UK's National Health State: £29 Billion Annual Increase in NHS Funding

The UK is becoming a "National Health State" with half of public service spending on health by 2028-29, according to the Resolution Foundation. Chancellor Rachel Reeves announced a £29 billion annual increase in NHS funding, which the Treasury said will improve patient care and modernize services. However, industry professionals have expressed skepticism about meeting the government's 18-week treatment target.

In a significant move towards modernizing healthcare, the UK government has announced a £29 billion annual increase in NHS funding, marking a substantial commitment to improving patient care and digital transformation. This announcement, part of the broader spending review, is set to significantly boost the NHS budget by 2028-29, with health spending accounting for nearly half of public service spending [1].

Chancellor Rachel Reeves, in her first multi-year spending review, outlined plans to increase NHS day-to-day spending by 3% per year in real terms. This substantial increase is aimed at addressing the growing pressures on the NHS, including a record waiting list of 7.43 million as of January 2025 [1]. The government hopes that this investment will not only ease these pressures but also modernize services and improve efficiency.

The Spending Review 2025 also includes a £10 billion ($14 billion) investment in NHS technology and digital transformation over the period 2028-29, a nearly 50% increase from the current financial year. This investment will focus on core technology infrastructure to optimize clinical and administrative time, reduce delays caused by outdated technology, and introduce a single patient record system. The Federated Data Platform, a controversial system based on technology from US spy-tech firm Palantir, is also set to be expanded to improve resource management and performance across the NHS [1].

While the increased funding is welcomed, industry professionals have expressed skepticism about the government's ability to meet its 18-week treatment target. The implementation of digital transformation and the introduction of new technologies may face challenges, including delays in program rollout and the need for significant process changes [1]. However, the government is optimistic that these investments will contribute to £13.8 billion ($18.7 billion) in total savings by 2029.

In addition to the NHS, other sectors are also set to benefit from the spending review. The schools budget will grow by £2 billion per year, with a further £2.3 billion allocated to fixing "crumbling classrooms" and £2.4 billion to rebuild 500 schools. Transport infrastructure will receive £3.5 billion to upgrade the TransPennine rail route and £2.5 billion for the East West rail between East Anglia and Oxfordshire. Research and development funding will rise to £22 billion per year by the end of the spending review, with £2 billion to support "home-grown AI" [2].

The spending review also includes plans to make the UK tax collector, HM Revenue & Customs (HMRC), a "truly digital first organization" by investing £500 million ($679 million) in digital services. By 2029-30, HMRC aims to ensure that 90% of dealings with taxpayers are digital self-serve, up from around 70% in 2025 [1].

While the spending review marks a significant investment in public services, critics have warned that the state of the public finances may necessitate further tax rises in the future [3]. The scale of the spending on the NHS in England, increasing to £226 billion by 2028-29, means that other areas of public expenditure will face real-terms cuts. Departments such as the Home Office, Ministry of Housing, Communities and Local Government, and the Foreign Office are among those expected to see reductions in day-to-day spending [3].

The UK's move towards becoming a "National Health State" is a bold step towards modernizing healthcare and improving patient outcomes. However, the success of these investments will depend on the effective implementation of digital transformation and the ability to meet ambitious targets.

References:
[1] https://www.theregister.com/2025/06/12/nhs_tech_spending_review/
[2] https://www.investing.com/news/general-news/nhs-funding-to-rise-by-29-billion-per-year-reeves-announces-93CH-4090866
[3] https://www.ireland-live.ie/news/uk/1823554/reeves-pumps-money-into-nhs-as-critics-warn-future-tax-rises-almost-inevitable.html