Download False economy: an analysis of NHS funding pressures

  • The total budget for the Department of Health and Social Care (DHSC) rose by just 0.6% to £122.8bn in 2016/17. This followed an increase in spending of 2.8% in 2015/16. On average, since the NHS's inception the budget has increased at 3.7% a year.
  • New funding announced in the 2017 Autumn Budget means that 2016/17 will represent one of the lowest annual growth rates in the DHSC budget between 2015/16 and 2020/21 – the period covered by the 2015 comprehensive spending review.
  • The rate of increase in 2016/17 was lower than population growth, so total health care spending in England per person fell in 2016/17.

Key points

  • Despite the low funding growth, the DHSC underspent its budget by £635m. This is a small underspend in the context of the total budget – just 0.5% – but is an improvement on 2015/16 when the departmental budget was overspent by £155m.
  • To achieve this, funding was targeted at front-line, day-to-day spending at the expense of longer-term investment.
  • 2016/17 saw the introduction of a new Sustainability and Transformation Fund (STF), provided to NHS trusts by NHS England, subject to agreeing and meeting financial and performance control totals.

Further reading