It was widely reported as a ‘generous’ settlement for the NHS in the spending review, compared to other departments such as policing and education. However, there are numerous calls on this funding and painful compromises ahead.
Top line figures: The Department of Health and Social Care budget will rise by 2.8% on average from 2026/27 to 2028/29. Within this overall allocation, NHS England, which manages day-to-day expenditures, will receive a 3% increase.
Let’s put this ‘generous’ settlement in context.
The NHS has been underfunded for well over a decade,
If instead, the NHS had received an annual increase of 3.8%, which is the average since its inception in 1948, it would have had £28–35 billion more each year by the early 2020s.
Due to this underfunding, it is now struggling to cope with the rise in patients, the increasing wage bill, deteriorating hospital conditions, and a substantial staff shortage.
Unanswered, too, is the question of social care reform, which the Prime Minister dodged in Parliament this week, as sector leaders called the announced extra funding a short-term patch only.
Additionally, the government’s election promises included changing our healthcare model to prioritise the prevention of sickness. So, how did the spending review measure up to all these demands?
Latest on workforce crisis: A shortage of NHS jobs for trained staff
NHS leaders directly link the delays in treatment to the workforce crisis. The cause is a lack of planning and persistent underfunding, leaving the current workforce too small to manage the scale of demand.
Now, though, funding issues are also undermining attempts to train more clinical staff. As doctors advance in their training, a bottleneck has developed due to a lack of funded specialist positions.
GPs are also suffering from these funding shortages. A BMA survey revealed that 84% of locum GPs in England struggle to secure consistent employment, leading many to reconsider their future in the NHS or the medical field altogether.
Over the past year, many hospital trusts have encountered immense financial pressure to meet government savings targets; as a result, staffing cuts are being made. In an NHS Providers survey, 37% of trust leaders reported cutting clinical posts to achieve financial targets, with another 40% considering similar actions.
This contradicts the intent of the NHS Workforce Plan, which recognised failures to plan and outlined annual workforce growth targets. Since its 2023 publication, the number of training places for medical and nursing staff has increased, but funding for future employment costs and training for this additional staff is now uncertain.
Workforce targets undermined by efficiency targets
Workforce growth modeling: Aims for 2.6–2.9% annual growth through to 2036/37, reaching 2.2–2.3 million total NHS staff england.nhs.uk.
Projected new staff by 2036: +60–74k doctors, +170–190k nurses, +71–76k allied health professionals, +210–240k support workers
But the government’s eye-watering’ savings targets of 4% are already leading to cuts in staff and a host of other difficult choices. The savings target is almost double last year’s and more than four times the NHS’s historical rate of productivity growth at 0.9 per cent.
The cost of delayed maintenance and repairs to England’s hospitals has rocketed
A major concern is NHS infrastructure.
By the time Labour took office in 2024, the backlog had surged to £13.8bn from £6bn in 2019, with more trusts facing over £100m in bills. These figures reflect overdue repairs to deteriorating buildings and outdated equipment, excluding total rebuilding costs, especially concerning RAAC concrete, which would be even higher.
The Autumn budget offered a 10.9% rise in capital spending for 2024/25 and 2025/26, but the spending review has flatlined the capital budget in real terms from 2026/27 to 2028/29.
Over 14 years, low capital investment from the Conservative government forced NHS trusts to use capital budgets for daily operations, resulting in a huge maintenance backlog.
In a worrying reminder of the waste and profiteering of PFI. NHSE chief executive Sir Jim Mackey proposed an “off–balance sheet capital investment mechanism” to attract private finance for health service infrastructure.
Resolution of all pay disputes
Dissatisfaction remains after the 2025 pay award announcement. Resident doctors received a 5.4% increase, consultants 4%, and nurses 3.6%.
The British Medical Association (BMA) threatens strike action, calling the increase “derisory,” as it fails to address previous pay freezes. The RCN criticised the 3.6% raise as “grotesque” and is balloting its members on next steps.
NHS workers are determined to protect their wages, which have lagged behind inflation from 2010- 2023. By the end of the Conservative government’s tenure, multiple strikes, including by nurses and doctors, were ongoing, demanding higher pay.
In July 2024, following Labour’s election win, pay settlements with staff unions averaged about 5.5% for most groups, significantly above the 2% initially planned by NHSE.
Analysts, such as IFS and the Nuffield Trust, state that 60-80% of the NHS’s annual uplift was consumed by pay and inflation over the last two years, a trend expected to continue this year, considering that 60% of NHS costs relate to its workforce.
Public health is the key to long-term health improvements
The Labour government’s 10-year plan for the NHS intends to shift services towards community care, health prevention, and digital technology use. However, funding for prevention has been overlooked for years, with public health grants cut by over 25% since 2015/16.
Restoring it to 2015/16 levels would need an extra £3.6bn during the Spending Review period, according to the Health Foundation.
The spending review could have renewed the public health grant to enhance national health, potentially reducing NHS costs in the long run. Although public health received a 3% increase in the Autumn budget, it will face budget cuts in the spending review due to NHS England’s 3% rise.
Currently, the NHS is facing over 7 million waiting lists for elective care, long waits for mental health services, and over 25% of A&E patients waiting over 4 hours, alongside widespread ambulance delays. The spending review funds are likely to be quickly depleted indeed
The cost of healthcare will always keep rising
The NHS exists in a world of ever-increasing healthcare costs, due to several factors that are not unique to the UK, including population growth; an ageing population, who typically use healthcare far more than younger people; rising expectations for treatment; and, unlike in other industries, new technology and innovations (medicines,drug delivery etc.) that do not reduce the cost of care, but are associated with higher costs. Added on to this the UK has seen over a decade of low investment and poor decisions in other areas that affect the health of the population, including housing, transport infrastructure, and the environment.
For several years, health economists have calculated that annual funding needs must rise by at least 3-4% per year to maintain services. Anything less will result in a managed decline in services, and only with more than a 3-4% increase will there be a substantial improvement in quality across a broad range of services.
What has the NHS received in the past?
Since the NHS’s launch in 1948, it has received an average of 3.6% increase in funding each year, although, as the graph below shows, the actual increases have varied with governments. The amounts the NHS has received have often been influenced by politics rather than need, with record rises averaging 6.8% in the Labour years from 1997 to 2009 and record lows of 1.1% in the coalition years from 2010 to 2014.
Both the Autumn budget, at 3.2%, and the Spending Review, at 2.8%, have given the DHSC total spending growth in real terms that falls short of the 3.6% average annual rise given to the NHS since its launch in 1948.
As well as being lower than the historical average, the increases are also for an NHS that has experienced 15 years of underfunding.
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