NHS leaders face both ‘carrot and stick’ in new performance drive
Source: gov.uk (2025-05-14)

NHS leaders will face new performance-based pay system with bonuses for improved patient care and penalties for failing trust executives.

- CEOs cutting waiting times and delivering improvements for patients could be rewarded with bonuses of up to 10%
- But failing trust execs will have annual pay rises docked under tough new government measures
- New measures are part of government’s Plan for Change to deliver investment and reform for the NHS
Failing trust leaders will have annual pay rises docked under tough new measures aimed at improving NHS performance and driving progress on cutting waiting lists.

Bonuses of up to 10% will also be on offer for top performers under the new ‘carrot and stick’ approach.

The bold shakeup will transform NHS services from boardroom to bedside, cutting waiting lists and driving better patient care as part of the government’s Plan for Change (https://www.gov.uk/missions).

Under the new plans, the government will look to learn from some of the most effective businesses in the country to recruit top talent to struggling trusts - with leadership vacancies in badly performing areas coming with a temporary pay increase of 15%, worth up to £45,000 (note 1).

Pay bands for senior managers will also be refreshed to attract and retain effective leaders within the NHS.

At the same time, failing CEOs could see up to £15,000 (note 2) docked from their salaries if they run into debt or fail to deliver improvements. This is in addition to any existing processes to tackle poor performance, where persistently failing managers could be sacked if they do not turn things around.

The bold overhaul also establishes stricter accountability for very senior managers, demanding greater financial rigour across all NHS trusts and integrated care boards (ICBs) and a drive for productivity.

Today’s announcement comes after Health and Social Care Secretary Wes Streeting declared in November there would be “no more reward for failure”.

Health and Social Care Secretary Wes Streeting said:

Some of the best businesses and most effective organisations across Britain and the world reward their top talent so they can keep on delivering. There’s no reason why we shouldn’t do the same in our NHS.

We will reward leaders who are cutting waiting times and making sure patients get better services. But bonuses and pay rises will be a reward and not a right - because I’m determined that every penny we invest through our Plan for Change is money well spent.

Our carrot and stick reforms will boost productivity, tackle underperformance and drive up standards for patients.

Sir Jim Mackey, NHS England Chief Executive, said:

If we are to consistently reach the standards of care the public rightly expect, it is clear that we need to reward those who are delivering for patients.

An important element of driving improvements must be strengthening the link between pay and operational performance at a very senior level - this happens in almost every other sector and there is no reason for the NHS to shy away from it, particularly when we rely on money that comes directly from taxpayers’ pockets.

We will be working together with local leaders to improve transparency and ensure progress is recognised, while offering sufficient flexibility to attract talented candidates to the most challenging roles and organisations.

Today’s guidelines setting out new penalties and rewards for trust leaders will introduce learning from leading businesses in the NHS.

It will include strict rules for NHS bosses, who will be expected to spend budgets wisely and ensure trusts are not going into debt. The government wants to see trusts deliver more efficiency, ensuring patients get more for taxpayers’ money being invested.

Today’s move follows some of the most ambitious efficiency targets in the health service’s history. As set out in NHS England’s planning guidance (https://www.england.nhs.uk/operational-planning-and-contracting/) published in January, NHS organisations will need to reduce their cost base by at least 1% and achieve 4% improvement in productivity and efficiency this financial year to deal with demand growth.

The new performance-based pay structure will help deliver on these targets, improving services and delivering better care for patients.

As part of the plans, the government is also bringing together pay structures for senior managers at ICBs and NHS trusts to boost consistency and align standards.

Any trust or ICB that fails to comply with the new guidelines will be required to publicly justify its decision in its annual report under a strict ‘comply or explain’ approach.

The tough new measures form part of the government’s Plan for Change, which will see the government deliver investment and reform to cut waiting times from 18 months to 18 weeks.

Notes

Note 1: based on the highest current salary of a trust CEO (under the new framework).

Note 2: the £15,000 is based on last year’s 5% pay uplifts, and the highest current salary of a trust CEO being £299,250 (under the new framework).