Financial performance

Our organisation must remain financially sustainable (living within our means) to ensure that we continue to provide safe, high-quality mental health care for our communities across our five boroughs now and in the future.

We are reporting a surplus of £1.9m; this includes upward revaluation of Trust assets due to market revaluation. Impairments of this nature are technical and are exceptional items. We measure performance against the position, excluding impairments. Our position, excluding impairment, is a £0.7m surplus. This position is on target and representative of strong operational success in delivering challenging cost improvements, alongside high levels of inpatient demand.

In addition, we delivered against the Department of Health and Social Care (DHSC) targets:

• Operate within a Capital Resource Limit of £31.8m
• Maintain a Capital Cost Absorption rate of 3.5%

We are committed to paying our creditors promptly and have signed up to the Better Payment Practice Code.  The code requires us to aim to pay undisputed invoices by the due date or within 30 days of receipt of goods or a valid invoice, whichever is later. We paid 94.6% (in terms of value) of non-NHS invoices within this period (94.4% in terms of number) and 98.7% of NHS invoices (in terms of value) within this period, 88.4% in terms of number.

We had a £99m loan from the Department of Health and Social Care to partly fund the construction costs of the new hospital buildings on the Springfield site. This construction has now been completed, and repayments of the loan are due to commence in 2027/28, funded by cash from asset sales. More than 81% of our capital expenditure in the year was spent on the Better Environments programme and the development of the Tolworth and Barnes sites. In total capital expenditure for the year was £28.9m, which was used to modernise our estate and IT infrastructure for the benefit of both patients and staff. 

Our cash balance of £55.4m remains at a healthy level and will be used to fund the ongoing estate modernisation and support servicing of the loan. 

The table summarises our financial performance for the year against which we are performance managed. Impairments are reported within operating costs and therefore are deducted to get to the position before impairments, as well as the Net Retained Surplus for the year.

Income

Total income received in the year ended 31 March 2025 was £352.9m (£316.5m in 2023/24), with 95% coming from patient care activities. The significant majority (75%) of non-patient care income is related to education and training.

A breakdown of total income by source:

Expenditure

We spent £349.4m (£314.6m in 2023/24) on operating expenditure (excluding impairments) during the year. The emphasis has remained on utilising this resource as efficiently as possible whilst maintaining and improving quality.

The key areas of spend are:

The most significant area of expenditure is staffing which accounted for £233.7m (£203.1m in 2023/24) or 67% (65%) of the total. This expenditure includes salaries and employers’ pension and national insurance contributions as well as contributions to the Apprenticeship Levy.

Staff are our key asset: only with high-quality and motivated staff can we deliver high-quality services. We continue to develop strategies to recruit, train and retain staff to ensure that high-quality services are first maintained and then improved. During the year, we have reduced our vacancy rate from 15.1% last year to 13.1% in 2024/25

Capital Investment Programme

During the year, we invested £28.9m in capital schemes. These are schemes to acquire, upgrade or maintain physical assets such as buildings and equipment.  The high value of investment primarily reflects the Trust’s Better Environments programme, including works at the Tolworth site.

We are grateful for the additional funding we received to contribute to the Mental Health Urgent and Emergency Care, to progress the development at Barnes and to improve our IT infrastructure.

A summary of the capital investments: 

Financial Outlook for 2025/26

In 2025/26, the financial outlook for the NHS remains challenging. The environment for the Voluntary Community and Social Enterprise (VCSE) sector and other providers relied upon by the health and care sector, as partners in the delivery of services, is also challenged. Unlike the NHS, they are not funded for increased costs relating to National Insurance or Living Wage. The result for the NHS is that sub-contractors and community partners may seek uplifts which are unaffordable. Some partners may need to scale back community service delivery which will reduce the system’s overall capacity and may exacerbate already long waiting times to access support.

Since the General Election last year, the new Government has focused on gaps in public finances and reestablishing delivery lost during COVID. This has affected the NHS in two key ways. Firstly, rewarding front-line NHS staff with higher-than-expected pay raises is intended to rebalance wages while requiring efficiencies to be made by providers. Secondly, by targeting oversight and commissioning bodies such as NHS England, which will be merged with the Department of Health and Social Care (DHSC), alongside reductions to Integrated Care Boards (ICBs) and corporate functions within provider trusts. The new 10-year NHS plan is due to be published, however, there will be considerable uncertainty, while these key bodies adapt and reshape. Although new funding has been made available, in reality a large part of this is required to fund pay awards approved at the outset of the new government’s tenure.

