What support do trust leaders need from government and national bodies this year?

Trusts have responded to this year's challenge; with NHSE data showing an aggregate overspend of £110m by the end of May 2025 – less than half the £240m recorded at the same point last year. While this is a promising sign of recovery, there is still significant financial risk baked into trusts' financial plans, with NHSE estimating this could be as large as £1.5bn.  

Trusts will do all they can to meet their financial plans this year, but there are a number of areas where they would value support from government to mitigate the risks they are currently managing and create strategic headroom to focus on delivering the commitments set out in the 10-year health plan.  

Minimise the impact of industrial action 

In July 2025, resident doctors staged a five-day strike over pay and working conditions. Earlier this year, the government accepted the recommendations of pay review bodies and agreed to a 5.4% rise for this staff group – the largest public sector pay award for 2025/26.

The Royal College of Nursing and other unions have rejected their settlements and threatened further action unless talks with the government were forthcoming. Over 2023 and 2024, industrial action was widespread across the NHS, involving resident doctors, consultants, specialist (SAS) doctors, nurses and other staff groups. NHSE has estimated that the total cost of industrial action over the 2023/24 financial year was £2.4bn.    

Industrial action has considerable financial costs in addition to the obvious impact on patients. Strikes mean trusts have to recruit temporary cover to fill rota gaps, often at premium rates (including paying consultants to stand in for resident doctors). In previous rounds of industrial action, disruption to planned care resulted in lost income to trusts where payment was linked to activity.

Trust leaders have also told us that planning for strike action consumes a significant proportion of management time, diverting focus from operational priorities and delivering savings targets.  

Given the existing financial risk this year, further strikes would severely undermine trusts' ability to meet financial plans and cut waiting lists, and trust leaders want to see a solution that avoids further disruption to patients.

83% of respondents to our April 2025 survey supported government introducing a national overtime rate to help reduce strike-related costs. This would help mitigate some of the financial risk associated with ongoing disputes, as the current process of negotiating overtime rates locally leads to unhelpful competition and significant variation in strike-related costs. 

Financial support to cover the cost of in-year redundancies 

As outlined above, trusts are making tough decisions this year to reduce their expenditure on staff pay to meet financial plans, including cuts to clinical posts.

While these cuts will improve long-term productivity and reduce recurrent expenditure, there will inevitably be up-front costs, such as redundancy payments, that will impact this year's budget. These immediate costs risk derailing financial plans and may halt headcount reductions this year if they are not immediately affordable.  

Trust leaders warn that without financial support for in-year redundancy costs, they risk either: missing efficiency savings targets and ending the year in deficit; or having to make deeper cuts elsewhere to make up the shortfall. Given the scale of the challenge this year, further cuts would likely impact patient care and the deliverability of key operational priorities.

Trust leaders are eager to work with the government on solutions to bridge the gap between up-front redundancy costs and long-term savings. The feedback from our April 2025 survey shows trust leaders agree that financial support – whether through funding top-ups or extended control totals – is essential to deliver plans this year. 

Communicate the priorities of the health service to the public 

The British Social Attitudes survey, published in April 2025, revealed a steep fall in public satisfaction with the NHS. Trust leaders are working hard to rebuild public confidence by reducing care backlogs, improving patient experience, and delivering high-quality care. They recognise that the NHS's need to live within its budget will sometimes lead to unpopular decisions, such as moving care from local facilities or cutting treatments that offer lower value for money.

Government support is vital to facilitate an honest conversation with the public about the scale of the NHS' financial challenge this year. This year's planning guidance set out that NHS England and government "will stand behind local leaders to make the best choices to meet the needs of their local populations, including where this means reducing or stopping lower-value activity." 

However, trust leaders currently feel that the government has not yet provided enough support to make these tough decisions. The feedback from our April 2025 survey shows that trust leaders would appreciate help from government in communicating that the difficult decisions that need to be made this year on staff headcount and service provision are the right things to do and will deliver long-term benefits for the health service. 

Ease punitive measures on accessing cash and overspending, taking into account structural issues 

To strengthen financial discipline in 2025/26, NHSE has tightened restrictions on trusts borrowing cash from NHSE. Although not new, this policy poses particular challenges this year given the scale of financial pressures all trusts are facing.

Responding to our April 2025 survey, 36% of trust leaders reported their organisation is likely to require additional national support to manage cash flow pressures this year. One respondent told us that at several points in the year they are forecasting that they will not have sufficient cash to meet their obligations.   

NHSE has also said that for systems to access their share of £2.2bn of deficit support funding this year, they must be on track to deliver their financial plans. As of July 2025, one system did not receive its allocated deficit support funding for the first quarter of this year, and five currently risk missing second-quarter allocations. The 10-year health plan makes clear that deficit support funding will be phased out from next financial year (2026/27).

