Creating a Single Neighbourhood Contract via the PCN DES

On 30 April 2026, NHS England published an updated Network Contract DES Contract Specification for 2026/27. It took effect the very next day. Interestingly, this was only a month after the original 26/27 DES had been published, so what had changed in such a short period of time? The answer is what could prove to be one of the most significant developments in primary care contracting in recent years: the DES Local Variation Arrangement, or “LVA”.

In this blog, we take a first look at what has changed, what we like about it, and what might give cause for concern.

The LVA is a new mechanism that allows a commissioner (an ICB) to submit a written request to NHS England for the establishment of a local variation to the PCN DES. In plain terms, it enables ICBs to propose changes to key parts of the PCN DES specification to suit local needs, subject to NHS England’s approval.

A Local Variation Arrangement may vary sections 7, 8 and 10.1 to 10.5 (inclusive) of the Network Contract DES Specification. To put that into context, those sections cover the Additional Roles Reimbursement Scheme (ARRS), the Service Requirements (including enhanced access, care home arrangements, collaboration obligations, and health improvement targets), and significant parts of the financial entitlements framework. The Investment and Impact Fund (IIF), however, cannot be touched.

The scope of what can be varied is striking. In principle, an ICB could propose to delete clause 7 entirely — effectively removing the ARRS — and replace it with something else altogether, such as an outcomes-based payment model or a locally defined set of KPIs. Similarly, the service requirements under section 8, including enhanced access provisions and NHS 111 obligations, could all be replaced. Even requirements introduced as recently as the 26/27 DES published the previous month could, in theory, be varied or removed.

There are no specified parameters limiting the degree to which these sections can be changed, beyond the requirement for NHS England approval. However, the LVA request must include the proposed variation wording, the rationale for the variations, and crucially, an explanation of how the proposed changes support delivery of the Network Contract DES for the PCN’s patients. So while the scope of permissible variation is wide, it is not a free-for-all — NHS England retains the final say.

It builds on existing infrastructure. Perhaps the most immediately attractive feature of the LVA is that it does not require the creation of anything new. It builds on the PCN infrastructure that practices have spent years developing — whether that is through a lead practice model, a flat structure, a PCN company, or a federation. Whatever model a PCN has adopted, the LVA can sit on top of it. There is no need for new entities, new governance arrangements, or a procurement process. It is, as a consequence, a rapid way to start delivering locally defined services within a neighbourhood, assuming that neighbourhoods and PCNs are broadly aligned.

It preserves the independent contractor model. Because the PCN DES is a variation to each practice’s primary medical services contract, the LVA operates at practice level. Practices remain the prime contractors. This is a significant distinction from a potential single neighbourhood contract, which would almost certainly not be contracted at practice level and would likely involve a different entity — such as a PCN company or a federation — holding the contract. The LVA locks DES income into practices as practice-level revenue, which must be good news for those who value the independent contractor model.

It creates a “LES-DES hybrid”: national funding, local specification. In effect, the LVA creates something that has never quite existed before — a nationally funded enhanced service with locally defined content. The funding envelope remains set by NHS England, but what is delivered within that envelope can now be tailored locally. This is, in practical terms, a hybrid between the DES (national, centrally specified) and a LES (locally commissioned, locally designed) — and it is a genuinely novel construct in primary care contracting.

It offers radical devolution. The PCN DES has historically been a prescriptive, centrally driven contract. The LVA represents a significant relaxation of central control. The fact that so much of the specification is now, in principle, open to local variation is quite astonishing. It is, in essence, NHS England devolving power locally, enabling ICBs to tailor services to the specific demographic and health needs of their populations rather than persisting with a one-size-fits-all model.

It offers flexibility on geography. Interestingly, there appears to be nothing in the specification requiring a Local Variation Arrangement to apply to a geographically contiguous area. An ICB could, for example, apply the same variation to several PCNs/neighbourhoods scattered across its footprint that share similar demographic profiles — such as areas with high deprivation — without those PCNs needing to be geographically adjacent. An ICB could equally choose to have different variations for different groups of PCNs within its area, tailored to their distinct local needs. This kind of demographic-based flexibility is genuinely novel and could be a powerful tool for addressing health inequalities.

