What does the Autumn Budget 2024 mean for health and care?

So then, this was a budget of firsts. The first budget by a Labour government in 14 years. The first budget delivered by a female chancellor of the exchequer. And, as we would hear more than once, the first phase of a two-part Spending Review: this Autumn Budget 2024 is phase one, and sets the financial envelope for health and care services in 2024/25 and 2025/26, and phase 2 comes in next year’s spending review, which will set budgets for 2026/27 and 2027/28. Let’s recap what was announced and what it might all mean for health and care services.

Adult social care

The story on adult social care funding and this Budget started just days after the new government took office. In her public spending audit in July, the Chancellor decided to cancel planned adult social care charging reforms that would have cost £1.1 billion in 2025/26.

Chancellors often take with one hand and give with another, so after this planned spending was cancelled, in the Autumn Budget 2024 the chancellor provided an additional £600 million of extra grant funding for social care in 2025/26 (including support for both adults and children social care services) and a £86 million increase to the Disabled Facilities Grant, which helps support people make changes to their home so they can continue to live there independently.

This support, as part of a 3.2% increase in local government spending power, will of course be welcomed. But it will also be spread thinly (if not almost completely eaten up). The adult social care sector employs as many people as the NHS but sits outside the formal public sector, and will be far more exposed to the increased cost pressures of the higher National Living Wage and higher National Insurance Employer Contribution costs the Chancellor also announced in the budget.

Adult social care may not have been left entirely out in the cold by this budget, but the atmosphere definitely feels chilly – especially as the much-promised fundamental reforms for social care remain over the horizon rather than in plain sight from the current policy agenda of this government.

Wider health and care

The government announced £70 million of funding in 2025/26 for the new Life Sciences Innovative Manufacturing Fund, to support businesses investing in UK life sciences manufacturing projects. There will also be a national review, aligned with the government’s Industrial Strategy, on barriers to adopting new technologies that enhance innovation and productivity, including in sectors like life sciences.

And on the same day that a first case of a new variant of mpox was reported, £460 million of investment was announced to strengthen the UK’s pandemic preparedness.

But there was no mention of the public health grant or wider public health budgets – which leaves public health leaders with some continued uncertainty over plans for next year. The Budget was not silent on some of the factors that affect ill health, though. The Chancellor renewed the escalated taxes on tobacco, increased duties on hand-rolling tobacco, and introduced a new duty on vaping products. The chancellor also announced an increase to the Soft Drinks Industry Levy, to maintain incentives for manufacturers to reduce their sugar content. And alcohol duties will be uprated, with the exception of draught rates in pubs (which the government describes as drinking in ‘social, controlled settings’ – at least part of which is debatable…).

The government is also providing £233 million of new funding in 2025/26 to prevent homelessness (taking total spending to £1 billion that year). The National Living Wage will increase, and the Carer’s Allowance weekly earnings limit will rise to the equivalent of 16 hours at the National Living Wage.

The government is investing £115 million in 2025/26 in the Connect to Work employment support scheme, to help match people with disabilities or health conditions into vacancies. And a ‘Get Britain Working’ White Paper will shortly be published with £240 million of investment to trial new ways of getting people back to work. This programme will include work in at least three integrated care systems (ICSs) to find evidence of how tackling health conditions can reduce economic inactivity.

Department of Health and Social Care spending

As always, there are four big health budgets to pay attention to in fiscal events:

• Capital investment on items like buildings and equipment – the Department of Health and Social Care (DHSC) Capital Departmental Expenditure Limit (CDEL)

• Day-to-day spending on items that are used within the year, like staff salaries and medicines – the DHSC Resource Departmental Expenditure Limit or (RDEL)

• These two items above added together, which gives a measure of total ‘health spending’ – the DHSC Total Departmental Expenditure Limit or (TDEL)

• The budget for NHS England, or ‘NHS spending’

This week’s budget had something to say on all of them (see Table 1).

Table 1: Department of Health and Social Care spending plans from the Autumn Budget 2024
£ billions (current prices)

Source: Table 4.1 to the Autumn Budget 2024 (HM Treasury)
Notes: Average annual growth rates have been adjusted for budget transfers and might not match cash figures

Day-to-day spending

In her budget speech, the Chancellor spoke about a £22.6 billion cash injection for the NHS – this is the difference between the £177.9 billion day-to-day spending (DHSC RDEL) in 2023/24, and the new planned spending of £200.5 billion by 2025/26. This represents a 3.4% average annual increase in real terms compared to 2023/24. Within this, NHS England’s budget will rise by 4.0% over the period ).

This is not the most profound statement I’ve made in my life, but here it goes: £22.6 billion is a lot of money. But here is some context to bear in mind when you’re thinking about just how far that money might stretch.

First, modelling by the Institute for Fiscal Studies (IFS) suggests the NHS Long Term Workforce Plan implied annual NHS budget increases of 3.6% even before any additional expectations were placed on the health service by the new government’s ambitions. Second, pay awards for staff are likely to be far higher than the NHS has budgeted for, so some more unfunded cost pressures are coming down the track for the NHS. And third, the Office for Budget Responsibility (OBR) has noted that in-year RDEL budgets are now ‘almost fully allocated to departments’ with only a small amount held in reserve for the rest of the year. So, if winter pressures were unusually severe, then the government might find itself returning to the funding well once more in 2024/25. As always, annual accounts, rather than budgets, are the final word on health and care spending.

