The Chancellor of the Exchequer has confirmed the NHS will receive an extra £8bn in real terms by 2020/21 in today’s Summer Budget announcement.

Anita Charlesworth, Chief Economist at the Health Foundation, said:

'Despite confirmation of the £8bn in today’s announcement - alongside the £2bn already announced in the last Autumn Budget for this year – the NHS will still need to significantly improve productivity over the next five years to achieve some £22bn in efficiency savings which are required to avoid cuts to the quality of care. If it’s unable to increase productivity, this extra money may not be enough to allow the service to offer the same range and quality of care it currently does. NHS providers are still projecting a large overspend this year and there is no indication of how that will be managed.

'In order to implement the Five Year Forward View, and sustain quality whilst meeting rising demand and delivering efficiencies, both the Health Foundation and the King’s Fund are also arguing for a transformation fund, in addition to the £8bn. The NHS will need this transition money - which will cover investment in new services to run parallel to existing ones - to be able to move care out of hospitals and into communities, making the service fit for the needs of today’s population.

'NHS staff’s pay will grow at much slower rate than private sector earnings. While this may help bridge some of the efficiency gap it raises real questions on whether it will put more pressure on the NHS’ soaring agency budgets if it leads to recruitment and retention problems.

'The Living Wage announcement is welcome - it will benefit large numbers who work in the social care sector, but with falling local government budgets there are real questions about how this can be paid for without further cuts to services.'

Media Contact

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Notes to editors

Read Adam Roberts, Senior Economics Fellow at the Health Foundation, on the meaning of the £8bn 

NHS Finances: the challenges all parties need to face is also available for download.