Chancellor announces £22.6bn cash injection for health service in budget

The health service is to receive a £22.6bn cash injection over two years, the chancellor has announced, in what she called the biggest spending increase outside Covid since 2010. But health experts said patients may not feel the impact as much of the increase would be absorbed by pay rises and higher care costs.

Announcing the “down payment” on the government’s 10-year plan for the NHS, due in spring 2025, Rachel Reeves said the NHS was the nation’s “most cherished public service” and that the extra funding would help the government cut waiting lists.

“This is the largest real-terms growth in day-to-day NHS spending outside of Covid since 2010,” she said. “Because of this record injection of funding, because of the thousands of additional beds that we have secured, and because of the reforms that we are delivering in our NHS, we can now begin to bring waiting lists down more quickly and move towards our target for waiting times to be no longer than 18 weeks by delivering on our manifesto commitment for 40,000 extra hospital appointments a week.”

Overall, the Treasury said, the average annual increase to the day-to-day NHS budget was 4%, while the total increase for the Department of Health and Social Care (DHSC) was 3.4%.

Reeves also announced a “record” £3.1bn two-year increase in the department’s capital budget, a 10.9% average annual rise. This includes £1bn for the repairs backlog and to tackle problems with reinforced autoclaved aerated concrete (Raac), £1.5bn of funding for new surgical hubs and diagnostic scanners and £70m for new radiotherapy machines.

Health experts welcomed the extra funding but cautioned that more investment in the NHS would be needed for patients to notice the difference. Siva Anandaciva, the chief analyst at the King’s Fund thinktank, said: “The health spending announced today is unlikely to be enough for patients to see a real improvement in the care they receive.”

While the budget increase would help sustain services, “it is unlikely to drastically improve care over the rest of this year, and certainly not overnight”, he added, because much of the £22.6bn extra would be absorbed by NHS staff pay increases and the rising cost of delivering care.

While the extra funding for the capital budget was also welcomed, the £3.1bn is considered a drop in the ocean compared with the £13.8bn backlog of NHS maintenance costs for buildings and equipment, and therefore only a modest downpayment on what is needed to tackle unsafe and outdated NHS facilities.

Saffron Cordery, the deputy chief executive of NHS Providers, said the budget brought a “welcome boost” for NHS trusts, but years of underinvestment and severe staff shortages meant all areas of the NHS were in a “very tough” position.

She said: “Almost £14bn is needed to plug a rocketing backlog of NHS repairs. Vital bits of the NHS are literally falling apart, putting quality of care and sometimes the safety of patients and staff at risk. The devil is often in the detail and it will be critical to ensure that welcome funding increases fall where they are needed, including to bring down waits for mental health and community services and to improve ambulance performance.”

There was widespread consternation that an extra £600m announced for social care was substantially less than the NHS has received, especially when care providers face extra costs from national insurance changes and minimum wage increases, exacerbating the difficult financial position they are in.

Also announced in the budget was a new duty of £2.20 a millilitre on vape liquid, plus an additional one-off increase in tobacco duty to maintain the price differential and avoid incentivising smoking.

A consultation was announced on potentially expanding the levy on sugary drinks. This could lead to reducing the percentage of sugar allowed in a drink before the charge kicks in, and introducing a third, highest tier for the most sugary products.

The levy could be extended to milkshakes and other dairy drinks. Some of these can have more than 10% sugar content but were exempted from the levy when it was introduced in 2018.

Matthew Bazeley-Bell, the deputy chief executive of the Royal Society for Public Health, said a 1p cut in alcohol duty on draught beer in pubs alongside increases for other drinks, was the right approach, reflecting the difference in harm between drinking in a pub and drinking high-strength alcohol bought elsewhere. “This is a welcome step in the right direction,” he said.