Note on NHS Budget

I recently came across an article in The Economist: “The story of one operation” (reference: https://www.economist.com/britain/2024/10/08/the-story-of-one-nhs-operation (paywall), accessed 20th October 2024).

The author discusses productivity in the NHS in terms of inputs and outcomes, which led me to ask a question about input costs: what is the NHS budget and how is it distributed?

Note that responsibility for health and social care in the UK is devolved to regional administrations, e.g. Northern Ireland Assembly & Executive for Northern Ireland. For this article, I will be looking primarily at NHS England. In a future article, I will compare NHS spending in the devolved regions.

UK Government Report

The first article I would like to reference is the Department of Health and Social Care Annual Report and Accounts (pdf); the latest report was published by the Sunak Conservative Government in January 2024 and refers to the financial year 2022-23.

The report is several hundred pages long and discusses a wide ranging of topics, including NHS priorities, exceptional costs due to, for example, the War in Ukraine, COVID-19, and impact of industrial actions, among other challenges.

One diagram that I found useful is the following:

Each block in the diagram could be further expanded to show agencies and bodies responsible for managing the funds and commissioning health services.

If we start at the top of the diagram, the funds allocated to healthcare by Government to the Department of Health & Social Care is £187.3 bn. Of this, the bulk (£159.1 bn) is transferred to NHS England. The remainder (£ 28.2 bn) is distributed to a number of bodies:

• Arm’s Length Bodies – these are public bodies established with a degree of autonomy from the Secretary of State and play an important role in supporting the health and care system. Examples of Arm’s Length Bodies are:
  • NHS Digital
  • Care Quality Commission (CQC)
  • National Institure for Health and Care Excellence (NICE)
• Health Education England – from what I can see, this agency has been absorbed into NHS England
• UK Health Security Agency (UKHSA) – executive agency tasked with prevention, preparation for and response to infectious diseases, and environmental hazards. The agency provides scientific and operational leadership, working with local, national and international partners to protect the public’s health and build the nation’s health security capability.
• Medicines and Healthcare products Regulatory Agency – another executive agency that regulates medicines, medical devices and blood components for transfusion in the UK.
• Local Authorities – these fall under a different Government department but presumably these funds (£3.2 bn) are ring-fenced for health-related expenditure only.

NHS England Spending

NHS England allocates most of its budget (£118.9 bn) to Integrated Care Boards (ICB). The definition of ICB, taken from this NHS England site, is as follows:

NHS organisations responsible for planning health services for their local population. There is one ICB in each ICS [integrated care system] area. They manage the NHS budget and work with local providers of NHS services, such as hospitals and GP practices, to agree a joint five-year plan which says how the NHS will contribute to the ICP’s [integrated care partnership] integrated care strategy.

There are 42 ICS in England and they comprise a broad partnership of healthcare professionals, social care providers and even volunteers who strive to improve and monitor health provision at the local level.

ICS in turn commission the end user health services from NHS and other providers: NHS Trusts, Foundation Trusts and even the private medical sector.

The remainder of NHS England’s budget (£39.6 bn) is spent on primary care, administration, publich health initiatives and direct commissioning of services from NHS and other providers.

NHS England Spending Over Time

The King’s Fund website has compiled charts showing increases in NHS England spending as well as total spending:

The reference article is https://www.kingsfund.org.uk/insight-and-analysis/data-and-charts/nhs-budget-nutshell (accessed 20 October 2024).

Note that the forecasted spending for 2023-2025 is based on the outgoing Conservative Government budget spending in 2024 and it may need to be revised following the incumbent Labour administration’s forthcoming first budget.