The recent budget announced a £22.6 billion cash injection for the NHS, hailed as the largest spending increase since 2010 outside of the Covid pandemic. While it appears generous compared to previous years, questions arise about whether this funding will truly transform an NHS that has faced over a decade of financial strain.
Keeping track
It can be difficult for those outside of the think-tanks, government and the NHS to make sense of the funding figures for healthcare in England. For a start the figure given at the start of a financial year in April is invariably not the final figure spent by the end of that year, due to in-year negotiations with the treasury for more money, such as to cover industrial action, pay awards and a winter crisis. This leads to percentage increases year on year, varying between sources.
NHS England or Department of health?
The other issue is determining whether funding increases refer to the Department of Health and Social Care (DHSC) as a whole or just to NHS England. The vast majority (around 90%) of the DHSC budget is allocated to NHS England, with the rest allocated to capital spending, the department’s various organisations, such as the UK Health Security Agency and the National Institute for Health and Care Research, and finally, the public health grant given to local authorities.
How much in real terms?
The Chancellor’s budget announcement of £22.6 million for the DHSC to 2025/26 increases the spending for the entire DHSC by 3.8% between 2023/24 and 2025/26 on average in real terms.
This means health spending in England will be £214.1 billion in 2025/26 under current plans, up from £201.9 billion in 2024/25 and £188.5 billion in 2023/24. Between 2010 and 2019, the average annual increases were just 1.4%.
DHSC spending can be split into day-to-day spending (pay, medicines etc.) and capital spending, which is used to finance long-term investments, such as buildings and medical equipment.
For day-to-day spending, the £22.6 billion announced in the budget equates to an increase in spending to £200.5 billion by 2025/26. This breaks down to an increase of 3.8% to £190.1 billion in 2024/25, then a 3% increase to £200.5 billion by 2025/26. Over the two years, this represents a 3.4% average annual increase in real terms compared to 2023/24.
Within this spending, NHS England’s budget will rise by 4.0% over the period, up to £192 billion for 2025/26. The increase is front-loaded, however, to help fund pay deals and other immediate cost pressures, so up 4.7% in 2024/25 then 3.3% in 2025/26.
Enough for capital?
Capital spending will rise to £13.6 billion by 2025/26, a 10.9% average annual increase in real terms compared to 2023/24. The spending will rise to £11.8 billion in 2024/25 and then to £13.6 billion in 2025/26. The money will be used to fund plans for new surgical hubs and diagnostic scanners (£1.5 billion); radiotherapy machines (£70 million); and £1 billion for critical maintenance issues with NHS buildings, including those affected by reinforced autoclaved aerated concrete (RAAC); £2 billion for NHS technology to improve productivity and cyber-security; a new fund to upgrade around 200 GP surgeries; and £26 million to open new mental health crisis centres.
However, as welcome as such a large increase in capital spending is, the NHS currently faces an estimated backlog in maintenance of £13.7 billion, a figure higher than the entire capital budget for 2025/26 of £13.6 billion.
Future funding unclear
Outside of NHS England and capital spending, in areas such as public health, which is included within the wider DHSC budget, it is not yet clear how much will be allocated for 2025/26.
Public health spending has been squeezed for many years, with the public health grant effectively cut by 28% per person in real terms since 2025/16 and in 2024/25 is £3.6bn, equivalent to just 2.2% of the NHS England budget.
The public health grant is given to local authorities for services, including sexual health services, health visiting, the NHS Health Check programme, and health improvement programmes such as stop smoking, healthy weight, and drug and alcohol services. All services that are vital if the government’s aim to move to a more preventative approach to healthcare are to be achieved.
There were positive moves in the area of prevention in the budget, however, with the Royal Society for Public Health (RSPH), welcoming the news that tobacco duty will rise and there will be a new flat vaping duty. Also welcomed was a reform of alcohol duty to reflect the difference in harm between drinking in a pub, and drinking products purchased from off licenses. The RSPH noted that draft duty falling, while other alcohol duties rise with inflation, should help encourage healthier drinking.
Similarly, the RSPH noted that “the decision to review the highly effective Soft Drinks Industry Levy – uprating it in line with inflation since its introduction – is a positive step to ensure that the work of promoting healthier soft drinks does not stall at a time when obesity rates are continuing to rise.”
