Thinking about the financial plumbing for neighbourhood health: following the money or changing the flow?

Authors – Charlotte Wickens, Andrew Todd and Cassie Staines 

As the concept of a neighbourhood health service shifts from being a prominent policy idea into implementation, questions have arisen about the role that changes to funding arrangements, and the financial architecture of the health system will play in enabling this.

There has been an underlying understanding that reorientating a health system towards preventative and proactive care, rooted in communities while moving away from reactive, hospital-based models will require changes to existing financial structures and patterns of spending. However, this is in the context of a financial position for health systems which make it “unlikely that there will be much additional resource made available to support this new way of working” as noted by the Vision for Neighbourhood Health and Wellbeing in Northern Ireland but applicable across the UK.  

Macmillan have an interest in this aspect of neighbourhood health through our work for over a decade testing and refining innovative financial models that help systems re-allocate resource from unplanned to planned care, with greater focus on outcomes and patient experience through new types of partnership between charities and the statutory sector. Through our experience we have recognised that working in this way requires rethinking not only how funding flows in individual systems or contexts but also what wider changes might need to happen in the financial architecture to support and realise a sustainable shift to neighbourhood health. 

As such, in this piece we hope to provide insight into the ongoing development of neighbourhood health across two different contexts within the UK and to share considerations and enablers for the development of changes to the financial architecture that support the ambitions around neighbourhood health.  

We have chosen to focus on England and Northern Ireland for this piece, because both nations have seen significant policy development on neighbourhood health, including some consideration of the financial underpinnings needed to implement it. While the terminology of neighbourhood health is used in both contexts, and there are similar features, for example the use of Integrated Neighbourhood Teams (INTs), there is not an identical approach or model. As such, we have included a section below which explores more fully the context for each country with regards to neighbourhood health.  

This piece draws on insight from seven anonymous semi-structured interviews we conducted with system leaders responsible for the delivery of neighbourhood health in both England and Northern Ireland. These interviews took place between April and July 2026. In sharing this insight, we seek to consider the current funding backdrop as it impacts on the development of neighbourhood health in practice, but also to share reflections on what needs to be in place to enable the move to neighbourhood health from a funding and financial architecture point of view.

This insight is coupled with learning from our own work on social investment models, including our Neighbourhood Health Transformation Funds, through which we aim to explore the potential role that novel funding approaches could play in unlocking the shift to a new model of care.  

Summary

Additional funding to support the delivery of neighbourhood health in both England and Northern Ireland is limited given the significant budgetary pressures and competing priorities for investment across both systems.  

In England, stakeholders we spoke to highlighted the constraining effect of the changing trends in NHS investment over time. Annual real terms increases to the NHS budget have followed a long-term trend of around 3.6% on average but the government’s 2025 Autumn Budget included planned spending to 2028/29 of an average of 2.2% per year once inflation is taken into account – below historic levels. This is leaving leaders coming in to manage day-to-day pressures with less cash and it was recognised that they have to handle these pressures in a fundamentally different way if they are going to avoid financial hardship: “if demand or our unit cost to meet demand doesn't change, then we're going to fail financially with a below trend rate of growth”.

There was also a recognition that financial performance was a key metric by which system leaders are being assessed by, for example in the new Oversight Framework the financial override means that any trusts in deficit are automatically ruled out of any segment above 3. However, many noted that a recent positive change has been to see a move from annual budgeting cycles to multi-year allocations so that systems can more cohesively plan their priorities over a longer time period.  

In Northern Ireland we heard that stretched budgets are already pushing the health and social care system to breaking point. Leaders described the financial outlook as “exceptionally challenging”, referring to a projected shortfall of approximately £800 million in the HSC budget at the time of our conversations. They highlighted the absence of an agreement among the Northern Ireland Executive on a multi-year budget, including for 2026/2027, with figures from draft proposals if agreed still leaving the health service “significantly underfunded”. This was having an impact across the system, for example with trusts being asked “to save about 6% of recurrent expenditure” alongside reductions to central budgets. Against a backdrop of long elective waiting lists and significant acute pressures, there was a recognition that this left the HSC Trusts in a difficult position in terms of delivering the neighbourhood agenda:  

“Trusts are facing very, very stringent financial cost containment and efficiency measures. And alongside that, they've been asked to or they've been required to start not just reducing their spend but diverting spend in towards neighbourhood services …. it's understandable that they're kind of nervous about that.” 

