NHS Faces £38bn funding shortfall by 2029, new study warns

The analysis calls for urgent and transparent political action to address the projected funding gap and to ensure a sustainable future for the NHS

A new study by a major think tank unveiled an alarming analysis projecting a £38 billion shortfall in NHS funding required to meet the future demands and improve services by the end of the next parliamentary term.

This shortfall projected by the starkly contrasts with the pledges made by both major political parties, highlighting the critical choices facing the next government in balancing healthcare needs, other public services, and taxation levels.

The Health Foundation analysis demonstrates that NHS funding in England must increase by 3.8 per cent annually in real terms over the next decade to cope with rising care needs and to achieve substantial improvements in services.

This translates to an immediate need for a 4.5 per cent  annual growth rate over the first five years to recover from the COVID-19 pandemic and to modernise healthcare services, culminating in an additional £46 billion by 2029/30.

However, with only an £8 billion increase factored into the Office for Budget Responsibility’s economic forecasts for the next parliament, this leaves a funding gap of £38 billion.

Anita Charlesworth, Director of the Health Foundation’s REAL Centre, voiced strong concerns, stating:

“The health service is in crisis, and all the main political parties have said they want to fix it – yet the funding they have so far promised falls well short of the level needed to make improvements.”

The Health Foundation's report emphasises that the proposed funding would be sufficient to address long waiting times, prioritise preventive measures, and significantly invest in primary, mental health, and community care.

Moreover, a crucial portion of the additional funding must be allocated to capital investment, including infrastructure improvements, increased bed and diagnostic capacity, and IT system enhancements.

Health capital spending needs to rise from almost £13 billion this year to £21 billion in 2029/30 and £27 billion by 2034/35.

This projection leaves a £9 billion gap in capital investment by the end of the parliament compared to the OBR’s assumptions.

The Health Foundation’s research with Ipsos reveals substantial public support for increased taxes to maintain NHS services.

A total of 47 per cent of respondents favor higher taxes, compared to just 11 per cent supporting reduced spending on other public services, and 9 per cent preferring cuts in NHS services to avoid tax increases.

Charlesworth emphasised the need for political honesty and said:

“Politicians need to be honest with the public about the scale of the challenge the NHS faces and the reality that an NHS fit for the future needs long-term sustainable investment.

"Honesty about this has so far been conspicuously lacking from the general election debate.”

The report situates these findings within a historical context, noting that NHS funding growth has averaged 3.8 per cent annually in real terms since the 1980s.

However, the past decade has seen lower growth, with only a 2.6 per cent annual increase between 2013/14 and 2019/20, contributing to the current pressures on the NHS.

Challenges ahead

The analysis underscores two major challenges: the need to address funding trade-offs with other public services and taxation, and the ambitious productivity improvements required within the NHS.

The report highlights that despite additional funding and staffing, hospital activity has struggled to recover post-pandemic, stressing that productivity and funding are intertwined.

The analysis calls for urgent and transparent political action to address the projected funding gap and to ensure a sustainable future for the NHS.

The full analysis is set to be published later this year with a comprehensive framework for a realistic and sustainable approach to NHS funding and workforce policy.