Despite how generous the headline figure of £22.6 billion looks, the consensus of opinion from commentators that have analysed the figures, is that the funding is nowhere near enough. There are also concerns about the lack of attention to social care.
Siva Anandaciva, the chief analyst at the King’s Fund think tank, said that while the budget increase would help sustain services,
“it is unlikely to drastically improve care over the rest of this year, and certainly not overnight.”
Budget increase already spent
Much of the money is already spoken for in pay increases and the current deficit in the NHS. Sally Gainsbury of the Nuffield Trust noted in a discussion on the budget, despite looking “generous” the increase is
“still not quite enough to resolve all the immediate cost pressures that the NHS in England is experiencing this year,” and it is likely that there are more negotiations and clarifications to come.
Gainsbury noted that in practice a lot of the extra money is tied up with elective activity at hospital trusts. Increasing elective activity to chase targets leads to high costs in staff overtime. Hitting the targets will bring money in for the trusts to offset the higher staff bill, but those trusts not hitting the targets will struggle with deficits, noted Gainsbury.
Adding, that whilst the budget might help NHS England breakeven overall, there will be considerable differences in performance between trusts, with many still in deficit.
Saffron Cordery, the deputy chief executive of NHS Providers, said the budget brought a “welcome boost” for England’s NHS trusts, but years of underinvestment and severe staff shortages meant all areas of the NHS were in a “very tough” position.
She welcomed the increase in capital funding, but noted that
“almost £14 billion is needed to plug a rocketing backlog of NHS repairs. Vital bits of the NHS are literally falling apart, putting quality of care and sometimes the safety of patients and staff at risk.”
The Royal Society for Public Health (RSPH), in its statement on the budget, was pessimistic about funding for public health noting that “there is unlikely to be any major movement on core public health spending, and – as always – there is more that could be done to invest in genuinely preventative services.” However, it did note that local authorities seeing their spending power increasing by 3.2% could give “councils an opportunity to show that they understand the value of prevention.”
Social care?
Many commentators were concerned that social care had received so little funding and attention in the budget, with just an extra £600m announced for social care substantially less than the NHS has received. This is particularly concerning as care providers face extra costs from national insurance changes and minimum wage increases. Saffron Corderoy noted:
“Social care needs urgent attention too. That can can’t be kicked down the road any longer. An underfunded, overstretched social care sector needs urgent reform and more resources not just to give people the care they need but to help to ease mounting pressure across the NHS.”
Anita Charlesworth, Senior Economic Advisor at The Health Foundation, noted that while the Budget provided “a welcome funding boost for the NHS, in many ways the challenges facing social care are, if anything, even greater.” Adding that NHS trust leaders had highlighted that social care capacity was one of the three greatest risks to the provision of high-quality patient care over winter.
There also appears to be little in this budget that will help the NHS with its long-term aims to move to a greater focus on preventative care, and from hospitals to community care. Sally Gainsbury noted that
“it is hard to see how the figure for 2025/26 creates any sort of headroom for moving from hospital to community/primary care,”
with no money for double-running of services, experimentation and new care pathways.
This lack of head-room means that once again short-termism rules and the long-term aspirations for the NHS continue to be undermined.
In capital spending, however, Siva Anandaciva, at the King’s Fund noted that the Chancellor made the very welcome step of announcing that capital budgets will now be set for five years and extended every two years at spending reviews, moving away from short-termism.
This budget is the first phase of a two-part spending review and sets the spending for health and care services in 2024/25 and 2025/26. Phase 2 comes in next year’s spending review, which will set budgets for 2026/27 and 2027/28.
As already noted the figure in the budget is rarely the final figure for spending on health. The Autumn Budget has reset spending levels for the current financial year (2024/25), but the onset of winter may well result in the need for more funding to be voted through early in 2025 to avoid the DHSC overspending its budget.
After years of underfunding leading to staffing issues, failing infrastructure and financial deficits, commentators agree that this is a budget that will help keep the NHS moving and deliver some improvement, albeit in a patchy way that will not be seen across the entire system, but it is unlikely to allow the NHS to make significant changes to the way it operates and towards its goal of moving to preventative care. For that to happen, budgets across the time of the parliament and beyond will have to keep up the increased investment.
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