A new analysis from the Health Foundation has revealed concerns over the future funding needs of NHS England with warnings of a potential shortfall unless the health service can significantly boost its productivity in the coming years
The analysis was drawn from research as part of the Health Foundation’s response to the Treasury’s Spending Review, showing the growing need for funding for the NHS through to 2028/29, especially driven by an aging population and an increase in major illnesses.
With the government allocating £183 billion for the NHS in 2025/26, the review will set funding levels for the following years. The Health Foundation’s analysis clearly shows the NHS’s financial outlook under different productivity scenarios.
Avoiding future financial burdens on the NHS
If the NHS achieves a 2% annual productivity growth, in line with the government’s target, the funding required for the NHS would rise to £198 billion by 2028/29. However, if productivity growth remains at 1%, the long-term average, the NHS will need £211 billion by 2028/29, an increase of £13 billion.
The report showed the importance of improving productivity to avoid an unsustainable financial burden on the system.
The long-term impact of COVID-19 continues to strain the NHS, with productivity dropping by 24% in 2020/21 compared to 2018/19.
Although there have been some recent improvements in the hospital sector, productivity across the entire health service remains below pre-pandemic levels. This slow recovery has made it harder for the NHS to cope with rising care demands, further complicating the funding challenges that lie ahead.
Improving the NHS
The Spending Review is a good opportunity for the government to implement measures to drive productivity improvements in the NHS.
This includes targeted investments in key areas such as capital infrastructure, buildings, equipment, and technology and supporting primary care and community services.
Policy changes are needed to improve the NHS’s ability to innovate and adapt, focusing on empowering staff, enhancing data management, and developing new ways to deliver services.
The Health Foundation has launched a new NHS Productivity Commission to explore potential solutions. Over the next 18 months, the Commission will look at productivity across various areas, including hospitals, primary care, and mental health services. The goal is to identify policy changes that could help boost long-term productivity growth across the entire health system.
UK’s healthcare infrastructure
One key area of concern highlighted by the Health Foundation is the state of NHS capital investment.
The UK’s investment in healthcare infrastructure has dragged behind similar countries, and the NHS faces a £14 billion maintenance backlog.
The Foundation estimates that capital spending would need to increase by 10.2% annually between 2024/25 and 2029/30 to address this. Without this investment, the NHS will struggle to modernise its facilities and technology to keep pace with rising demand.
Although recent changes to Treasury fiscal rules and the introduction of longer-term capital budgets provide some hope, the true test will be whether the government commits to matching these new financial frameworks with substantial increases in NHS investment.
The Health Foundation’s submission to the Spending Review also emphasises the need for a long-term strategy to improve public health and support sustainable economic growth.
This includes restoring the public health grant to the real-terms equivalent of 2015/16 levels, allocating additional funds for adult social care to meet growing demand, and establishing new spending categories for preventative health measures.
