Budget 2018: £1bn real terms cut to wider health budget

31 October 2018

The Health Foundation yesterday released analysis following the budget, which included calculations of what the budgets will be in the coming years for NHS England and the wider Department of Health and Social Care (DHSC).

We set out that, as things stand, the NHS England (NHSE) resource budget is to increase by £5.1bn in real terms next year, including £1.25bn to cover additional pension costs. The DHSC resource budget (which includes NHSE as well as wider health spending) is only increasing by £4bn, meaning that wider health spending will see a £1bn reduction next year, unless £1.25bn is also added to the published DHSC resource budget (DHSC RDEL). 

This is not a technicality; it will mean reductions to spending across public health, workforce training and capital investment in buildings and equipment of £1bn. All of these areas directly impact on patient care and health services. Department of Health and Social Care sources have explained that a promised uplift in funding to account for additional pension costs addresses this reduction. However, this references the NHS England budget, where an adjustment to reflect pension costs was confirmed in June alongside the NHS England £20.5bn funding settlement. Our analysis takes account of this for the NHS England data. The Budget documentation makes clear that funding will be added to the NHS England budget for pension cost but it does not confirm that any corresponding increase has been made to the wider DHSC budget, which is the subject of our analysis.

The Budget documentation therefore shows a £1bn reduction to wider health spending outside the NHS England budget. Our calculations are set out in the table below. The relevant figure is the DHSC RDEL budget for 2019/20, which we have calculated as being £129.6bn in cash terms, in real terms £127.3bn. This figure is taken from table 1.6 in the Treasury Red Book published yesterday - the same table as the NHS England figures for resource DEL with and without the pension addition. If a corresponding increase had been made for DHSC RDEL, the budget for 2019/20 would need to be at least £130.9bn in cash terms and £128.5bn in real terms, which would mean an increase of £1.25bn had been made to account for the increased pension costs.

Media contact

Sam Fletcher 
020 7664 4647

Budget 2018 chart showing change in budgets for NHS and social care

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