The Committee has been monitoring the effect of the 'Nicholson Challenge' - the commitment in the 2010 Spending Review to achieve, in effect, efficiency gains of 4% year on year in the NHS, to allow the service to meet rising demand out of a budget which in real terms is broadly stable. In its previous reports the Committee has taken the consistent view that the Nicholson Challenge can only be achieved by making fundamental changes to the way that care is delivered. Only through a new commitment to integration of the different strands of health and social care can the economic requirements of the Nicholson Challenge and the broader objectives of enhancing the quality of health and care services can be met. In this report the Committee examined the reported achievements of the Nicholson Challenge in its first full year of operation and sets out its findings in respect of the efficiency gains being made and the progress in integration of health and social care systems.