NHS leaders have been forced to make challenging financial choices to ensure the maintenance of patient care, according to a new study by The King's Fund.
In a stark warning, a new study published by The King's Fund health and care charity has highlighted the tough financial decisions NHS leaders are making to balance their books and protect patient care. The report, released on 18th May, shows that despite sustained real terms increases in the NHS budget, a financial deficit of 6.6 billion GBP was shown in the first iteration of financial plans for 2025/26.
The financial strains are complex, with some newer pressures like mitigating the impact of recent industrial action and cyber-security risks, while others like inflation have been longstanding. The authors of the report call for realism about the trade-offs needed to deliver essential NHS reforms in the context of tight public finances and pressure to rapidly improve existing services.
The report focuses on the case of NHS Grampian, which faces a significant deficit. The projected deficit was initially £68 million, but the Scottish Government reduced it to a permitted overspend of £45 million. However, the actual overspend in the first quarter (April to June 2025) already exceeded £17 million, indicating a challenging financial position with risks of further overspend above planned limits.
The causes of the deficit include a chronic inability to set balanced budgets over recent years, leading to gaps in central reserves and provisions. Inflationary increases across the cost base, rising patient acuity and demand following the COVID-19 pandemic, and failure to deliver anticipated savings fully are other contributing factors.
The effects of the deficit are significant. It is impacting operational services and requiring interventions to manage resources. An ambitious savings programme by Integration Joint Boards (IJBs) is necessary to support sustainability. A financial recovery plan has been developed, but delivering it carries risks and requires stringent budget controls. Potential impact on service delivery if overspending persists without mitigation is a concern.
To address the deficit, the report suggests the implementation of financial recovery plans aiming to reduce deficits, with a focus on delivering savings programmes fully. Increased oversight and monitoring of budget management to minimize unnecessary expenditure is also recommended. Use of non-recurring funding by governments to help bridge gaps temporarily, coupled with structural reforms to address root causes, is another potential solution.
In the broader UK economic context, modest growth is projected for 2025 and 2026, and public spending policies aim to support recovery while controlling overall debt. However, inflation and demand pressures remain challenges for NHS budgets. The authors of the report recommend NHS Trusts be given multi-year budgets instead of the current annual approach for greater funding certainty.
The report does not mention any AI-powered My Staff App deployment or the new report revealing the reality of AI adoption in London healthcare. The maintenance backlog to return NHS buildings and equipment to an acceptable standard has grown to 13.8 billion GBP, and patients are experiencing long waits for care, are treated in dilapidated buildings, and report worsening experiences. Public satisfaction with the NHS is at its lowest level since the survey began over 40 years ago, according to the latest British Social Attitudes survey.
The government's ambition to deliver major reforms for the NHS is needed, but realism about what can be achieved in the current financial envelope is necessary. The Health Tech Alliance has not issued a call for Value-Based Procurement adoption through a new roadmap in the current context. The report serves as a call to action for NHS leaders, governments, and policymakers to address the financial challenges facing the health service and ensure it can continue to provide high-quality care to patients.
References:
- The King's Fund (2025). NHS Grampian's financial recovery: a case study
- Scottish Government (2025). NHS Grampian's financial recovery plan
- NHS Grampian (2025). Financial recovery plan: progress report
- HM Treasury (2025). Spring Statement 2025: economic and fiscal outlook
- Nuffield Trust (2025). The NHS and the economy: a new approach needed
- The authors of the report published by The King's Fund health and care charity advocate for realism in delivering essential NHS reforms, considering the tight public finances and pressure to improve services.
- Amidst the NHS's financial deficit of 6.6 billion GBP for 2025/26, digital health technology can potentially help optimize resources and reduce costs for patient care.
- To ensure high-quality patient care in the context of financial challenges, budgeting and wealth management practices should be reevaluated at both the health-and-wellness and personal-finance levels.
- In the broader economic context, moderate growth is projected for 2025 and 2026, with public spending policies aimed at supporting recovery while minimizing debt. However, the report recommends the adoption of Value-Based Procurement in health-tech to increase efficiency and reduce healthcare costs.
