Budget 2025: submission from NHS Providers

The 2025 budget should aim to provide a settlement for the NHS that: 

1. Shields frontline services from the financial impact of industrial action and increases to medicines prices to ensure trusts can maximise the use of resources to recover care backlogs and improve performance.
   
   
2. Provides short-term financial support to cover any unforeseen upfront costs (such as redundancy payments) associated with delivering financial plans this year and secure the NHS’s path to longer-term financial sustainability.
   
   
3. Reforms the capital allocation regime to grant trusts greater flexibility to strategically invest in infrastructure projects that will improve productivity, modernise care and deliver better outcomes for patients – as outlined in our report: Investing in the NHS: empowering the sector to drive productivity, renewal and growth.
   
   
4. Develops a comprehensive capital strategy to ensure the NHS estate is well-equipped to tackle the challenges of the future.
   
   
5. Sets out a realistic delivery ask for recovering care backlogs which balances improving access to care with a return to sustainable trust finances.
   
   
6. Addresses the imbalance in resource allocations between mental health and physical health and reverses under-investment in community services to meet record levels of demand and continue to deliver safe, high-quality care to patients.
   
   
7. Secures long-term funding streams to enable trusts to build new capacity, invest in the prevention of ill health and address health inequalities.

The NHS continues to face significant financial pressure. In recent years, system finances have weakened, becoming increasingly reliant on national top-ups to manage persistent challenges. High inflation has eroded the value of trusts’ allocations, while sustained industrial action and operational challenges – such as higher patient acuity and discharge delays – have placed additional strain on overstretched budgets. This year, initial forecasts indicated a £6.6bn aggregate deficit, highlighting the extent of the financial challenges faced by trusts in recent years. While the planning deficit has been reduced to £2.2bn, there is broader recognition that the overall financial position of the NHS remains highly fragile. Trusts are supportive of the vision set out in the 10-year health plan (10YHP), however, they are actively managing a number of immediate financial pressures this year which, without further support from government, could slow progress in delivering the longer-term transformation set out in the 10YHP. 

Our April 2025 survey of trust leaders highlighted the scale of the challenge providers face this year. Trusts have been set an unprecedented £11bn efficiency savings target, forcing them to make difficult choices to support the delivery of their financial plans. Nine in ten trust leaders we surveyed told us they were scaling back services this year (47%) or considering scaling back services this year (43%). Over three-quarters (77%) of leaders told us they were expecting to cut substantive clinical posts (37%) or considering cutting substantive clinical posts (40%). A further 62% of trust leaders reported that their organisation did not have a healthy cash balance and were grappling with an unsustainable underlying run rate. As our survey results demonstrate, trusts are under real pressure to deliver reductions in their expenditure, while also minimising the impact of cuts on patient care.

Trusts have made significant progress on meeting those challenges so far this year. Since 2022/23, trusts have delivered over £20bn of efficiency savings and remain committed to delivering the highest level of in-year efficiency savings on record this year. As our April 2025 survey results demonstrate, trusts are prepared to take the tough decisions required to return the NHS to a financially sustainable position. The latest NHS England (NHSE) data shows that the aggregate system deficit was £172m by the end of July 2025, which is significantly lower than the £487m deficit recorded at the same point last year.

However, it is important to outline that the overall financial position remains precarious. NHSE has estimated that the financial risk embedded in plans this year could be as large as £1.5bn. Trusts have already absorbed £300m of costs from July’s resident doctors strike, and trust leaders are clear that finances will not be able to sustain any further shocks. As outlined by the Nuffield Trust, if the government agrees to lifting the threshold that the NHS can pay for drugs and medicines, this could have significant cost ramifications for trusts. It is therefore essential that government meets the costs arising from industrial action or increases to medicines prices to protect frontline services. Any further cost pressures must be funded by government. There is no headroom left within trusts’ budgets to deal with unforeseen cost pressures and deliver their financial plans. 

As outlined above, trusts are prepared to take tough decisions this year to reduce their expenditure on staff pay in order to deliver their financial plans. While such measures will improve productivity and reduce recurrent costs, they also create short-term cost pressures, particularly for redundancy payments. Trust leaders are concerned that these unforeseen upfront costs risk undermining financial plans and could postpone the implementation of necessary changes to staffing levels. We understand negotiations continue on a redundancy support package for integrated care boards (ICBs). These cost pressures should be borne in mind as the government develops its 10 Year Workforce Plan, due for publication before the end of this calendar year. Any priorities set in the plan which require additional resource must have accompanying funding in order to be enacted. Government support will be critical to provide trusts with the financial headroom they need to bridge the gap between immediate costs and future savings. The government should consider whether there is any flexibility in the phasing of the funding announced at the recent Spending Review which will support trusts manage immediate financial pressures and front-load investment in order to that will help deliver the three shifts. 

