5th November 2026
The National Audit Office (NAO) report, published on 4 November 2026, highlights significant risks when health boards undergo major restructuring.
In particular regarding the rapid loss of staff skills, lagging performance measures, and the complexities of aligning health boundaries with local government.
While the report focuses specifically on the restructuring of Integrated Care Boards (ICBs) in NHS England, the structural challenges and warnings it outlines offer highly relevant lessons for the Scottish Government as it considers its own major reorganisations of health boards and councils.
Here is a breakdown of the core warnings in the report and how they directly translate into caution points for Scotland's proposed public service changes:
The Risk of Hollowing Out Essential Skills
The NAO Warning
In England, the drive to cut running costs by 43% meant reducing staff by around a third (approximately 8,000 posts).
The NAO warned that while cost-cutting progressed rapidly, the government has "less assurance about whether ICBs will retain the skills and capacity needed to deliver effective strategic commissioning."
Lesson for Scotland
Any major merger or restructuring of Scottish health boards and local councils designed to save money risks a "brain drain." If staff are cut too quickly or roles are poorly redefined, the newly formed bodies may lack the specialized capability required to plan and buy effective healthcare services.
[b]Restructuring Faster Than the Supporting Rules
The NAO Warning
The report notes that "reforms have progressed faster than some of the arrangements that are needed to support them." Crucial elements—such as how the new health boards would interact with local government and how their performance would be measured—were still being figured out mid-process. This makes it incredibly difficult to track whether the changes are actually improving patient health outcomes.
Lesson for Scotland
Structural changes are often easier to announce than the operational frameworks needed to run them. The Scottish Government would need to ensure that clear metrics for success, digital data-sharing infrastructure, and governance rules are set before moving boundaries, rather than trying to build the engine while driving the car.
The "Mismatched Boundaries" Headache
The NAO Warning
English ICB boundaries have historically not matched up perfectly with local government authorities, creating friction. While the Westminster government is now trying to force them to align, the NAO notes that achieving closer alignment with local government is operationally "challenging" and requires intense management.
Lesson for Scotland
Jointly reorganising Scottish Health Boards (which are regional) and local councils (which handle social care, housing, and education) is notoriously complex. If boundaries and accountability structures do not align perfectly, it creates bureaucratic silos, making "whole-system" community care harder, not easier, to deliver.
Summary Comparison of the Risks
English ICB Reform Challenge
Parallel Risk for Scottish Reorganisation
Aggressive workforce cuts (cutting ~8,000 posts) to achieve financial savings. Loss of frontline planning and clinical expertise during council/board mergers.
Reorganising before establishing how to measure success or track health outcomes.
Disruption to patient care without a clear way to prove the reorganisation helped.
The friction of unaligned health and local government boundaries. Compounding existing friction between NHS boards and Scotland's 32 local councils.
Ultimately, the NAO’s conclusion serves as a universal warning for public sector reform: structural reorganisation and cost-cutting usually happen rapidly, but establishing the stability, capacity, and clarity needed to actually improve public health takes much longer.
If the Scottish Government pushes forward with major health and council overhauls, the NAO report suggests that protecting staff capability and solidifying local integration models must happen ahead of boundary lines being redrawn.
4 November 2026
NAO - Restructuring of Integrated Care Boards
More deails
Integrated Care Boards have been tasked with cutting running costs by 43%, delivering £908 million in annual savings, as they restructure to focus more clearly on strategic commissioning.
Planned workforce reductions are equivalent to around a third of the total ICB workforce, with an estimated £582 million spent on voluntary and compulsory redundancy payments.
The NAO recommends NHSE and DHSC should clearly define ICBs’ future roles, and ensure workforce reductions deliver sustainable savings without losing essential skills and capacity.
Integrated Care Boards (ICBs) have restructured, made redundancies and developed new operating models at pace to meet NHSE savings targets, but it is not clear yet if they have retained the necessary skills and capacity for effective strategic commissioning delivery, a new NAO report has found.
In response to a 2024 review, NHSE announced that it planned to restructure ICBs to focus more on commissioning services, and aimed to reduce duplication and spending.2 NHSE has instructed ICBs to reduce their running costs by 43% from previous levels of around £2 billion to make total savings of £908 million a year.3 NHSE estimates that ICB running costs for 2026-27 will be around £1.4 billion, £200 million above the £1.2 billion target.
ICBs are now making changes to meet these running cost targets, with some ICBs needing to make much greater running cost reductions than others. Some ICBs have chosen to form clusters or merge to cover larger populations and pursue efficiencies.
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.4
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.5
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.
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. 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.
ICBs have had difficulties planning their future workforce because their role and responsibilities were still changing as restructuring began.
To help ensure the reforms deliver sustainable savings while maintaining the skills and capacity ICBs need, the NAO recommends that NHSE and DHSC should:
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.