Health Bill: Transfer of powers, Integrated Health Organisations and Transitional Arrangements

The Health Bill (“Bill”), introduced in the House of Commons on 14 May 2026, will abolish NHS England (“NHSE”) and transfer the bulk of its functions to the Secretary of State for Health and Social Care (the "Secretary of State") and to integrated care boards ("ICBs"). 

We previously covered the background to the Bill and what this means for Patient Choice here and the introduction of the Single Patient Record (“SPR”) here.

In this article we cover some additional key changes.

Transfer of NHS England Functions

As a result of the abolition of NHSE, the Bill proposes to transfer NHSE’s property, rights and liabilities to various bodies including, primarily, the Secretary of State (SoS) and integrated care boards (ICBs)[1].

ICBs will become responsible for over 90% of the NHS commissioning budget[2], taking on responsibilities for commissioning functions including primary care[3], dentistry, pharmacy and ophthalmology which will transfer from NHSE. The SoS will be able to commission certain services[4], which we expect to be detailed in secondary legislation.

The Bill also transfers responsibility for oversight of the NHS provider licence[5] regime from NHSE to the SoS[6] and introduces the ability to set or modify licence conditions to ensure legislative compliance[7]. This means the SoS will operate the provider licence and have oversight of providers of NHS-funded services, including independent sector providers.

Secretary of State Powers

The breadth of the SoS’ responsibilities and powers demonstrate the key role they will play in overseeing and managing the healthcare system. In addition to its responsibilities outlined above, the SoS will have a variety of powers, including: 

1. to direct ICBs to make arrangements for those people in respect of whom the ICB has responsibility[8], enabling, for example, a patient to access vaccination services outside of their ICB where appropriate;
2. to direct ICBs, subject to exceptions described further below, as to how they exercise their functions[9]; and
3. to intervene in the context of ICB failure, including directing an ICB to cease performing functions for a set period specified. 

The SoS’ power to direct, outlined at point 2 above is particularly broad and enables directions to be given to ICBs regarding:

1. whether or not the ICB can exercise a power;
2. when and how a function is to be exercised;
3. conditions that must be met before a function is exercised;
4. matters to be taken into account in exercising a function.

Interestingly, in the context of such directions, where the exercise of a function is reliant on an ICB having formed an opinion but it does not form that opinion, the SoS may form that opinion and direct the ICB to exercise the function nonetheless, in effect enabling the SoS to override the ICB in some circumstances (see the exceptions below). 

There are exceptions[10] to the SoS’ power to direct, namely that:

1. a direction may not relate to the appointment or employment of an individual;
2. a direction may not be given regarding a decision about services provided to an individual for or in connection with the prevention, diagnosis or treatment of illness;
3. a direction may not be given regarding the provision of a drug, medicine or other treatment, nor the use of a diagnostic technique if the direction is inconsistent with NICE guidance/recommendations (and an ICB is not required to comply with any such direction if it is inconsistent with subsequent NICE guidance/recommendation).

The scope of these exceptions is relatively narrow, providing broad room for the SoS to direct ICBs as to how they exercise their functions. In the context of commissioning, for example, this could enable the SoS to make a direction based on political motivations as to which providers are awarded NHS work. That said, and of some reassurance to providers, in taking any such decisions the SoS remains duty-bound to "act with a view to enabling patients to make choices with respect to aspects of health services provided to them"[11] which it could be argued involves the provision of healthcare services from a range of providers in both public and independent sectors.

ICBs – Strategic Commissioners

As referred to above, ICBs will take on all but exceptional commissioning functions, increasing their responsibilities in this respect. The Bill also simplifies the planning process, removing the requirement for integrated care partnerships and strategies[12] and instead requires joint planning by ICBs and their partners[13]. Such planning will involve allocating resource and setting system-wide priorities to improve the health and wellbeing of the local population. ICBs will also work with their local authorities to prepare a Neighbourhood Health Plan[14], in relation to which further guidance is expected. 

Under the new plans, ICBs are empowered to allocate resource in procuring services and take charge in shaping and managing the provider market to deliver its strategic outcomes[15]. This includes establishing place-based partnerships where ICBs will work with providers to address local healthcare needs.

These changes demonstrate how the Bill is enabling ICBs to act as strategic commissioners to shape service models which best support population health.   

Integrated Health Organisation (IHO) contracts

The IHO model is a mechanism whereby an ICB can commission an advanced, high-performing foundation trust to be designated as an IHO and thereby hold an IHO contract. Specific criteria must be met by a trust seeking such designation[16]. As contract-holders, IHOs will hold and manage a budget to enable them to invest in care models to improve the health outcomes of a defined, local population. Achieving this will require IHO holders to work across organisational boundaries with a network of local providers. 

The model is evolving and it has not yet been determined how IHOs will engage with local providers to deliver services, for example delegating commissioning responsibilities to providers or via subcontracts. We therefore cannot yet say with certainty what impact the IHO model will have on the independent sector. The expectation is that the first IHO contracts will be awarded in 2027 and we will continue to monitor updates in the meantime to assess the impact on independent sector providers in this area.

Transitional Arrangements

In practical terms, NHSE’s property, staff and liabilities will transfer to the Department of Health and Social Care (“DHSC”) through statutory transfer schemes. Such schemes have not yet been published. This will include the contracts NHSE currently holds which are expected to automatically transfer, without a requirement for novation or re-procurement exercise, to DHSC. Further detail regarding the schemes is anticipated. 

Practical Steps for Independent Sector Providers

Whilst we await the Bill’s passage through Parliament, as well as associated secondary legislation and guidance, independent sector providers can take action now in anticipation of the changes ahead. 

We suggest providers:

1. Review existing arrangements with NHS bodies and consider whether there will be a change in commissioner. Note that ICBs will commission the majority of services but some may shift to DHSC for the SoS to commission which will mean establishing a new commissioner/provider relationship. Note, if you have an existing contract in place with NHSE, this is expected to automatically transfer to DHSC without the need for a novation agreement.
2. Plan your approach to strategically partner with your local commissioner(s) and consider:
   1. how to position your services to contribute to positive health outcomes for populations in your operational area;
   2. how to align your service offering with national priorities set out by DHSC as well as those strategic priorities at a local level where you operate;
   3. how to ensure your services can smoothly integrate into the patient pathway which may involve multiple providers in public and private sectors.
3. Look out for further guidance and/or consultation in respect of any modifications to the NHS provider licence[17].

Conclusion

We continue to track the Bill’s progress as well as any emerging secondary legislation and guidance and will share developments that have practical and commercial relevance for independent sector providers working with the NHS.

If you would like to discuss this article or if you have any other questions, please contact Patrick Parkin ([email protected]) Susannah Jury ([email protected]) or another member of the Burges Salmon team.