NHS in the red: Unpacking its Financial Crisis

Alex Groeger
Mar 14
3 min read

Photo by Jonathan Borba: https://www.pexels.com/photo/man-wearing-blue-scrub-suit-and-mask-sitting-on-bench-3279197/

The National Health Service (NHS) has been long regarded as one of the UK’s most important institutions, yet it has suffered mounting financial pressures that threaten its very existence. With rising costs, an aging population, and increasing demand for services, the NHS’s struggle to balance its books has raised serious questions about whether it remains cost-effective to protect. However, it is essential to remember that the NHS represents more than just a healthcare system; it is a state

religion, a testament to the values of fairness and equality. Despite the challenges, the NHS continues to provide essential care to millions, something that any privatized system would find hard to replicate.

Whilst being one of the largest healthcare providers in the world, employing over 1.3 million people (NHS England), the NHS’ resources have not kept pace with the country’s changing demographic and healthcare needs. The workforce accounts for 45.6% of the total budget spend, with the NHS receiving a funding boost of £25.7 billion in our latest Autumn Budget. This funding is crucial, but it is still not enough to meet the demands of a growing and aging population. Yet, even under significant

financial strain, the NHS remains one of the most efficient healthcare systems globally.

One of the most significant financial challenges for the NHS is the increasing demand on services. The UK’s population is aging at a concerning rate, with the proportion of the population over 65 increasing over 2% between 2011 and 2021 (ONS), so incidence of chronic conditions like heart disease, diabetes, and dementia are only increasing. These long-term conditions require ongoing

care, placing additional strain on an already overstretched system. Also, the number of patients on waiting lists for treatment has skyrocketed, with millions waiting for surgeries and consultations, only to have them cancelled. Despite significant rises given to the NHS, they still fail to keep pace with the true cost of treatment which each year increases by around 4.2% when accounting for

inflation. This is vastly outstripped by the budgetary increases, which sit at 1.7% when accounting for the aging population (ONS). This disparity highlights the urgent need for a long-term solution to protect the NHS' future.

Another contributor to the NHS' financial woes is the workforce. The NHS faces an ever-growing shortage of doctors, nurses, and other healthcare professionals. According to recent reports, there are over 100,700 vacancies across the NHS – to blame are burnout, retirement, and the impact of the COVID-19 pandemic. Despite these challenges, many argue that the NHS remains cost-effective compared to health systems in other high-income countries. According to Statista, the UK is joint 9th in percentage of GDP allocated to healthcare, spending 10.9%. In an era when many other systems are struggling with privatization, the NHS continues to prove that universal healthcare can work. Actors in favour of the NHS argue that, even in a strained state, it still provides high-quality care at a fraction of the cost seen in other systems across the globe. This is backed by the UK being ranked 9th

in terms of spending, and 21st in the world in terms of healthcare quality, but with only 3 of the 8 countries that spend more than us on healthcare performing better on this index.

One proposed solution is the recent decision to scrap NHS England, removing a layer of bureaucracy and welcoming it back under government control. Ultimately, the aim of this is to save millions of pounds to be spent better elsewhere by democratically controlled bodies. Whilst we know very little about what this will look like, one can only say it seems sensible as it is clear that the NHS needs

much more than just money, it is a leaky ship that needs long term solutions in order to survive.

The question remains whether the government can meet the financial demands of an increasingly stretched healthcare system without sacrificing the principles that have made the NHS so beloved – but one thing is clear. Bold action is required from both policymakers and the public to protect our most valuable institution, but can our government provide this?

NHS in the red: Unpacking its Financial Crisis

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