NHS providers are wasting energy pursuing foundation trust status when the model is “not going to work in the future”, Sir David Nicholson has said.

In his final HSJ interview before retirement at the end of this month, the outgoing NHS England chief executive also gave a damning account of how current NHS rules and structures were obstructing vital changes. He also warned the NHS could tip into overall deficit in the next financial year for the first time since 2005-06.

Speaking as he prepared to leave after 36 years in the service, Sir David said some recent changes were positive, such as greater clinical leadership and the potential of an independent NHS England.

However, he identified a series of problems with the structure, mainly a result of government reforms, that if not solved risked leaving the NHS “locked into an old system which we simply can’t afford”.

Sir David said: “This year the NHS overall will make a substantial surplus… It’s going to be quite tight next year. It is still possible [it will make a surplus in 2014-15] but it will be tight. 2015-16 is a completely different place, because of the [better care fund pooling with councils].”

Sir David Nicholson

He warned that if the systemic problems he identified were not addressed the NHS could end up making short term cuts, and reversing the gains he listed as among his proudest achievements, including reducing waiting times and hospital acquired infections.

The problems were:

Provider policy

Sir David said the government’s policy on providers “that somehow everyone’s going to become a foundation trust” was in fact “not a policy at all because it can’t be implemented”. This left a “vacuum” and he could not see “where the change is going to be made.” He said: “People are using lots and lots of energy flogging a [foundation trust] model which is not going to work in the future.”

Sir David said the government needed a new policy, which may include changing legislation, creating “opportunities” for a variety of models to “flourish”. These include chains of providers, commissioners joined with providers, and GPs “bringing in secondary care clinicians as partners”.


Sir David said the government “still hasn’t got the [section 75 competition] regulations right” and ministers’ intention that competition “be driven by what commissioners require” was not “reflected in the regulations”.

He said competition rules and regulations made “it very difficult [for health providers] to make decisions”, and this was preventing service change. “When people are uncertain and things are too complicated, they go to lawyers for advice [and] we end in a bad place.”

System leadership

Sir David said: “It’s not clear now who makes the decisions… If you’re going to make a big and ambitious change, who actually does it? That’s a real problem.

“The position of the reforms is commissioners should drive change. But providers tell me commissioners come down a list [of priorities for attention]. They [consider] the Care Quality Commission, Monitor, the Trust Development Authority, and then commissioners. That’s a difficult place for people to have to make those decisions.”

The commissioning system

Sir David said the split between NHS England’s primary care budget and CCGs’ responsibilities was “undoubtedly an issue” and the answer was more “pooling resources and joint commissioning”.

He acknowledged the “basic infrastructure” of NHS England’s commissioning of specialised services needed to improve, as did “information systems”. He said he was “sure” strengthening specialised commissioning capacity would be a priority for his successor Simon Stevens, who starts on 1 April.

Mr Stevens would also need to consider the balance between NHS England’s central and local resource and how much it still needed elements of its structure which are “slightly old style control mechanisms”, such as its regional and local operations divisions.


Sir David said the new system meant change required “mutual trust and working across organisations”, while “a lot of experienced people” had left the service. “A lot of those relationships have been fractured. To build [new] relationships and trust takes time.”

‘I was negotiating going on a package’

Sir David has confirmed he was about to be pushed out of his job by Andrew Lansley and had begun talks on leaving with a “pay-off” when the government backtracked.

The outgoing NHS England chief executive said the former health secretary had “made it really clear to me I was not the person who was going to lead the NHS Commissioning Board”.

“It got to the point where I was negotiating with the Cabinet Office about going on a package,” in autumn 2010, he said.

“I was going on the Wednesday to the Cabinet Office to talk about it, and on the Tuesday, [Mr Lansley] invited me for breakfast and asked me to stay.”

It was “hard for me to speculate” about the reason for the change of mind, he said, “but there is no doubt I had personally quite a lot of support from… the Treasury [and] Number 10”.

Sir David said he agreed to stay because he did not want to have “walked away when the NHS was in real trouble” and believed he could “get the reforms in an order which I thought could work”. He said he was now receiving no “pay-off”.

Nicholson exit interview: Rules and structures are blocking change