Investment in the UK’s healthcare sector

Healthcare is an essential service that plays a critical role in ensuring the wellbeing of individuals and society as a whole. This is why investment in the healthcare sector is vital – it maintains and improves the quality of healthcare services, and people’s quality of life more widely.

So what does healthcare spending in the United Kingdom look like?

In May 2023, the Office for National Statistics (ONS) reported total public healthcare spending in 2022 in the UK estimated at £283 billion – an increase of 0.7% on spending in 2021, but a decrease of 4.5% when adjusted for the effects of inflation. It however remains one of the biggest expenditures in the country, accounting for around 11.3% of gross domestic product (GDP).

While investment in the healthcare sector continues to account for a significant proportion of public spending, many argue it has not kept up with demand, particularly in areas such as infrastructure. For example, a recent analysis from the British Medical Association (BMA) concluded healthcare funding is currently inadequate:

“Healthcare spending has increased nearly every year since the NHS was established, because the population has grown, and more people are living longer with more complex health issues,” the BMA stated. “However, growth in health funding over the past decade, prior to COVID-19, was below the long-term average and did not keep pace with demand. Although additional and necessary funding has been provided, the historic lack of funding meant the (National Health Service) NHS was unprepared for a major health crisis like COVID-19.”

It will take time, according to the BMA, and investment to put the NHS back on a sustainable footing.

Sources of healthcare funding in the UK

In the UK, healthcare is predominantly funded through the NHS, which provides free healthcare to all UK citizens and residents. The exact name for the service varies within the UK’s four areas:

• NHS England
• NHS Scotland
• NHS Wales
• Health and Social Care (HSC) in Northern Ireland

Regardless of where it operates, though, the NHS is primarily funded through general taxation, and its budget is set by the UK government. The NHS budget is allocated to various healthcare providers and services, including primary care, hospital interventions, and mental health services, within the various NHS trusts.

In addition to the NHS, there are other sources of healthcare funding in the UK, including private healthcare insurance and out-of-pocket payments.

• Private healthcare insurance allows individuals to access private healthcare services, which are not covered by the NHS.
• Out-of-pocket payments refer to payments made directly by individuals for healthcare services, such as dental care or cosmetic surgery.

How much is invested in the NHS?

Investment in the NHS varies year on year and in different areas of the UK.

For example, the King’s Fund, which is an independent charitable organisation that aims to improve health and care in England, explains funding for health services in England comes from the Department for Health and Social Care’s budget:

“Planned spending for the Department of Health and Social Care in England is £180.2 billion in 2022/23. The majority of the Department’s spending (£152.6 billion in 2022/23) is passed to NHS England and NHS Improvement for spending on health services.”

The remainder of the budget, though, is allocated to other national bodies for “spending on other health-related functions such as public health (including grants to local authorities), training and development of NHS staff, and regulating the quality of care.”

Recent investments in UK healthcare 

One of the most significant recent investments in UK healthcare came as a response to the COVID-19 pandemic, with increased budgets made available for both patient care and vaccination programmes. In 2021, for instance, the UK government allocated an additional £6.6 billion to the NHS to help address the impact of the pandemic on healthcare services in real terms. This covered:

• primary care costs
• infection control measures
• long COVID services
• mental health and occupational health support services for nurses, paramedics, therapists, pharmacists, and other staff working on the frontline during the pandemic.

Building on the success of the UK’s pandemic response – particularly in clinical research and development for vaccines alongside clinical trials – the government has also invested in what it calls its Life Sciences Vision. This is a 10-year strategy to bring together government, industry, the NHS, academia, and medical research charities to accelerate innovation and address pressing health challenges such as:

• dementia
• cardiovascular diseases and their major risk factors, including obesity
• mental health conditions.

Health services also outline their budget priorities. For example, NHS England has stated that some of its priorities for 2023/24 are centred around core service delivery and productivity with specific focus on:

• Urgent and emergency care: improving response and waiting times
• Elective and cancer care: decreasing elective waiting times, cancer backlogs and aligning cancer diagnostic performance to core standard 
• Primary care: improving access to primary care services

Longer term investment and transformation plans include:

• Workforce: systematically focus on the NHS People Promise to help retain and improve staff attendance
• Mental health: improvements in mental health support for children, increase provision of psychological therapies and community mental health treatment, dementia diagnosis and perinatal mental health
• People with learning disabilities and autism: provide annual health checks to people on learning disability registers and reduce the number of autistic and people with a learning disability in inpatient care
• Preventative health: increase hypertension treatments for at-risk adults and lipid lowering therapies for adults at high risk of cardiovascular diseases, as well as addressing health inequalities

Benefits of investing in the healthcare sector

Investing in healthcare can have an immensely positive impact on people. By improving access to high-quality healthcare services, developing new treatments and therapies, and supporting new health research and development, the health sector can improve health outcomes and transform people’s lives: improved health brings greater happiness, productivity, life expectancy, and even economic benefits.

In fact, there is an established link between healthcare investment and economic growth. In 2022, an NHS Confederation analysis found that for each £1 spent on the NHS, there is a corresponding £4 return on investment. This is because healthier people mean higher levels of workforce participation.

“Investing in the NHS has potential to support the population to improve health,” the analysis states. “The most direct link we have observed is that investing in primary care workforce shows links to reduced A&E attendances and non-elective admissions, both of which are signals of ill health and in turn influence workforce participation.”

What is the effect of private healthcare in the UK?

Private healthcare options exist alongside NHS services in the UK, and this is a topic of ongoing debate.

Some argue private healthcare in the UK can help support the NHS by providing people with access to healthcare services not covered by the NHS, and can help reduce waiting times for certain healthcare services, such as elective procedures.

On the other hand, others argue private healthcare will create a two-tier healthcare system, where those who can afford to pay for private healthcare have access to better quality healthcare services.

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