To ensure this doesn't destabilise system finances, it is imperative that NHSE carries out comprehensive analysis to understand why systems have been reliant on deficit support funding in recent years. Where this analysis suggests there are legitimate underlying reasons for recurrent underperformance for example, PFI costs, unsustainable service models), then NHSE should not seek to penalise organisations by removing deficit support funding from them. 

Trust leaders agree on the need for stronger financial discipline but many feel that the current approach is too punitive, given structural issues underpin much financial underperformance, and these are often beyond the control of a single organisation and cannot be fixed in a single year.

NHSE already acknowledges issues with the system for allocating revenue, which results in some not receiving their "fair share" of funding, but has not yet suggested it will take this into account when applying financial sanctions. It would be counterproductive to use punitive measures if this has the effect of making already struggling trusts even more unsustainable.

Trust leaders are concerned that restricting cash borrowing and holding back deficit support funding will force them to make deeper cuts that could impact patient care. Trusts are not asking the government to tolerate overspending, but for a more nuanced, gradual approach to financial recovery that will enable them to preserve quality of care.  

Clear and consistent messaging on the priorities for this year

Trust leaders face an exceptionally difficult task this year. As our April 2025 survey results show, they are ready to make tough decisions to restore financial sustainability.

Despite the systemic challenges trusts are facing, they continue to deliver on the government's key priorities for the health service – evidenced by recent progress on the elective waiting list, and improvements to urgent and emergency care, with ambulance trusts meeting the category-two response time target for five consecutive months.

Despite the five-day strike by resident doctors in July, trusts delivered approximately 11,000 more appointments and procedures than the previous period of strike action in July 2024. Trust leaders want to maintain this momentum. This will require a consistent approach throughout the year from national leaders, and a commitment to the priorities set at the beginning of 2025/26. 

Last year, an unexpected change in priorities stymied progress on a key system goal: in January 2025 a cap was imposed unexpectedly on elective recovery fund payments, which had incentivised increased activity for planned care to bring down the waiting list. The cap was imposed to contain spending, but in doing so it undermined trusts' efforts to prioritise expanding elective activity to reduce care backlogs and improve waiting times for patients.

Given the work trusts have done in recent years to expand elective capacity, there is a strong case for removing affordability caps to enable trusts to reduce waiting lists at a faster pace. Trust leaders understand the need to balance delivery of operational priorities to ensure these can be delivered sustainably within their current allocated budget; however, this should also not be to the detriment of patients waiting for treatment.  

Optimise the use of digital tools to improve productivity 

There is little doubt that NHS productivity was significantly damaged by the pandemic. Official figures from the Office for National Statistics (ONS) show that quality-adjusted healthcare productivity, by the end of 2022/23, was 5.4% lower than 2019/20 levels.

Analysis from the Institute for Fiscal Studies also outlines that although the NHS has substantially more staff than it did prior to the pandemic, there has not been a commensurate rise in activity levels. Trusts are doing all they can to improve their productivity levels – and this is supported by the most recent productivity data provided by NHSE.

In recent years, trusts have significantly curtailed spending on agency staffing (an estimated 38% reduction over two years); reformed care delivery models by delivering more procedures with same-day discharge; and reduced the average length of stay for overnight non-elective admissions.

To go further and faster on improving productivity, government must work with trusts to harness the power of digital technology, including artificial intelligence (AI), which will widen access to care, enhance the experience of patients and, crucially, improve productivity. Our report, Digital transformation and the productivity and efficiency challenge, outlines various case studies demonstrating how technology can play a crucial role in unlocking productivity savings. 

Responding to our April 2025 survey, 81% of trust leaders disagreed that they had sufficient funding to invest in digital transformation. The government's £10bn investment in NHS technology announced at the Spending Review in June 2025 will be welcome news for trusts.

Some trust leaders are concerned that the mandated cuts to back-office costs this year will have a knock-on effect on digital transformation efforts. Given that vital digital transformation budgets have been continually raided in recent years, it is vital that the recent investment from government is protected and supports trusts to digitise at pace.

Government's commitment to outlining revenue and capital budgets over a multi-year period will also provide trusts with the certainty and flexibility they need to invest in digital projects that will offer the best value to their patients over the long-term. To maximise the productivity benefits stemming from government’s £10bn investment in NHS technology, it will be vital for government to ensure the make-up of that investment is sufficiently balanced between revenue budgets and capital budgets.

For example, trusts will need to balance investment in new digital infrastructure with the ongoing requirements to renew software licenses and train staff to improve operability of new technologies. Getting this balance right will be critical for delivering the shift from analogue to digital.