In terms of spending, the Department of Health and Social Care stands as the largest department – and the second-largest area of all government spending, after welfare spending. As the new Chancellor evaluates state spending for a new budget plan, it is important to understand the trends in health and social care spending growth.  

New analysis from the Nuffield Trust finds that growth in government health spending over the last 40 years has slowed considerably once the increases in England’s population and its changes in demographics have been accounted for.  

Since 1979/80, the Department of Health budget has grown four-fold in real terms, and it has doubled its share of GDP. At the same time, the English population has grown by 10.6 million. The number of older people has also grown, both in absolute terms and as a proportion of the total population. An individual in their mid-to-late eighties on average consumes around 10 times as much hospital-based care as someone in their early twenties.  

Using cost estimates to take these changes in population into account, researchers at the Nuffield Trust found that, on average, health and care spending per person in England grew by around 2.6% a year in real terms between 1979/80 and 2020/21. This growth in funding is the amount needed to grow and improve services for patients rather than to only stand still and meet rising costs, needs and population growth.  

This growth in health spending has not been spread equally. In the decade leading up to the pandemic, spending increases for health, after adjustments, barely grew at all, averaging 0.4%. In fact, this time periodincluded four years in which spending per head actually fell. 

Going forwards, outlined spending suggests that funding increases will not return to the 2.6% average for some time. This constrained funding growth will continue to temper just how much the NHS can invest, beyond what is needed to simply keep its head above water.