This surfaces a key dilemma highlighted repeatedly in our interviews, namely the tension between the demand for spending to maintain hospital-based activity and the imperative to fund neighbourhood health. One leader in England told us that delivery of neighbourhood health services was being hampered by “a long-entrenched standard [in] the pattern of how money is divided up”, with the greater proportion of NHS budget increases in the last 15-20 years going to acute hospitals over other parts of the system. Indeed, those we spoke to felt it was difficult to reconcile the ambitions and policy direction outlined in the 10-Year Health Plan (and subsequent Neighbourhood Health Framework) with the ongoing emphasis on hard metrics for A&E attendances and elective waits.

The capacity of system leaders was seen as being pulled towards immediate pressures, rather than longer term change. For example, one participant remarked that “the first question that comes along is, well, you know, what's happening to your A&E performance?”. Interviewees remarked that this was reflected in the level of funding set aside for neighbourhood health over the last year, described to us as “peanuts compared to everywhere else” when considering it against other stated priorities for systems. 

The allocation of funding for primary care in both jurisdictions was also raised as a matter of concern given the link that it provides between health services and local communities. Stakeholders pointed out that demands on the sector have increased over time but without the resource required to manage this demand sustainably while also covering day-to-day operational costs. In Northern Ireland we heard that this was leading to a precarious situation for general practice in particular, with a flurry of practice closures in recent years. Similarly in England, we heard about the struggle faced by general practices in getting by on an ever-decreasing share of NHS funding and the fact that “they cannot survive just doing the national contract”.  

Another concern across both systems for neighbourhood health delivery was the absence of any financial mechanism to facilitate the transition from the current model of care. One interviewee in England described this as a “big unsolved problem” within the current financial architecture and felt the only plausible source of transition funding would be “an above average improvement in acute productivity to get back to like pre-pandemic levels”. At the same time, there was an acceptance that finding a workable solution for transition costs was never going to be easy and that confronting this reality was an important step on the path to enacting real system change:  

“In an ideal world, I think if you're looking to do significant reform, you'd want to fund that reform separately from day-to-day services and enable a transition period. That's not where we are. I suppose the financial challenge kind of really makes the imperative for doing things differently all the stronger.” 

As explored above, a recurring theme in our interviews with system leaders, and well explored by policy experts in discussion about neighbourhood health, was that “transitions cost money”. It is difficult to shift from a model of care based in hospitals to one where care is delivered differently closer to home without the need to smooth the transition between them. This is often referred to as ‘double running’, describing the fact that while new community-based models get up and running, the need for hospital services is unlikely to diminish and so we need to ‘run’ or fund both models simultaneously.  

However, as previously explored, in a challenging fiscal climate for health systems the underlying assumption has been that the majority of these transitional costs would need to be enabled through systems finding efficiencies that could be reinvested. Nevertheless, given the tightness of existing budgets and the unrealistic likelihood of cash releasing in the short term, interviewees described the importance of finding “any transient funding that allows you to bridge the gap and make the changes”.  

In our conversations with system leaders across both contexts there was an acknowledgement of the potential to leverage external investment to provide the additional resource required. In fact, in Northern Ireland this is something explicitly introduced into the mixed funding model. One interviewee in Northern Ireland reflected that this came about as partnerships are seen as “critical to success” as part of recognising that from “the position we’re in…we actually can’t solve all of the problems of health and social care ourselves”.  Many interviewees in this context cited the new, ‘first-of-its-kind’  strategic partnership between AstraZeneca and the Department of Health, the Department for the Economy and the Health Innovation Research Alliance NI (HIRANI) as an example of realising this. Yet examples of partnerships across both England and Northern Ireland also involved working differently with the VCSFE sector too, including with Macmillan through social investment.

From our conversations with system leaders, some interesting insight emerged about the benefits of these partnerships and novel funding methods but also of the considerations needed to make this work. A benefit that we heard about was the ability to not just add a service, but to have the capacity and headroom to implement something that, as an interviewee in England put it, “moves towards a new model of care” and rethinks how “existing functions work together”. A reflection from a participant from Northern Ireland was that this approach to partnership has moved the conversations on to “things that we maybe wouldn’t have prioritised before” as the external funding will open up the “flexibility in our financing” to test new things.  

This was linked to the ability to implement changes to the model of care without needing to release cash upfront to enable this. As has been well explored, the need to free up and redeploy existing resource immediately from current services to fund transformation is a perennial difficulty. There is often also a question from the outset of about whether the changes being pursued would be “cash releasing or not”, which has been an important part of the wider conversations about neighbourhood health, with many arguing that it is wrong to assume that delivering care in this way will be cheaper or generate cost savings in the short term.

