the available resource. Tighter cash-borrowing controls have been introduced since the start of the year, also to help make sure that spending remains in line with plan.

Delivering against plans will require systems to deliver significant efficiencies and higher income of £9.3bn (equivalent to 6.2% of their total allocation); and an aggregate reduction in WTE staffing of 1.2% compared to 2023/24. At month 9 systems have delivered £5.7bn of savings which is £0.4bn lower than plan. This compares to £4.8bn of efficiencies delivered at the same point last year.

Overall workforce levels have reduced by 0.6% since the end of the prior financial year. Agency spending has reduced significantly in the last two years and is continuing to fall in 2024/25. Cash spending on agency staff is lower now than at any point in recent years and as a percentage of total pay is lower than at any point since 2017 (when the current data goes back to). Cash spending on agency staff is currently forecast for 2024/25 at £2.1 billion, which would be a reduction of £1.4 billion from 2022/23 (~38% reduction).

We are expecting that ICBs and providers will continue to improve their expenditure run rate in the final months of the year. To the extent that systems are not able to deliver their plans, we expect that underspends in NHS England as a result of the tighter financial controls we have now had to impose will be sufficient to deliver balance across the NHS as a whole.

Providers have spent £2,922 million on capital schemes to month 8 (excluding IFRS 16 expenditure relating to lease assets), representing 39% of their full year budget (compared to 39% at the same stage last year). The DHSC provider and commissioning capital budget for 2024/25 (including IFRS16) is set at £8,712 million against which we are currently forecasting an underspend of £108 million.

In January we issued financial allocations and planning guidance. Next year will be tougher than previous years. The final revenue budget shows circa 2% growth in real terms. This will need to cover all costs including final pay settlements set out by government, Employer National Insurance Contributions, increases for inflation, and the costs of recovery including all elective activity and unavoidable costs such as new treatments approved by the National Institute for Health and Care Excellence. Final plans are due to be submitted at the end of March.

Publication reference: Public Board paper (BM/25/02)(Pu)