In June, NHS England published its much-awaited long-term workforce plan, which was welcomed across the political spectrum. The plan estimates that the NHS in England will need around 60% more staff by 2036–37. If such an increase is delivered, that could plausibly mean that in England, almost half of public sector workers, and around one in eleven workers overall, would be employed by the NHS.
Under a central set of assumptions, the workforce plan implies annual NHS budget increases of around 3.6% per year in real terms (or 70% in total by 2036–37). This would be in line with the long-run average real-terms growth rate in UK health spending (3.6% per year from 1949–50 to 2022–23), but higher than the 2.4% per year seen since 2009–10. In other words, returning to the NHS’s long-run average funding growth rate could be enough to fund the workforce plan. By the NHS’s own estimates, though, this will only be enough to meet NHS demand if productivity can be increased by between 1.5% and 2% per year: an extremely ambitious target well above what the NHS is estimated to have achieved in the past.
These are among the findings of new research from the Institute for Fiscal Studies, published today as a pre-released chapter of the 2023 IFS Green Budget (produced in association with Citi and with funding from the Nuffield Foundation). The chapter considers the implications of the NHS workforce plan for the total size of the NHS workforce and NHS funding, on the assumption that it is implemented and achieved in full. Other key findings include:
- The plan aims to increase the number of staff employed by the English NHS from around 1.5 million in 2021–22 to between 2.3 and 2.4 million in 2036–37. This would be equivalent to average growth in the size of the NHS workforce of between 3.1% and 3.4% per year. For context, we estimate that NHS staffing numbers grew by around 1.1% per year between 2009–10 and 2019–20.
- The plan includes an expansion in all staff roles within the NHS, and a change in staff mix: it targets particularly large increases in the number employed in emerging roles – such as nursing associates and advanced practitioners – and in the number working in the mental health sector.
- If this increase in the NHS workforce is delivered, we estimate that almost half (49%) of public sector workers in England will work for the NHS in 2036–37, compared with 38% in 2021–22. By 2036–37, we estimate that one in eleven (9%) of all workers in England will work for the NHS, compared with one in seventeen (6%) in 2021–22.
- While the plan included £2.4 billion of additional funding for the training of new staff, it did not consider the (much larger) medium-term implications of this large increase in staffing for the NHS paybill, nor the required increase in other inputs if the NHS is to treat substantially more patients. This will mean difficult fiscal decisions at future Spending Reviews.
- Increasing the size of the workforce so rapidly will likely require NHS wages to become more generous in real terms and – potentially – match or even exceed growth in wages in the rest of the economy. It will also likely require an increase in non-staffing inputs to healthcare (most obviously things such as drugs and equipment).
- Under a range of assumptions about both staffing and non-staffing costs, we estimate that NHS resource (day-to-day) funding will need to increase by between 2.4% and 4.4% per year (a total increase of between 42% and 90% between 2021–22 and 2036–37) to match the costs implied by the workforce plan, with a central estimate of 3.6% per year (70% total increase).
- In the central case, spending on the NHS in England would be around 2% of GDP higher by 2036–37, relative to 2021–22 (the starting point for the workforce plan). That is equivalent to around an extra £50 billion in today’s terms. To give a sense of scale, raising that sort of sum would require increasing the standard rate of VAT from 20% to around 27% by 2036–37, or increasing all income tax rates by around 6 percentage points. Other funding options would of course be available.
- All of this analysis assumes that staffing increases exactly as set out in the workforce plan. But even by the NHS’s own estimates, this will only be ‘enough’ to meet demands on the service if labour productivity within the health service grows by between 1.5% and 2.0% each year. This could prove to be too optimistic: it would mean doubling the average rate of productivity growth seen between 1995–96 and 2019–20 (0.8%).
Max Warner, Research Economist at IFS and an author of the research, said:
‘The publication of the NHS workforce plan and its detailed workforce projections is an important and welcome milestone for the NHS. We estimate that the plan might imply average real-terms funding growth of around 3.6% per year for the NHS in England. That is by no means outlandish by historical standards, but would nonetheless require difficult fiscal decisions in the current climate of sluggish growth.
‘NHS modelling suggests that even these large staffing increases will only be “enough” to meet future demand if staff productivity can be increased by a highly ambitious 1.5% to 2% per year. The risk of having a workforce plan but no similarly high-profile plan for capital, technology or management is that higher spending on staffing squeezes out other vital inputs, and makes those productivity gains all but impossible to achieve.’