Capital spending

Capital spending will rise to £13.6 billion by 2025/26 (a 10.9% average annual increase in real terms compared to 2023/24). And this will be used to fund a plethora of areas including (deep breath): £1.5 billion for new surgical hubs and diagnostic scanners; £70 million for new radiotherapy machines; £1 billion for critical maintenance issues with NHS buildings, including those affected by reinforced autoclaved aerated concrete (RAAC); £2 billion for NHS technology to improve productivity and cyber-security; a new fund to upgrade around 200 GP surgeries; and £26 million to open new mental health crisis centres.

There are a few interesting things to note here.

First, the previous government’s Spring Budget in March 2024 allocated £3.4 billion increase in capital investment over three years from 2025/26 to improve NHS IT and productivity. The £2 billion of funding announced this week is a mix of capital and revenue funding and has similar goals to this previous funding announcement, but is not the same amount or profile of funding. And while capital spending is going up in 2025/26, capital budgets for the current year are somewhat lower than we might have expected from previous fiscal event – in part because of yet another switch of capital funding to relieve pressures on day-to-day health budgets.

Second, the chancellor said that the Health and Care Secretary Wes Streeting will announce the details of his review into the New Hospitals Programme in the coming weeks and publish this review in the new year – as the single biggest national health capital programme, the outcome of this review will have a colossal influence on future capital spending plans.

Third, the announcement to upgrade around 200 general practice surgeries sounds familiar, but mostly because it was included in the Conservative Party manifesto in the 2024 general election (never let a good idea go to waste). There are about 6,000 general practices in England, so upgrading 200 of them is not quite a drop in the ocean, but is a drop in a pretty big sea. And this is just a microcosm of how challenging the capital picture is in the NHS, where the total capital budget for the entire health service is still lower than the cost of eradicating problems in just the secondary care estate (see Figure 1).

And fourth, the Chancellor made the very welcome step of announcing that from now on, capital budgets will be set for five years and extended every two years at spending reviews. For too long, capital investment in health care has been defined by short-termism. The Chancellor has taken a step towards redressing that.

Total health spending

So, we have covered day-to-day and capital spending so far. Bring them together and you see total health spending will now increase by 3.8% between 2023/24 and 2025/26 on average in real terms. This means health spending in England will be £214.1 billion in 2025/26 under current plans¹.

£214.1 billion... How on earth can you contextualise a number that big? Well, looking to the past is one useful cue. And on that basis, a 3.8% increase is just a little higher than the 3.6% long-run average the NHS has received since the 1950s. It is still far higher than the low increases seen during austerity (circa 1.1% growth), but also far lower than the peak years of investment during parts of the New Labour government (circa 6.7% growth).

And so, expectations will need to be calibrated accordingly. The NHS is facing rising financial deficits, a growing and aging population, rising cost pressures, and endemic staffing shortages and performance woes. This is a budget that will help keep the show on the road for health care services and deliver some improvement, but it is unlikely to deliver a step change in access or quality to care. The language of ‘downpayments’ and ‘not fixing the NHS in a single budget’ from the Chancellor and Health and Care Secretary only becomes clearer when you read the detail of the budget documents.

What happens next?

The end of the Chancellor’s speech is rarely the final word on health and care funding. So, what can we expect next when it comes to health and care spending?

The Autumn Budget has reset spending levels for the current financial year (2024/25). But the financial year is not over. So as the health and care service heads into winter we can expect the usual concerns over whether enough funding was in place to help services cope, and whether more funding will need to be voted through early next year to avoid the DHSC overspending its budget.

The Autumn Budget has also set initial spending levels for the coming year: 2025/26. The OBR notes that government spending in general (and health is no exception) is now significantly front-loaded: for example, the NHS England budget jumps by 4.7% between 2023/24 and 2024/25 (ie above the long-run average) before funding growth slows to 3.3% between 2024/25 and 2025/26 (ie, below the long-run average).

This suggests that the current planned budget for 2025/26 is a starting point that is likely to be revised upwards in phase 2 of the Comprehensive Spending Review. This phase 2 fiscal statement will also set budgets for 2026/27 and 2027/28, once further pay awards, the impact of the new hospitals programme review, and the publication of the 10-year plan materialise by Spring 2025.

At the start of her speech, the Chancellor said ‘change must be felt’. And it would be churlish to say that the billions being poured into the health service will not be felt. Of course it will. But these improvements might be most felt in the seven hospitals with bubbly concrete that have more funding dedicated to them, but not the many other parts of the health and care estate that gets steadily more dilapidated. It will be felt in the staff and patients who will use one of the new surgical hubs that can now be built, but not in the other wards that are flooded with sewage when the drains fail. It will be felt in the 200, of the more than 6,000 total, GP surgeries that will be upgraded.

And that is the risk perhaps, that despite all this extra funding and the political capital that was expended to deliver it, the change will be felt in only some parts of what is, after all, a national health service.