NHS financial reform and the 10 Year Health Plan: aligning vision with delivery

Key points

• There is strong support across the NHS for the ambitions set out in the 10 Year Health Plan (10YHP) to shift care from hospital community, analogue to digital, and treatment to prevention. NHS leaders agree that reforming the financial framework will be essential to delivering this vision.
• Despite the enthusiasm and energy from leaders regarding the 10YHP’s vision, there is less confidence that the proposed reforms to the financial framework will, in and of themselves, enable delivery of the three shifts. This is particularly significant given the emphasis the plan places on financial reform as a primary lever for enabling system-wide change.
• This report assesses the reforms to the financial framework set out in the 10YHP, identifying key risks, offering targeted recommendations and setting out a series of principles to support effective implementation. It focuses on how these reforms can best enable the NHS to deliver the vision set out in the ten-year plan.
• The current financial context, as outlined in the NHS Alliance’s Targets and Trade-Offs report (May 2026), significantly constrains the NHS’s ability to deliver the transformation required without impacting on core services. This challenge is particularly profound in delivering the shift from hospital to community-based care, which will require a credible approach to managing ‘double running’ costs so organisations can maintain existing capacity while investing in new models of care without destabilising their financial recovery.
• Reform to payment mechanisms and financial flows to support the three shifts must be carefully designed to support system-wide change. Incentives need to align with value, outcomes and population health rather than solely activity to avoid a return to models that reinforce a hospital-centric approach or create affordability pressures. At the same time, changes to allocations and funding flows must be implemented gradually to avoid destabilising financial recovery efforts and enable integrated, cross-sector working.
• Restoring financial discipline is necessary but must reflect underlying structural pressures across the system. Moves to phase out deficit support funding should be accompanied by action to address the drivers of financial deficits; otherwise, such reforms risk widening the gap between the highest performing and the most challenged organisations.
• Proposed changes to the capital regime, including multi-year settlements and greater devolution of funding to the frontline, are most welcome. However, their impact will be limited without further reforms to the capital regime to improve the flexibility upon which capital can be spent across the financial year and without a comprehensive capital strategy that sets out the long-term direction that will ensure the NHS estate can adapt to more closely align with the 10YHP’s vision.