Content originally from The King’s Fund
The NHS is a bottomless pit
Myth
Some commentators and politicians have labelled the NHS a bottomless pit – the more money it receives, the more it demands. They argue that the NHS consumes too high a proportion of public spending and that continuing to increase health spending is unsustainable – the more money it receives, the more it demands.
The facts
Spending on health care has historically grown by about 4 per cent each year in real terms in the UK. This is due to a combination of factors including a growing and ageing population, rising patient expectations and medical and technological advances. Like other nations, we have chosen to pay for this by prioritising investment in our health system from the proceeds of economic growth.
In the decade following the global financial crisis in 2008, the health service faced the most prolonged spending squeeze in its history: between 2009/10 and 2018/19 health spending increased by an average of 1.5 per cent per year in real terms, well below the long-term average. As a result, spending failed to keep up with demand, increasing the pressures on services and leading to staff shortages, rising waiting times for treatment and performance standards being routinely missed, well before the pandemic.
Spending on the NHS now accounts for more than 20 per cent of all public spending…
In 2018, the government announced a five-year settlement for some areas of health spending, covering the period from 2019/20 to 2023/24. Under this deal, NHS England’s budget would rise by an average of 3.4 per cent each year in real terms. As a result of the additional pressures created by the pandemic, this was followed by a new three-year funding settlement in September 2021 to increase Department of Health and Social Care’s resource budget (day-to-day spending) by an average of 3.8 per cent each year until 2024/25. This uplift is part-funded through an increase to National Insurance Contributions, known as the Health and Social Care Levy.
As public spending on health has increased, it has consumed a larger share of government expenditure. Spending on the NHS now accounts for more than 20 per cent of all public spending (and more than 40 per cent of day-to-day spending on public services), leading to trade-offs with other areas of government spending. However, this should also be seen in the context of the UK’s relatively low tax revenues compared to many other countries.
In 2019, the UK spent 9.9 per cent of its GDP on health, remaining consistently around this level since 20111 . This is slightly above the average for members of the Organisation for Economic Co-operation and Development (OECD) but lower than several comparable nations, including Germany, France and the Netherlands. Evidence also suggests the NHS is relatively efficient (see Myth 2 below).
Verdict
Compared to other countries, the UK does not spend a particularly high proportion of its national wealth on health care, while a decade of historically low funding increases has left services facing huge pressures and a workforce crisis. Like levels of taxation and public spending more generally, how much is spent on health is a political choice and politicians should be honest with the public about the standards of care they can expect with the levels of funding provided.
- 1As in all countries, the proportion of GDP spent on health care increased during the pandemic, rising to 11.9 per cent in 2021. Levels of spending have not yet stabilised post-pandemic, so more recent comparisons should be treated with caution.
SWF Health & Social Care Group 