Within the health sector, and in particular mental health, in 2025/26, demand is again expected to rise, and the complexity of patients presenting is expected to increase. In the context of a constrained labour force and funding streams, this presents significant challenges. Set against this, the Trust will continue to build upon its successes to further reduce use of costly external beds and to rely more consistently upon its own bed base; we will do this through our Adult Patient Journey programme and by reducing our average length of stay, which has been an outlier. We will work with key partners to address the beds occupied by patients who are now ready to move on in their recovery journey.

Together, these factors make for a financially and operationally very challenging year ahead. 

The DHSC and NHS England continue to honour the principle of the Mental Health Investment Standard (MHIS) and System Development Funding (SDF) for 2025/26. Whilst the SDF elements pertaining to mental health have been largely retained, they have been reduced compared to the prior year. Again, much of the MHIS increase will be consumed by increasing demand for services and high costs of delivery rather than transformational change. The Trust and ICB aim to achieve strategic targets and ambitions with what remains and have focused investments on key areas, including adult patient flow and CAMHS. 

Every year, the Trust needs to deliver Cost Improvement Plans (CIPs) to secure its required financial position. The requirement for CIPs emanates from both centrally ascribed efficiency targets and internal investments in quality, which do not form part of national funding uplifts; the challenge we face is our biggest at 7% (nationally, the NHS has an £11bn or 7% efficiency target). The key areas of focus for savings for 2025/26 will be: Community Productivity, Corporate Efficiency, and Adult Patient Journey, which will focus on patient flow, recruitment and retention. We recognise the need to recruit substantively, reduce temporary staffing costs and maintain a tight focus on controlling expenditure to ensure financial sustainability; fundamental to this is reducing our length of stay and ensuring that patients are treated in the least restrictive way. 

We continue to be a committed and active member of the South London Mental Health and Community Partnership (SLP) of mental health trusts. Building on previous years’ work, in 2025/26, the SLP will continue to develop and consolidate its Provider Collaborative programmes for specialised services in Forensics, CAMHS, Adult Eating Disorders and Perinatal. It is worth noting that the NHSE Specialised Commissioning department has now delegated the budgets for these services to local ICBs, as part of the above landscape changes. The Trust will work with the ICB arrangements to continue improving delivery.  In parallel, the Trust continues to work with NHSE Specialised Commissioning on a range of directly commissioned items, such as Deaf MH and Obsessive Compulsive Disorder (OCD) services.

In 2024/25, Phase 2 of the Complex Care Programme continues to roll out. This extends the programme’s scope from purely NHS-funded placements to placements that are jointly funded by health and local authority budgets. It represents another increase in the overall Trust funding position, increasing our financial base and its reach in mental health services for patients and the ability to improve the experience and outcomes of the population we serve. Another borough, Southwark, entered the programme last year, which is a sign of its growing success and scope.

We remain committed to the ongoing modernisation of our sites, transforming them into modern mental health facilities that are fit for the future. Following the successful completion of phase one with the occupation of two new buildings on our Springfield site, we will in 2025/26 formally commence the joint development of a school and outpatient facilities at Barnes Hospital and open our fully refurbished facilities at Richmond Royal. We have commenced the development of our Tolworth Hospital site in Kingston, which is due for completion in 2027. The Trust continues to invest in information technology and, in particular, new technologies, like Artificial Intelligence, to support both staff and patients.

Donations

The Trust continues to operate as an official charity and is grateful for all the support it receives. The Trust Charity is a member of NHS Charities Together, which, following the generous donations from the public during the pandemic, allocated grants to individual NHS charities. The Trust charity is not consolidated into the Trust’s accounts but reported separately.

Going Concern 

We are required to consider whether it is appropriate for our accounts to be prepared on a ‘going concern’ basis. The going concern assumption is a fundamental principle in the preparation of financial statements, under which an entity is ordinarily viewed as continuing in business for the foreseeable future.

NHS organisations, by their nature of providing services in the public sector, are considered a going concern. Our anticipation of continuing to provide services in the public sector is documented in our published strategy. Nationally, there is continued and increasing investment in mental health services, including in South West London, and we are working with commissioners in relation to the investments and transformation required.

After making enquiries, the directors have a reasonable expectation that the services we provide will continue to be provided by the public sector for the foreseeable future. For this reason, the directors have adopted the going concern basis in preparing the accounts, following the definition of going concern in the public sector adopted by HM Treasury’s Financial Reporting Manual.