It has been argued that while it will not create immediate cost savings, neighbourhood health, through the focus on prevention and a more proactive model of care, could ‘bend the curve’ on trends that otherwise see increasing reliance on reactive hospital-based care which costs more to provide. As one participant put it, “it's economically better than the do-nothing scenario”. However, when considering change in the NHS, the ability to cash release is often expected to be proven in 12 months, therefore deterring the NHS from seeking improvements that will reduce activity and spend but only on longer time frames.  

Interviewees in England particularly highlighted the need for management capacity as a core, often under considered resource, that helps facilitate changes to the model of care. One interviewee with experience working with Macmillan on a social investment project argued that working in an external partnership helped them avoid the “NHS trap of not putting enough into project management”. This seemed especially relevant amongst stakeholders in England with both a reduction of running costs in ICBs and a similar drive to reduce costs in provider organisations leading to a significant squeeze on management costs to contribute to savings.

One interviewee reflected on this, arguing that there was a question on whether the commissioning skills and analytical capacity needed to accurately estimate return on investment and model cost is there in the system, with ICBs struggling to answer these questions "without good external support" especially “coming out the other end of restructure”.  

“It requires…really good kind of measurement, estimation of impact and then measurement of impact… but whether the commissioning skills and whether the trust and imagination are there to make it work, I don't know”.  

This idea of capacity also often tied into a conversation about managing risk. A perceived benefit of externally sourced funding, particularly for social investment, was that it supported a changing attitude to risk within the health system. One interviewee remarked that this model of funding with outcomes-based contracting, which is one approach that can be used in a social investment model, is “really good for transferring risk from the NHS to the funder”.

This was seen by some stakeholders as an important element of being able to encourage commissioning bodies, national organisations, or the board of their own organisation, to support this. They described needing to assure partners and build support across their system to be able to go forward with this transformation approach, highlighting that a common vision of what could be achieved by doing things differently was key to this but so was time. For example, one interviewee in England remarked that within their stakeholders the “promise that it might alleviate some of the front door pressures” was a motivating factor for cross system support for entering a social investment partnership. However, our interviewees also reflected that building this cross-system support was not a short process and required significant attention and time.  

It was also recognised across both Northern Ireland and England that this was a new way of doing things and as such “picking through the governance and accountability and financial management” were key considerations and being worked through in real time. One interviewee in Northern Ireland reflected that the “system isn't geared…this way, so we're having to build new interfaces effectively to allow it to happen”. Given the emerging nature of this approach, interviewees also reflected on the importance of trust as a crucial foundation; “if we get the trust right and the principles right and we have a genuine conversation, I think we can do it”.

One participant also flagged the importance of education and upskilling for financial leaders around these novel funding arrangements as there was a risk that a lack of understanding may cause them to “at best drag their feet and at worst just quietly block stuff”. It was suggested that as part of the move to neighbourhood health it would be wise to consider how these skills would be developed in the system and that maybe this also needed to be a target of enabling investment.  

Our conversations with system leaders also often came back to how the shift to new models of care could be done sustainably. In our interviews across England and Northern Ireland there was a sense that while there was “no shortage of schemes and willingness out there to do them”, the ability to move from the “small scale pilot to large scale implementation” was still not guaranteed. One stakeholder we spoke to in Northern Ireland emphasised that they have “had so much experience of…having a really good service that really benefits patients and then when the funding runs out it…disappears”.

For many that we spoke to ensuring that sustainability is a consideration built in from the outset was crucial, with some arguing that with pump prime funding, such as through social investment, works to do this by enabling a “reduction in demand in where you're currently spending your money that then frees you up to make changes in that service” which then would support savings that “pay back the initial pump priming funding” and could be re-allocated to continue to fund the new improved service.

There was also a sense from some that we spoke to that reorientating towards a new model of care would not just rely on managing transitions and setting up new services, in many cases it would also require a consideration of what might need to be stopped or ‘decommissioned’ too.

This long read was written by Charlotte Wickens - National System Change Manager, and Andrew Todd - External Affairs Adviser, and Cassie Staines - External Affairs Manager at Macmillan.

Published on 6 October 2026.

It draws on insight from 7 anonymous semi-structured interviews conducted with system leaders responsible for the delivery of neighbourhood health in both England and Northern Ireland. These interviews took place between April and July 2026.

Related information

• Why we’re investing in care closer to home - six new Trailblazer sites
• Macmillan Cancer Support and Social Investment
• Neighbourhood health and Macmillan Cancer Support
• From rhetoric to reality: what is the neighbourhood health service? - long read.