In our April 2025 survey of trust leaders, 60% of respondents reported that they do not feel confident that they have sufficient access to capital to manage rising demand, improve productivity and provide a positive environment for staff and patients. While trust leaders welcome the recent uplifts to capital budgets, the level of funding they are able to access still falls short of the scale of infrastructure need across the NHS. The maintenance backlog has steadily risen over the last decade, and now stands at £13.8bn, with trusts managing significant levels of risk across their estates. The proportion of the backlog categorised as ‘high risk’ (£2.7bn) is now seven times higher than the equivalent figure for 2013/14. Estate-related issues impede trusts’ efforts to improve productivity, with medical procedures frequently disrupted, postponed or cancelled due to faulty equipment or safety hazards. A large portion of the NHS estate is simply outdated, with 42% of NHS facilities built before 1985 and 14% predating the NHS’ establishment in 1948. This aging infrastructure poses significant challenges to trusts in meeting modern healthcare standards and means that a significant proportion of trusts’ budgets each year is absorbed by maintenance costs, leaving little headroom for trusts to prioritise longer-term strategic investment.

Trust leaders emphatically agree with Lord Darzi's conclusion in his 2024 review that the NHS capital regime is "dysfunctional". To address this challenge, government should consider comprehensive reforms to the NHS capital regime to ensure capital budgets are deployed as effectively as possible. Our report, Investing in the NHS: empowering the sector to drive productivity, renewal and growth, identifies several priorities for reform that would enable more strategic investment and deliver better value for patients: 

• To support delivery of the 10YHP, the DHSC should set a trajectory to increase the capital share of health spending annually, with the aim of dedicating 10% of the overall budget to capital investment by 2035. This would support the 10YHP’s aim of allowing trusts more financial flexibility, for example around reinvesting surpluses, and could transform the NHS with more capacity, modern facilities, cutting-edge devices, labour-saving technologies, and the most advanced digital tools.
  
  
• There is strong consensus among trust leaders that the capital approvals process is too complex, slow and risk-averse, stifling innovation and delaying projects that will deliver tangible benefits to staff, patients and productivity. Government should explore ways to simplify and accelerate approvals, using a clear criteria-led approach to ensure decisions align with local, regional and national priorities. 
  
  
• Trusts have been continually frustrated by nationally held funds being released late in the financial year, often at short notice. This undermines long-term planning, increases bureaucracy via the use of burdensome bidding processes, and leads to inefficient spending decisions to avoid vital capital funds going to waste. Trust leaders support reforms that would allow a portion of capital budgets to be carried over between financial years. One potential solution may be to establish a new NHS investment bank to facilitate inter-year balancing. This should be investigated, as it could provide trusts with greater flexibility to ensure that capital funding is invested as strategically as possible. 
  
  
• The requirement for all capital investment to not breach the capital departmental expenditure limit (CDEL) restricts partnerships with local authorities and private investment and acts as a real barrier to unlocking alternative funding streams. Excluding certain types of expenditure – such as retained surpluses, local authority or commercially driven investment – from counting against DHSC CDEL could stretch the NHS capital budget further and unlock wider investment in healthcare infrastructure and position the NHS as a driver of local economic growth. Greater investment with local authorities and private developers could create opportunities for the NHS to support efforts to revitalise high streets and bring care closer to patients and service users. 
  
  
• Trust leaders welcomed the government’s decision to explore the feasibility of introducing new public-private partnerships (PPPs) for primary and neighbourhood health infrastructure. It is clear that lessons need to be learned from previous private finance initiatives (PFI) and the long-term affordability to trusts of such schemes needs to be considered to ensure these represent genuine value for money, both now and in the future. Provided value for money can be demonstrated and future revenue costs managed, trusts would be supportive of an expansion of PPPs to support healthcare infrastructure from all sectors.

The government’s ambition to implement the "three shifts" in care – expanding community services, preventing ill health, and harnessing new technologies – will demand a different approach to the NHS estate. As recovering elective and emergency care performance has been prioritised, mental health, community and ambulance trust leaders are particularly concerned about a lack of parity for investment in their estates. Trust leaders would welcome the development of a comprehensive NHS capital strategy which would set out a vision for how the NHS estate should adapt to changing care delivery models and ensure parity of access to capital funding for ambulance, community, specialist and mental health services. This would provide trusts with a framework to base their local plans on and ensure the future NHS is not operating from an inadequate estate in the future.

