Summary

1. The 2025/26 draft financial plans submitted in February 2025 totalled £4.4 billion deficit (£6.6 billion gross of deficit support funding (DSF); there was a positive response after the leadership and financial reset in March 2025 with final plans submitted on 30 April at break-even after a series of interventions and board to boards. The level of efficiencies in plans was £11 billion (7.1%) of which £4.8 billion (44%) was deemed high risk. We had a full set of capital submissions; 5 systems submitted non-compliant plans (that is, more than 5% over budget).

2. Over the past year, NHS England’s national finance teams have worked closely with regions, systems and providers to maintain financial balance across the NHS, strengthening financial discipline and creating the conditions for long‑term transformation. Senior leadership across NHS England and the wider Chief Financial Officer directorate have played a key role in reinforcing the importance of financial grip, and ensuring consistent and visible focus on living within our means as part of day‑to‑day operational delivery.

3. This approach has delivered results. The NHS ended the year with a £70 million underspend (0.035%) at a national level, as well as managing multiple rounds of industrial action, major restructuring programmes across all NHS organisations, and supporting the elective sprint in the final quarter. For the first time in ten years the financial position has been delivered without drawing on a reserve claim from HM Treasury, demonstrating improved financial grip, building greater confidence from government partners, and a step change in how financial control and accountability are understood across the system.

4. Within that position the systems delivered a £563 million deficit (£400 million down from 2024/25 on a like for like basis) with some big strides made across all areas of financial performance:

1. the level of overspend in front line organisations has reduced by over one third
2. the number of organisations delivering plan increased from 70% to nearly 80%
3. the level of efficiency delivered increased from £8.6 billion to £10.2 billion
4. agency spend was almost halved, from £2.1 billion to £1.2 billion

Revenue

5. The unaudited NHS non-ringfenced Revenue Departmental Expenditure Limit (RDEL) position is a £70 million (0.035%) underspend, within that position are system overspends of £563 million, this figure reflects the impact of held-back deficit support funding (DSF). The figures presented in this paper reflect draft accounts submissions and are therefore subject to external audit process.

Table 1: Financial outturn 2025/26

6. The overall system deficit including DSF is £813 million which reduces to £563 once withheld DSF and delegated specialised commissioning are included, with 15 systems reporting deficits (including DSF) compared to 17 in 2024/25.

7. System overspends are largely driven by slippage against efficiency plans, including workforce costs above planned levels. The financial impact of five days of industrial action in July has also adversely impacted system positions due to the increased cost of staff cover during the strikes. NHS England has provided funding to providers for the more recent industrial action. Systems delivered £10.2 billion (92%) efficiencies, a shortfall of £842 million to the planned level of £11.2 billion but a £1.6 billion increase on 2024/25 levels.

8. The table below shows the 15 systems that did not deliver their financial plans for the year. 

Table 2: Systems with deficits 2025/26

9. The financial position for each system shows the total expected deficit for the year with DSF if earned and excluding DSF. The 5 systems with the largest deficits (Kent and Medway, Cheshire and Merseyside, Nottingham and Nottinghamshire, Humber and North Yorkshire and Hampshire and Isle of Wight) are responsible for 88% of the total system deficit.

10. We have seen significant improvements in 2025/26, with several systems that have historically faced huge financial challenges making substantial progress toward delivering their plans for the year and reducing the underlying deficits. These improvements have largely been driven by full board ownership of the challenges, resulting in much stronger financial grip, better delivery of efficiency plans, and focused action on key cost pressures such as continuing healthcare expenditure and agency staffing. The table below shows 8 systems have improved their gross deficits by over £300 million in one year.

Table 3: systems with material improvements in 2025/26

Capital

11. Providers have spent £9,174 million on capital schemes during 2025/26 (including IFRS 16 expenditure relating to leased assets), representing 98% of their full year budget. The Department of Health and Social Care provider and commissioning capital budget for 2025/26 (including IFRS 16) was set at £10,176 million against which we delivered an underspend of £321 million. We planned to deliver an underspend of circa £200 million to make our contribution to managing the Group overcommitment.

12. We have agreed to make available up to £80 million of capital funding to support an urgent and emergency care (UEC) incentive scheme. Eligible providers are able to utilise the capital awarded across 2026/27 and 2027/28. Based on improved UEC performance in 2025/26, 34 trusts are eligible to receive a share of £80 million.

Annex 1: financial position by system (surplus / deficit basis) £m

Annex 2: providers with an overspend greater than £5 million