Elective funding ring-fence to be axed

It has been strictly centrally controlled in recent years via the “elective recovery fund”, to incentivise activity and drive the national political priority.

But NHS England’s chief finance officer told the Commons health and social care committee today this would no longer be the case in 2025-26, despite cutting down elective waits remaining a national priority.

NHSE CEO Amanda Pritchard and Julian Kelly confirmed to MPs there would be a big reduction in various ring-fenced funding pots in 2025-26, as part of planning rules due to be published this week. The NHSE CEO said it could be contentious, as it may lead to some people’s priorities being compromised, but the centre wanted to “untie” the “hands” of local leaders.

Mr Kelly also said: “We are not planning to ring-fence elective funding this year, the government asked us to do that previously… we are setting goals to improve elective waiting times, improve emergency care, but it is for them to work out how to do that.”

It means the “elective recovery fund” as it has worked in recent years will effectively be scrapped. NHSE had already said there would be no “uncapped” elective funding in 2025-26, as there has been between April and this month.

NHSE has also said trusts will be expected to carry out a similar level of elective activity next year as this, while each will be set an individual 18-week target.

Meanwhile, Mr Kelly said NHS England was considering changes to the funding regime, including “should we move to paying for [out of hospital care] activity in a similar way we pay for elective activity”?

“If you want to increase capacity, that is one way of doing it,” he said at the session today. 

Changes were not for 2025-26 but would be considered as part of the 10-Year Health Plan, he said.

Mr Kelly said consideration was also being given to introducing “accountable care” type fixed budgets for population cohorts, citing the GP “fundholding” approach of several decades ago.

“Those are things we are looking at as part of the work on the 10-year-plan, but those would be for kind of more radical change from 2026-27 onwards.”

Asked about why NHSE’s transformation director — Vin Diwakar — was in an interim position, Ms Pritchard said the organisation was still considering how to structure its senior leadership alongside the Department of Health and Social Care’s role.

She said there would be no further big restructuring, but it would look to work more closely with DHSC and to devolve more to integrated care boards.

Asked about NHSE’s culture, Ms Pritchard said it had “just completed a big, massive reorganisation”, which has been “really hard for people… some of whom are still finding it really quite hard to adjust to a new organisation… Others of whom are absolutely thriving on the opportunity”.

She said NHSE had carried out a staff survey with “exactly the same question” as local metrics, “so we can compare ourselves to NHS in most areas”, and: “We’re actually doing better than the NHS as an overall in NHS England”, though adding she had “no complacency”.