Two-year spending freeze as inflation eats away at NHS funding

  • 9th February 2024

The Nuffield Trust has launched its health and care finances tracker as a resource for policymakers, academics, media, and those following the challenging financial situation facing health and care services at a time of increasing demand and steeply-rising costs.

In the first update to the tracker following the Chancellor’s Autumn Statement, the think tank reveals that the NHS has experienced an effective spending freeze over the past two years as budget increases intended to improve services were eaten up by inflation.

And this analysis follows the dramatic revision to the Office for Budget Responsibility’s (OBR) inflation estimate for this year from 2.5%-6.1%.

This spending freeze has meant that the NHS is now much closer than expected to the spending trajectory set out at the 2019 NHS Long-Term Plan – something it was asked to converge back to post-pandemic.

Spending now is just £1.4bn (1%) above this level.

However, the tracker reveals that the next budget, which will need to be revised upwards to fund pay rises already agreed, is £10bn below where it would be if the Government were to roll forward the Long-Term Plan trajectory another year.

Nuffield Trust senior policy analyst, Sally Gainsbury, said: “Far from investing in the NHS, our analysis reveals that, since the pandemic, Government funding has barely kept pace with soaring prices affecting the whole economy.

“If the Government continues to refuse to pay extra for inflationary pressures being experienced across the health services, this simply means patients will wait longer for care, much-needed investment will be further delayed, and the quality of healthcare will deteriorate.

“The NHS will already be planning what it does next year and urgently needs politicians to have an honest conversation about what the NHS costs and how we can pay for it.”

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