• NHSE received additional £18bn in covid funding this year but this will be cut to £3bn next year
  • Means total budget will go from £148bn to £139bn in 2021-22
  • Analyst says Treasury will need to continue to be flexible in how it funds NHS response to pandemic’s ‘uncertain path’

NHS England’s budget for 2021-22 will be cut by £9bn compared to the current year as the Treasury scales back its planned spending on the coronavirus pandemic.

This year, NHSE has received an additional £18bn in covid funding on top of its planned budget of £130bn, giving it an expected total spend of £148bn. 

The Budget, published today, will reduce covid funding to £3bn next year, which means total planned spending will fall back to £139bn in 2021-22.

The £3bn next year includes several measures which have already been announced, such as £1bn to tackle the elective backlog and £500m for mental health services.

Most of the large covid expenditure programmes, such as test and trace and personal protective equipment, sit outside the NHSE budget, but the NHS has still incurred significant extra costs in relation to staffing, the major block contracts with the private sector, and other items.

Sources said that several requests from NHSE to the government for 2021-22 had not yet been funded, and that discussions were ongoing about them. 

Kings Fund chief analyst Siva Anandaciva told the Treasury would need to show continued flexibility on funding for the NHS response to covid.

“On the face of it, today’s budget suggests that planned NHS spending on covid-19 will be dramatically lower in 2021-22 than it was this year,” Mr Anandaciva said.

“But the experience of the previous year – from the Spring budget 2020 onwards – suggests that this will not be the final word on spending for next year, and the NHS will surely need additional funding to meet any future waves of the virus and make some headway into the rising waits for care that have built up.”

The total Department of Health and Social Care budget, which includes some covid spending outside the NHS budget, such as PPE, test and trace, and the vaccination programme, is also due to see a cliff-edge reduction of about £30.1bn in 2021-22. 

The NHS funding plans:-

Reacting to the chancellor’s statement, NHS Providers deputy chief executive Saffron Cordery said it would be vital for additional money, on top of the £3bn, to be made available to cover covid costs as they arise throughout 2021-22. She added the budget had “fallen short” on setting out the strategic direction for public services, particularly in relation to social care.

This came after NHS Providers chief executive Chris Hopson had suggested the NHSE budget in 2021-22 should remain at around the level of the current year (£148bn), as it is scheduled to rise to around this amount under the long-term plan settlement by 2023-24 anyway.