Spending on the NHS in England has risen less quickly than the Conservatives promised at the last election despite the extra demand created by the pandemic and record waiting lists, a leading thinktank has said.
The Institute for Fiscal Studies (IFS) said increases in funding from the government had been eaten up by higher than expected inflation and, as a result, NHS day-to-day spending had grown by 2.7% a year during the current parliament – below the 3.3% pledged by Boris Johnson in 2019.
The IFS said that “despite a pandemic, record waiting lists and growing rates of ill health, real-terms health spending has risen less quickly than was planned five years ago.
“This breaks the habit of a lifetime: over the past 40 years, the NHS budget has almost always grown more quickly than originally planned. This parliament is the exception.”
At the 2019 election, the Conservatives pledged to increase spending by £34bn a year by the end of the parliament.
The IFS said this amounted to a 29% cash increase between 2019 and 2020 and 2024-25, which given the expected levels of inflation at the time amounted to a 3.3% annual increase in real terms day-to-day spending. The latest plans involve a bigger cash increase of 37% but much higher inflation means a real terms increase of 2.7% a year.
Inflation as measured by the consumer prices index (CPI) rose sharply as economies emerged from lockdowns imposed during the pandemic, peaking at 11.1% in October 2022.
Last year, the government and unions thrashed out a two-year NHS pay deal after strike action.
The thinktank also said the NHS was in a poor state of repair due to a lack of investment over the past decade and a half.
After being cut back sharply in the 2010s, capital spending has increased in recent years – though in 2023–24, the capital budget in England was raided to fund day-to-day pressures, returning to the bad practice of the late 2010s.
“One consequence of low capital spending is the deterioration of the NHS estate in England, where the maintenance backlog has more than doubled over the past decade,” the IFS said.
Although day-to-day NHS spending has undershot the plans made in 2019, the IFS said Britain’s weak growth during this parliament meant health spending had grown as a share of GDP and now accounted for more than 40% of total public spending.
The latest plans implied no real-terms growth for the NHS England budget from 2023–24 and 2024–25, and there are no published plans for health spending after that.
The IFS said the next government would come under pressure to increase the health budget, adding that both main parties had endorsed the NHS England workforce plan, which will require real-terms funding growth of about 3.6% a year if it is to be achieved.
Max Warner, an IFS economist, said: “The sheer size of the health budget means that delivering funding increases at anything like the historical average would require cuts elsewhere, even before accounting for recent promises on defence spending.
“Neither the Conservative party nor Labour party have been keen to set out spending plans. But the next government will have to confront this reality – and fast.”
Spending per person on the NHS is higher in Scotland, Wales and Northern Ireland than in England, although the gap has narrowed in recent decades. In 1999–2000, Scotland spent 22% more per person than England, Wales spent 12% more and Northern Ireland spent 15% more. But in 2019–20, on the eve of the pandemic, Scotland spent 3% more, while Wales and Northern Ireland each spent 7% more.
A department of health and social care spokesperson said: “We are providing the NHS with record funding of nearly £165bn a year by the end of this parliament, an increase of 13% in real terms compared to 2019-20, which is making a real difference in cutting waiting lists.
“The chancellor also announced at the budget that the NHS in England will receive a £2.5bn day-to-day funding boost this year and a further £3.4bn investment in the latest technology from 2025, helping to unlock £35bn in savings.”
