How the NHS budget is changing

The NHS budget is in a constant state of flux. Every change results in a new announcement on what is being added to the NHS and what is taken away. However, it’s not only important to understand that it is changing, but essential to know how it’s changed. Since 1948 the NHS has stood strong in the UK, providing free medical care to those who need it. So, let’s take a look at the NHS and its budget. 

How Is The NHS Funded?

98.8% of NHS funding comes from the taxes and national insurance that the public pay. The other 1.2% is made up of patient charges which are counted as anything that the patient directly pays for but isn’t covered in the mandate. This includes things like dental care and prescription charges. Or, when you go to hospital and you have to pay the parking fees; these can be included in that 1.2% as well.

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huwdavies Huw Davies, Research Manager
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The NHS budget is in a constant state of flux. Every change results in a new announcement on what is being added to the NHS and what is taken away. However, it’s not only important to understand that it is changing, but essential to know how it’s changed. Since 1948 the NHS has stood strong in the UK, providing free medical care to those who need it. So, let’s take a look at the NHS and its budget. 

How Is The NHS Funded?

98.8% of NHS funding comes from the taxes and national insurance that the public pay. The other 1.2% is made up of patient charges which are counted as anything that the patient directly pays for but isn’t covered in the mandate. This includes things like dental care and prescription charges. Or, when you go to hospital and you have to pay the parking fees; these can be included in that 1.2% as well.

How Is Funding Decided?

A large part of the NHS works on mandate funding. What this means is that there are a specific list of rules that need to be complied with when it comes to spending the budget. There are a number of important areas that aren’t included in the mandate, however, which creates a problem. These are the areas that are the first to get cut when efficiencies need to be made, resulting in underfunding.


Some of these areas include; social care, Care Quality Commissions, health grants to local authorities and the training of NHS staff. All of these are important, but are overlooked as they aren’t mentioned in the mandate.

2021 NHS Budget Update

As of 3rd March 2021, the NHS budget is as it stands: Rishi Sunak did not mention any significant changes to the budget in light of COVID-19 in order to protect the staff or patients. The budget for the NHS is set to fall from £148bn in 2020-21 to £139bn in 2021-22. The only extra money that has been given to the NHS was the £1.65bn for the COVID-19 vaccination roll out. 

What Does This Mean?

The issue that we are facing now is that the NHS was already underfunded, and understaffed before the pandemic surfaced back in 2019. Now, with the Chancellor cutting the budget for the NHS further, there is no telling how the NHS is going to fare under the increased pressure. 

It’s been a tough couple of years for the NHS, with calls for pay rises being ignored countless times, and now the budget has been cut as a whole. The 1% pay rise being suggested by the Department of Health and Social Care has left NHS staff feeling undervalued and there are fears that more healthcare professionals are likely to leave the NHS.

Essentially, improper funding adds to the immense pressure being put onto an already strained and stressed NHS.

We hope that you have found this article helpful, and now understand more about how the NHS is funded, how the funding is decided and the state of the NHS budget in 2021.

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