New study reveals trade-offs being made to ensure NHS ‘lives within its financial means’

A new study published today (Sunday 18 May) uncovers the tough decisions NHS leaders are making to balance their books and protect patient care.

Researchers from The King’s Fund health and care charity spoke in depth to NHS leaders in England to understand the decisions being driven by tight finances.

In addition to initiatives to drive efficiency and boost productivity, the researchers found examples of local NHS leaders cutting services such as patient transport, holding down workforce costs by freezing recruitment and reducing agency staffing, and reducing investments in public health services such as health visiting and school nurses.

The authors call for realism about the trade-offs needed to deliver essential NHS reforms in the context of tight public finances and pressure to rapidly improve existing services.

Despite sustained real-terms increases in the NHS budget, rising demand for care and treatment driven by a sicker population have left the health service struggling to live within its means. An additional £22.6 billion NHS funding was announced in the 2024 Autumn Budget, yet the first iteration of financial plans for 2025/26 showed ‘a very significant financial deficit’ of £6.6 billion for NHS systems. Meanwhile, the maintenance backlog to return NHS buildings and equipment to an acceptable standard has been growing and currently stands at £13.8 billion.

The financial strains are complex, with some newer pressures, such as mitigating the impact of recent industrial action and cyber-security risks, while others, such as inflation, have been longstanding. Now, leaders interviewed for this research warn that some services are becoming financially unsustainable to run.

With the NHS unlikely to get a major funding boost in the current economic context, the report authors conclude that it will not be possible for the health service to do everything that might be asked or expected of it. The researchers argue that the government and public will need to be realistic about the extent to which current services can be improved in the short term while also delivering fundamental reforms that would make for a sustainable health service in the long term.

The authors also recommend NHS trusts are set multi-year budgets instead of the current annual approach. They argue that greater funding certainty would help NHS leaders mitigate the risk of in-year financial pressures adversely impacting patient care.

Commenting on the findings, Siva Anandaciva, Director of Policy at The King’s Fund, said:

‘It is absolutely right that the NHS is asked to be as productive as possible and deliver value-for-money for patients and taxpayers. By adopting new technology and improving existing processes, health services around the globe are trying to improve patient care and reduce pressures on public finances. But it is also right that the health service is set realistic goals.

‘Our research shows how challenging it is to keep running high-quality services when budgets can’t keep pace with demand. It underlines just how difficult it will be to deliver much-needed reforms while also expecting rapid improvements to current services.

‘NHS budgets have risen in real terms while some other public services have seen funding cuts, but financial pressures persist and they are having an impact on the quality of care. Patients are experiencing long waits for care, are treated in dilapidated buildings, and report worsening experience. The impact is shown in the findings of the latest British Social Attitudes survey, which found that public satisfaction with the NHS is at its lowest level since the survey began over 40 years ago.

‘The government’s ambition to deliver major reform for the NHS has never been more needed. To achieve that goal, ministers have previously said they will need to make tough trade-offs. Now is the time for realism about what can be achieved in the current financial envelope, and clarity about how the NHS should prioritise funding to deliver reforms versus maintaining the services people are currently using every day.’

Notes to editors

1. This research was a BBC exclusive, with a programme on BBC Radio 4 on 1:30pm Sunday 18 May which explores the research findings. 

For further information, or to request an interview, please contact the Press and Public Affairs team on 020 7307 2585. 

The King's Fund is an independent charity working to improve health and care in England. We help to shape policy and practice through research and analysis; develop individuals, teams and organisations; promote understanding of the health and social care system; and bring people together to learn, share knowledge and debate. Our vision is that the best possible health and care is available to all.