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This helps fulfil the NHS’s own plan for the future, which the government promised to fund at the election with an additional £10 billion by the end of the parliament.

The transformation fund, which will be allocated dependent on hospitals meeting a series of strict conditions, will give the NHS the time and space it needs to put transformation plans in place. This will make 7 day services a reality for patients and will meet the ambitions of the NHS Five Year Forward View.

The government is committed to the values of the NHS, and in the Spending Review the Chancellor confirmed the £10 billion for the NHS’s future plan. The £1.8 billion, part of a £3.8 billion front-loaded funding boost for next year, is designed to help trusts reduce their deficits and allow them to focus on transforming services to deliver excellent care for patients every day of the week. The initiative is only possible because the government has taken tough economic decisions to enable investment in key public services.

NHS staff across the country are already doing their bit to deliver excellent and safe care for patients and this funding will enable them to focus even further on improving quality for patients while making every penny count. Trusts are expected to have a tight grip on finances and investment will be dependent on them meeting a number of strict and non-negotiable conditions set out by NHS Improvement, NHS England and the Department of Health, including:

• agreeing with NHS England and NHS Improvement a strong and measurable recovery plan that shows how the trust will reduce deficits and break even within a reasonable timeframe, as well as a ‘control total’ for their 2016/17 budget
• developing a plan and reporting regularly on progress towards achieving the savings outlined by Lord Carter as part of his review into NHS productivity
• making further progress to reduce agency spend, along with a trajectory of how much spend will fall and regular reporting against this trajectory as part of the ongoing drive to employ fewer agency staff and more permanent staff to improve continuity of care for patients and improve safety
• agreeing with NHS England and NHS Improvement a credible plan for maintaining delivery of core standards for patients, including the 4 hour A&E standard, the 18 week referral to treatment standard and, for appropriate providers, the ambulance access standards
• setting out a clear and credible plan for achieving 7 day services for patients throughout the country by 2020

Sanctions will be included as part of the funding to ensure hospitals comply with the measures.

The funding will be broken down into 2 parts. A proportion of funding will be distributed to all providers of emergency care, linked to demonstrating initial progress against the conditions outlined above and the setting of agreed control totals with NHS Improvement. A second element will be used to target providers which can deliver additional efficiencies and improvements. Both elements of the fund will put trusts in a stronger financial position to make sure patients benefit from a world-class NHS for decades to come.

The initiative will be led by NHS Improvement, NHS England and the Department of Health, and the 3 organisations will shortly write to trusts with details of how funding will be distributed.

Jeremy Hunt said:

This government is committed to the values of the NHS, which is why we’re investing £10 billion in its own plan for the future, including £6 billion upfront by next year. We’re offering trusts help to improve their financial position and transform services for patients based on that planned investment, subject to strict conditions. This will allow hospitals to focus their efforts on making the NHS a truly 7 day service, offering the same excellent world class care every day of the week.

Jim Mackey, Chief Executive Designate of NHS Improvement, said:

The NHS is dealing with some significant challenges at the moment. This funding gives NHS providers the hope and possibility of doing things they have been unable to do this year: balance the books and deliver good emergency care performance.

We will be working with them to ensure they get back to the levels of performance the NHS should expect and its patients deserve. Alongside this, trusts need to look at longer term transformations to meet changing patient needs over the coming years.

Simon Stevens, Chief Executive of NHS England, said:

We’ve rightly decided to deploy a meaningful chunk of next year’s hard won NHS funding growth to help get hospitals back on their feet, and in return patients and taxpayers will expect a return to fundamental performance standards and financial discipline.

As that happens, we need to accelerate care redesign and free up a rising share of the NHS’s new investment for critical priorities such as primary care, mental health and cancer services. The NHS’s 5 year funding allocations being agreed at the NHS England public board meeting tomorrow aim to do just that.