NHS receives major Budget boost but ‘lacklustre’ social care settlement will hit councils, experts warn

The NHS has been handed a huge £22.6bn boost in Rachel Reeves’ first Budget – but experts have warned that funding for social care falls short.

Labour’s historic budget will see spending on the NHS increase by 3.8 per cent in real terms in 2025-26, and funding for infrastructure increase to £13.6 billion – an uplift of 10.9 per cent.

Announcing the Budget settlement for health and social care Ms Reeves told the Commons: “In the spring, we will publish a 10-year plan for the NHS to deliver a shift from hospital to community, from analogue to digital, and from sickness to prevention. Today, we are announcing a downpayment on that plan to enable the NHS to deliver 2 per cent productivity growth next year.”

The increase in NHS spending over the next two years is touted as the biggest increase in funding, outside of the emergency pandemic spending, since 2010.

Responding to the budget, Siva Anandaciva, chief analyst at think tank The King’s Fund, said: “The chancellor has said that ‘change must be felt’, but the health spending announced today is unlikely to be enough for patients to see a real improvement in the care they receive.

“The 3.8 per cent real-terms uplift over two years to the Department of Health and Social Care (DHSC) budget will help sustain services but is unlikely to drastically improve care over the rest of this year, and certainly not overnight. That’s because the £22bn for two years allocated for day-to-day spending will also need to cover existing commitments for new staff pay deals and rising costs of delivering care.”

Social care services will be given £600 million, while local authorities will see an overall increase of 3.2 per cent in their budgets.

Saffron Cordery, deputy chief executive for NHS Providers, welcomed the settlement for the NHS but warned: “Social care needs urgent attention too. That can can’t be kicked down the road any longer. An underfunded, overstretched social care sector needs urgent reform and more resources not just to give people the care they need but to help to ease mounting pressure across the NHS.”

She said: “Trust leaders will continue to strive to make the most of every pound going into the NHS while doing everything they can to provide safe, high-quality care.

“But after years of underinvestment and severe staff shortages, we agree with ministers that we must be realistic about the speed of progress. Today’s economic challenges in the face of rising demand across hospital, mental health, community and ambulance services mean services, having to find unprecedented savings, are in a very tough position.”

Chancellor Reeves said £1bn will be allocated to upgrading NHS buildings which are in “disrepair”, and £1.5bn will go towards new hospital beds.

Mr Anandiciva said while the increase in capital investment in NHS buildings and equipment announced “will go some way towards reducing the waiting list in coming years”, the “existing backlog of NHS maintenance issues with buildings and equipment is a staggering £13.8 billion and the extra funding announced today will only be a modest downpayment on what is needed to tackle unsafe and outdated NHS facilities.”

Within the Budget announcement, the Treasury has allocated:

As part of the settlement the DHSC, including the NHS, will have to deliver 2 productivity savings next year.

Chancellor Reeves separately announced £11.8bn in funding for compensation for those impacted by the infected blood scandal.

Local authorities were handed a 3.2 per cent increase and a £600 million grant was given social care services for next year.

Dr Rhidian Hughes, chief executive of the Voluntary Organisations Disability Group (VODG) which represents more than 100 disability charities, said: “Today’s budget falls far short of the commitment needed to put social care on a surer footing. The government continue to support previously planned cuts to disability benefit and provide lacklustre investment in social care, which will do very little to give third sector providers the long-term stability they need.”

Speaking with The Independent, Simon Bottery, senior fellow for the King’s Fund, said the £600 million means the government is not delivering on its promise that fixing the NHS also means fixing social care.

He said: “The Local Government Authority was calling for a ‘significant increase’ in spending for [councils] and 3.2 per cent is on the low side of significant.”

Mr Bottery also warned the increase in national insurance contributions for employers, and national living wage increase would impact the care sector.

He said the increases are: “The cost of employment will be the single biggest expenditure for most providers’ costs. A large chunk of care providers are commissioned by local authorities and providers will be looking to them to meet those costs. Local Authorities will have to do that through a budget increase which will be stretched across lots of different areas.

The settlement for local authorities and social care comes after the government scrapped social care reforms worth £1.1bn.