It is a credible alternative — or at least a precursor — to the single neighbourhood contract. The single neighbourhood contract remains a concept coming down the pipeline and will doubtless be implemented by many ICBs. When it does arrive, it will face significant implementation challenges: there is no entity structure for neighbourhoods, no governance framework, and a probable need for procurement. The LVA avoids all of those problems. For ICBs that are happy with their PCN footprints and want to start delivering locally defined neighbourhood-level services now, the LVA provides a credible route to do so without waiting.

ICB capability. ICBs are currently undergoing major cuts. The LVA requires ICBs to do a significant amount of work: drafting proposals, engaging with practices, navigating the approval process, and implementing variations. Whether ICBs have the staff and the capability to take advantage of this opportunity is a genuine question.

Lack of guidance. At the time of writing, there is no published guidance from NHS England as to what kind of changes it would or would not be likely to approve. ICBs are, to a degree, groping in the dark. Without a framework of expectations, there is a risk that ICBs either propose too little (for fear of rejection) or invest significant time and resource into proposals that are ultimately refused. This uncertainty is arguably the biggest practical barrier to uptake.

Central approval requirements. Every proposed variation requires NHS England’s approval. The more flexibility an ICB wants, the harder the approval process becomes. If a single ICB has 30 PCNs and wants multiple different variations, that is a significant volume of work flowing to the centre for sign-off. One has to hope that NHS England is adequately resourced to manage that process.

Getting practices on board. The LVA is, at its heart, still a DES — an enhanced service that operates on an opt-in basis. Before a Local Variation Arrangement can take effect, the commissioner must provide confirmation and evidence that each Core Network Practice has agreed to participate on the terms approved by NHS England. Unanimity within a PCN appears to be required. This means that a single practice within a PCN could, in principle, hold things up. If a practice refuses to sign up, the DES simply continues without modification for that PCN. Any proposed variation will therefore need to be demonstrably more attractive than the existing DES to get practices across the line.

Complexity if run alongside other models. Although no ICB would sensibly attempt to run LVAs alongside separate single neighbourhood contracts, (or indeed create a plethora of LVAs) there is nothing in the specification that precludes it. The potential for complexity and administrative burden is considerable.

One dimension that deserves particular attention is the financial impact on individual GP practices. PCN and enhanced services income typically represents around 30% of total revenue for a GP practice. A shift in how that funding is controlled, directed, or conditioned could, over time, affect both profitability and viability if not planned for. By locking this all in at practice level LVAs should be more attractive for individual practices than single neighbourhood contracts, but it does mean that the complex ‘shared cost/revenue model of PCNs will continue. Embedding control and governance of money at PCN/neighbourhood level will be more important than ever.

The LVA increases both opportunity and responsibility for PCNs. Networks are now expected to manage larger and more complex funding streams, employ or host multidisciplinary teams at scale, deliver locally tailored services, and act as credible partners with ICBs.

For some networks — particularly those that delayed structural decisions while waiting for clarity on neighbourhood contracts — incorporation or the use of an established federation model may now merit serious consideration. This is not about rushing into change, but about recognising that the PCN’s role is becoming increasingly central to service delivery and that governance arrangements need to be fit for purpose.

While much will continue to evolve, there are some sensible steps practices and PCNs can take now.

First, understand your local neighbourhood model. In most parts of the country PCNs are evolving into neighbourhoods, but LVAs and single neighbourhood contracts are both aimed at neighbourhoods, not PCNs. Make sure you understand how your single and multi neighbourhood model is evolving.

Second, revisit PCN governance arrangements. Ensure decision-making, financial controls, and risk-sharing are clearly documented and understood. If you are still operating on the original Network Agreement without review, now is the time.

Third, engage early with your ICB. ICB reorganisations have created gaps — but that also means this is the moment when future direction is set by those who engage first. If your ICB is exploring LVAs, you want to be part of that conversation from the outset. This kind of engagement is probably best led at scale by your LMC.

Over time we expect to publish further, more detailed analysis of the specific provisions that can be varied and the opportunities that may arise from them. In the meantime, if you have any questions about the LVA or the updated PCN DES, please do not hesitate to contact us.