The NHS has been widely regarded as one of the most efficient healthcare systems in the developed world. For example, a study comparing the healthcare systems of 11 countries between 2011 and 2013 found that the NHS scored highest on quality, access and efficiency (

But by the end of 2016 the picture had become very different. Now, good access to services and the quality of care are at risk, not because of mismanagement on the part of NHS organisations but because of insufficient funding of the NHS ( we are experiencing the biggest sustained fall in NHS spending in any period since 1951.  Once adjusted for inflation, spending on the NHS in England has been increasing by only 0.9% a year (on average) – well below the 3.7% growth rate that the UK health service has been used to in the past. But even worse, once inflation that is specific to the NHS is taken into account, the real increase in funding is just 0.2% per year ( Although the UK is the 5th largest economy in the world, we spend much less on healthcare than other countries like France or Germany.

At the same time that funding is getting tighter, the NHS has to cope with:

  • The annual transfer of NHS funds to the Better Care Fund (£3.8 billion from 2015). This Fund was set up to support the integration of health and social care, largely by cutting hospital care for those who are chronically ill and the frail elderly and replacing it with supposedly cheaper care in the community;
  • A cut of £200 million in Local Authority public health budgets which fund many services such as school nursing, screening programmes, and smoking cessation programmes – despite recognition by the boss of NHS England of the need for “a radical upgrade in prevention and public health”.  This cut will not only affect preventative and public health services but will also have a serious knock on effect on NHS healthcare services.(;
  • A cut in the money paid by the government to NHS providers for their work under the Payment by Results system from 2010/11. Over three-quarters of each hospital’s funding has come from this system through which hospitals are paid per treatment, according to prices set by a tariff. In recent years, payments have been cut by over 40% for a quarter of the treatments that hospitals provide ( So, for example, a hospital providing routine knee surgery would have been paid £3,077 for each procedure in 2009/10, but by 2013/14, the hospital would have received £1,673 for the same procedure.

Cuts to tariff payments made up nearly half of the £20 billion ‘efficacy savings’ that the NHS was told to achieve by 2015 under the ‘Nicholson Challenge’, dreamed up by the last Labour government and included in the NHS funding settlement agreed by the Coalition Government when it came to power.

Further reading

For information about government funding for the NHS see

Francis R (2013) Report of the Mid Staffordshire NHS Foundation Trust public inquiry.

For an argument on how the ‘need for austerity’ is being used as a strategy for introducing rapid social change, not least dismantling the welfare state, see

For an explanation of NHS payment systems, such as Payment by Results, see

updated November 2016

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