House of Commons Library

NHS Expenditure

Published Wednesday, June 14, 2017

NHS Expenditure by Rachael Harker. Documents NHS expenditure since 1948; summary of the structure of the NHS and how it is financed.

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Expenditure on the NHS has risen rapidly and consistently since it was established on 5th July 1948. In the first full year of its operation, the Government spent £11.4bn on health in the UK. In 2015/16, the figure was over ten times that amount: £138.7bn. Growth in health expenditure has far outpaced the rise in both GDP and total public expenditure: each increased by a factor of around 4.8 over this period.

The average annual expenditure increase since 1955/56 is 3.8%. However, between 2000/01 and 2004/05 average annual spending growth was 8.8% which is higher than at any other time in the history of the NHS.

 

Responsibility for health services is devolved to the Scottish, Welsh and Northern Irish administrations. In 2015/16 health services expenditure per head was highest in Scotland (£2,258 per head) and lowest in England (£2,106 per head).

The focus of this note is on the structure, funding process and expenditure of the NHS in England. The structure and expenditure of the UK NHS is described briefly in Section 1. Expenditure in England is dealt with in Section 2.

In 2015/16, NHS England held a budget of £102 billion. The majority of this budget (72%, £73 billion) was allocated to Clinical Commissioning Groups (CCGs) according to a population and needs-based formula. NHS England retains around 28% of the budget (£29 billion in 2015/16) for the direct commissioning of specialised healthcare, primary care and military and offender services.

In England the largest five-year moving average in real terms spending growth (+8.7%) occurred over the period 1999/2000 to 2003/04. Based on inflation figures published in the March 2017 Budget, the lowest five-year moving average is set to occur over the 2015/16 to 2019/20 period (+1.1%).

Commons Briefing papers SN00724

Author: Rachael Harker

Topics: Health finance, Health services

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