Cap on elective care funding to be scrapped

New NHS England CEO Sir Jim Mackey confirmed the move in a letter sent to health service leaders today in which he pledged the cap would be replaced by a “much more flexible approach to planning elective activity”.

The letter also set out next steps for the restructuring of integrated care boards and indicated where trusts should seek cost savings.

The cap was originally proposed by government and NHSE’s former leadership as a cost control measure. The decision to scrap it will be welcomed by both NHS and private providers, who had branded the policy “totally unworkable”. 

Sir Jim told a meeting of CEOs last month that he wanted to scrap the cap on elective payments, but said the policy U-turn would be subject to Treasury approval.

The letter said: “We will shortly be publishing the response to the NHS Standard Contract consultation and the payment rules consultation for 25-26, which will set out a much more flexible approach to planning elective activity, including removing the elective payment limit, and proposals to strengthen the current activity management provisions within the contract.

“This will be a first step in developing and strengthening commissioning, where commissioners and providers, where possible, jointly agree on affordable activity levels to meet key standards at the start of the year. This activity plan will be the basis on which providers and commissioners will work together during the year.”

Nurses targeted for cuts

Sir Jim also set out how he wanted trusts to approach cutting their corporate costs, including non-patient facing corporate nursing roles across providers and ICBs.

He wrote: “Since 2018-19, corporate costs in NHS providers have risen by 40 per cent (£1.85bn), excluding pay and pensions (56 per cent including pay and pensions)… We are now requesting that all NHS providers reduce their corporate cost growth by 50 per cent during quarter 3 2025-26. These savings should be reinvested locally to enhance frontline services.

“Some of these savings will be most effectively realised at a geographical or system level. Regional directors will share benchmarking data for each provider and lean into this work to ensure that systems are collaborating, where appropriate, to determine the best approach.”

He continued: “Since 2019, there has been a substantial increase in the number of non-patient facing corporate nursing roles across NHS providers and ICBs. These roles have supported significant improvements within the nursing workforce, such as sustained post pandemic low leaver rates and reductions in vacancy levels.

“However, initial analysis indicates significant sector and regional variation with the deployment and proportion of these roles within NHS providers. To ensure optimal deployment of the corporate nursing workforce, Duncan Burton, chief nursing officer for England, will lead a benchmarking analysis to identify potential unwarranted variation and utilise this knowledge to set an appropriate threshold which we will ask systems and providers to align to in 2025-26.”

Sir Jim has encouraged trusts to develop wholly owned subsidiaries to run many of their non-clinical activities.

He wrote: “We have adjusted our approval approach to subsidiary transaction assurance to reduce the burden on providers while ensuring that certain conditions are met. We will provide guidance shortly, informed by discussions with unions nationally.”