Government must ensure ICB workforce reductions deliver “sustainable savings” without losing essential capacity, says watchdog

This comes as ICBs have been tasked with cutting running costs by 43%, as they restructure to focus more clearly on strategic commissioning.

In a report, the NAO acknowledged that while ICBs have restructured, made redundancies and developed new operating models “at pace” to meet NHS England savings targets, it is not yet clear if they have retained the necessary skills and capacity for effective strategic commissioning delivery.

Following clustering and merging, the total number of ICBs dropped from 42 to 25 ICBs or clusters by April 2026.

ICBs surveyed by the NAO identified opportunities and benefits from clustering and merging.

By June 2026, most ICBs surveyed by the NAO had also developed new operating models to reduce running costs and focus more clearly on their role as strategic commissioners.

ICBs planned to make savings including by streamlining corporate services, removing duplication and making greater use of technology.

The NAO observed: “A major part of making the savings will come from reducing ICB workforces. NHS England estimates that achieving a £908 million saving in running costs will require reducing posts by around 8,000 (full-time equivalent), around a third of total ICB staff.

“These redundancies have taken longer than originally planned and the restructuring has affected staff morale and relationships with local partners, and created risks to organisational capacity.”

ICBs spent £582 million on redundancies in 2025-26, including £401.5 million allocated by NHSE, with ICBs responsible for any further payments in 2026-27, the report found.

The NAO warned that while ICBs have sought to limit disruption to frontline services, there are early signs of issues in some areas that may leave local authorities with “gaps to fill” and place greater onus on health and social care providers to manage “frictions in the health system”.

For example, a key challenge for ICBs will be making significant workforce reductions while retaining the skills and capacity needed to deliver their new strategic commissioning role and the ambitions of the ten-year health plan, said the report.

To help ensure the reforms deliver sustainable savings while maintaining the skills and capacity ICBs need, the NAO recommended that NHS England and the DHSC:

• clearly set out ICBs’ future roles and responsibilities, alongside robust arrangements for measuring performance, capability and the success of the reforms;
• ensure workforce reductions deliver lasting savings, while protecting essential skills and capacity and avoiding unnecessary redundancy costs if staff return elsewhere in the NHS; and
• help ICBs share good practice and maintain strong relationships with local partners, ensuring reforms across health, local government and other public services are joined up.

ICBs work in partnership with NHS trusts, primary care providers and local authorities to address the wider determinants of health and decide what local healthcare services should be provided.

The 2024 Darzi review of the NHS concluded that the role of ICBs needed to be clearer and that there were opportunities to reduce duplication with other bodies.

Responding to the report, Cllr Dr Wendy Taylor, Chair of the LGA’s Health and Wellbeing Committee, said: “As the NHS and local government face significant pressures and change, we must reform together, not retreat into silos, and ensure councils are not left filling gaps in coordination, planning and system leadership. Reductions in ICB capacity risk weakening the partnership working between health and local government that is essential to improving population health and reducing inequalities.

“Councils remain committed to working with health partners to make this a success. Health and local government are two sides of the same coin, with decisions made by one directly affecting the other. As ICBs move towards larger footprints and a more strategic role, it is essential to maintain strong relationships, local knowledge and joint working at place and neighbourhood level.

“Restructuring must not simply shift pressures and costs to elsewhere in the system. The Government should commit DHSC and NHS England to working with local government to review Continuing Healthcare (CHC) funding, assessment and dispute arrangements. There must be greater focus on evidence that changes in eligibility decisions and practice may be shifting costs from the NHS to councils. Any changes to CHC policy or practice must not result in unfunded cost-shunting to councils.”

Lottie Winson