The National Health Service is poised to receive a substantial funding boost of up to £30 billion over the next three years, according to early insights from the government’s upcoming spending review. But this increase in NHS funding will come at a cost — other public services are expected to face sharp budget cuts.
Sources close to Chancellor Rachel Reeves revealed that the Department of Health and Social Care (DHSC) will receive the most generous settlement among all government departments. Reeves is expected to frame this move as a strategic investment in the pillars of national stability — health, security and the economy.
The DHSC is projected to benefit from a 2.8% annual rise in its operational budget, resulting in a £30 billion cash increase by 2028, though this translates to £17 billion in real terms, accounting for inflation. However, reports indicate that capital spending will see no real-term growth, increasing only in line with inflation.
Despite the eye-catching headline figure, analysts have urged caution. Much of the new spending will go towards maintaining existing levels of service amid rising costs, rather than driving transformation.
Tackling NHS waiting lists was one of Labour’s core election promises. Prime Minister Keir Starmer has vowed to reduce waiting times significantly, aiming to ensure that 92% of patients are treated within 18 weeks of referral by the next general election.
Current figures tell a different story. Just 60% of patients are seen within that timeframe, and the total number waiting for planned treatment has nudged upwards, rising from 6.24 million to 6.25 million in the most recent data.
Hospital leaders have cautioned that efforts to cut a £6.5 billion deficit are already leading to frontline service reductions. The push to balance the books may further strain services even as the government pumps in more funds.
Although the NHS secured £3.1 billion in capital funding in the 2024 budget, health experts argue this is less than half the £6.4 billion annually needed to meet the NHS’s 2% productivity growth target.
“Without additional capital investment, either traditional or through the private sector, I just don’t think it’s possible to combine recovery and reform,” said Matthew Taylor, Chief Executive of the NHS Confederation.
Infrastructure spending and wider economic strategy
Alongside the health investment, Reeves plans to inject £113 billion a year into infrastructure, backing major projects like Sizewell C nuclear power plant and a new generation of mini reactors. The aim: to supercharge economic growth and create future resilience.
But not all the health funding will be felt immediately. According to the Nuffield Trust, some of the extra funding for 2025–26 — about £1.5 billion — is earmarked to offset higher employer National Insurance contributions, reducing the real-term impact.
Since Labour came into office, healthcare spending has been set to grow at 2.9% annually for the next two years — a modest bump from the 2.4% average annual growth between 2011 and 2023.
While the NHS funding boost is one of the most significant commitments in this spending review, experts warn that structural reform and capital investment are just as critical for sustainable recovery.
“The funding increase is not going to enable us to achieve recovery and reform. We need more than day-to-day funding—we need transformation,” Taylor stressed.
As the government moves ahead with its financial roadmap, the coming months will reveal whether this bold reallocation of resources can deliver long-promised improvements in health care, without hollowing out other essential services.
