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NHS funding has decreased in real terms, analysis shows

NHS funding has decreased in real terms, analysis shows
By Beth Gault
19 March 2024

The NHS budget has fallen by 1% in real terms for this coming year compared to 2023/24, according to analysis by think tank The Health Foundation.

An extra £2.5bn for the NHS was announced for 2024/25 in the Chancellor’s spring budget earlier this month, taking the total figure to £164bn. However, the think tank said this was a cut when adjusted for inflation, population growth and ageing.

Without adjusting for population growth and ageing, it is a 0.2% increase in real terms funding.

The Department of Health and Social Care’s total budget is set to increase to £192bn in 2024/25, but when adjusted for inflation only equates to a 0.6% increase in real terms compared to the previous year.

However, capital funding which covers land, buildings and IT will increase by 13.6% in real terms in 2024/25, compared to the previous year.

Hannah-Rose Douglas, deputy director for the Health Foundation’s REAL Centre, said: ‘While the additional funding for the NHS in the recent spring budget is welcome, when the impact of a growing and ageing population as well as inflation is taken into account, the value of the NHS England’s spending pot will decrease in value by 1% in 2024/25, compared to the previous year. This underlines the challenges for the NHS to improve care when faced with these ongoing funding and demand pressures. 

‘The government’s plans to increase capital spending to boost NHS technology is a welcome and significant investment, although it won’t kick in until 2025/26, after the general election. There is a long history of promises to spend more on NHS capital and technology, with budgets too often raided to pay for short-term pressures, so it’s essential that this money is spent as intended.’

Deputy chief executive of NHS Providers, Saffron Cordery, called for a shift to long-term, multi-year investment across the health service to better plan for the future, rather than a ‘stop-start approach’ which leaves them worrying about budget cuts.

‘We can’t go on like this’, she said. ‘The Budget provided welcome extra funding to help offset the recurrent cost of previous pay deals and more money for NHS technology, but inflationary pressures and rising demand for care mean NHS finances face another year of being relentlessly squeezed.

‘There’s a very real risk too that unless the Treasury fully funds upcoming staff pay awards for 2024/25, NHS England and trusts will once again have to scrabble around to find additional money to meet wage bills.’

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