How does the health sector fair in this year’s budget?

Here in the Health team at IMPOWER we couldn’t help but take a closer look at Wednesday’s budget.

Health revenue budget increases
Firstly, taking a macro view, for the Department of Health and Social Care (DHSC), the headline figure the government are using is “an average real terms increase of 4% to the NHS day-to-day budget from 23-24 to 25-26”. The likely reason for Chancellor Reeves to choose this description (over two years) is that the increase from this year to next isn’t that big – 3% in real terms, reflecting the increase in spend this year that has already gone into the NHS.

This is not a big shift from spending increases in recent years and will be tough for the NHS, particularly given that it is required to meet lots of pay awards within this envelope. The document also states that “in delivering the settlement DHSC (inc. NHS) will deliver 2% productivity next year” this is ambitious.

If we look in more detail at the minimum wage increase, this could result in more short-term pressure on the pay budget for NHS organisations. This is because the current hourly rate for entry level Band 2 & Band 3 workers in the NHS is £12.08/hr and £12.31/hr, respectively. This covers the bulk of Healthcare Assistants, Porters, Catering and Housekeeping Staff and Receptionists and Admin Assistants. Pay will have to be increased to at least match the minimum wage but in most instances be significantly higher than the minimum wage, if this workforce, particularly health care assistants are to be retained.

It also hides that DHSC’s core budget (i.e. non-NHS) is being cut in cash terms next year. So don’t expect big increases to the public health grant any time soon.

It is worth noting the additional £22.6bn resource spending for this year and next, should help plug the forecasted £2.2bn deficit for this year, help healthcare organisations and systems achieve financial breakeven and hopefully help relieve some of the unrelenting focus on efficiency and lead to better long-term planning. Hopefully, this provides providers with the ability to increase capacity and fulfil the government’s ambition of 40,000 extra NHS appointments.

We continue to believe in the mantra that without investing in community care the long-term health goals and efficiencies cannot be met. Prevention and whole system integration is key.

Health capital budget increases
Capital does better, with a 12.8% (£1.8bn) increase in DHSC capital budgets into next year. This is expected to cover, amongst other things:

– £1.5bn surgical hubs
– £1bn to tackle dangerous reinforced autoclaved aerated concrete (RAAC)
– £2bn in tech and digital
– GP upgrades
– £460m on strengthening pandemic preparedness

We are awaiting the announcement of the NHP review into the new hospital builds, what programmes will be taken forward in what order. With further funding announced for RAAC hospitals only, it is unclear when a number of these projects will progress, leaving a number of Providers and Trusts unsure about how to progress and at what pace.

Tackling the causes of ill health
Yesterday’s budget did announce a raft of measures aimed at tackling some of the causes of ill health:
• Increased tabaco duty and is introducing a vaping products duty from 2026
• Increased the soft drinks levy and is reviewing current sugar thresholds
• Increased funding to tackle homelessness and support social care

Although the public health grant was not increased, it was positive to see some steps being taken to tackle the causes of ill health. However, it is unlikely this will deliver the key shift from treatment to prevention planned.