While the NHS has made progress in reducing the longest waits for care, the overall size of the elective waiting list remains stubbornly high. As of August 2025, the waiting list for elective care was 7.41 million cases, involving 6.26 million individual patients. Although long waits persist, trusts have made progress in reducing the number of patients waiting over 18 weeks for treatment, currently 2.89 million cases, representing a 9.3% fall in comparison to the same period last year. Accident and emergency (A&E) departments are seeing record demand, with 2.31m attendances in September 2025 – the highest September figure ever recorded. In this context, trusts are doing all they can to see and treat patients quickly but remain slightly behind the 78% target set out in the Urgent and Emergency Care Plan published earlier this year. Despite record demand, ambulance response times have been steadily improving, with August 2025 seeing the fastest response times in over four years. Elsewhere, the waiting list for community services is now at a record-high, with over 1.2 million cases in July 2025 and with monthly referrals now 66% higher than the equivalent pre-pandemic figure. Overall, the NHS continues to deal with significant operational pressures as it works hard to recover care backlogs, while continuing to meet record levels of demand.  

Recent performance data reflects the determination of trusts to tackle long waits and deliver for patients, and also the scale of the challenge ahead in meeting key operational priorities. Sustained progress on elective recovery and urgent and emergency care (UEC) will require realistic expectations, sustained focus, targeted investment, and sufficient flexibility for trusts to expand capacity. Without this, there is a real risk that targets will outpace what is operationally achievable, destabilising finances and undermining the progress trusts have already made. To scale up activity, manage record demand, and embed improvements to patient care, the government must provide trusts from all sectors with the right resources and the strategic headroom to deliver performance improvements. Trusts are working hard to improve productivity, however there needs to be recognition that investment will be required in order to tackle the elective backlog as quickly as possible, and in time to meet the 18-week target by 2029. 

To sustainably improve access to care, trusts need the flexibility to build new capacity, shift more resources into community-based services and invest in preventing ill health. However, most providers are currently held back by requirements to deliver stretching financial plans underpinned by generating unprecedented levels of efficiency savings. Responding to our April 2025 survey of trust leaders, 88% disagreed that trusts and systems have sufficient funding to invest in prevention and help manage future demand growth. Community trusts have also reported that the removal of ringfences from service development funding (SDF) this year has disproportionately impacted investment in community services. Trusts agree with the government’s focus on improving NHS performance and reducing waiting times, but this should not be restricted to elective and UEC. This commitment must also contain a concerted effort to tackle waiting lists for mental health, learning disability and community services; improve population health; and address health inequalities. More can be done to align the government’s priorities for the health service with a targeted approach to improving the overall health of the population.

Demand for mental health services has risen sharply in recent years, with open referrals reaching 2.16 million in August 2025 - 42% higher than the equivalent figure from August 2019. Despite efforts from trusts to adapt to growing demand and the evolving needs of patients, there is still significant unmet need. Our April 2025 survey of trust leaders highlighted that 50% of trust leaders disagreed that it would be possible to meet mental health need this year if the current trend of investment continues. Trusts have worked hard to increase access and transform models of care, however, these efforts have been hampered by recent falls in the share of NHS spend invested in mental health services and speculation over the future of the mental health investment standard (MHIS). Lord Darzi’s 2024 report highlighted the disparity in resource allocation between mental and physical health, with mental health accounting for less than 10% of NHS expenditure despite accounting for over 20% of the disease burden. To ensure mental health trusts can continue responding to unprecedented levels of demand, it is vital that this funding imbalance is urgently addressed. 

The MHIS was introduced to ensure that a growing share of NHS spending was allocated to mental health services and has acted as a critical safety net for mental health trusts in securing the resources they need to expand and transform services. In recent years, mental health trust leaders have continually highlighted that they have frequently not received the increase in funding that the MHIS exists to deliver for them. Several trust leaders have informed us that they have been tasked with delivering proportionately more efficiency savings than system partners each year and have seen vital transformation funding diverted to financially challenged organisations in their system from other sectors to support the overall system financial position. Effective and transparent mechanisms are needed to guarantee sufficient funding reaches the mental health services that need it most. Future funding needs to adequately account for changes in mental health prevalence, service demand, and the impact of transforming care models. To address this, the MHIS must be viewed as a minimum, rather than as a ceiling based on affordability, in order to close the gap between resources for mental health services and local need. The imbalance in resource allocation between mental and physical health needs to be addressed.