How inflation threatens the NHS and what policy makers can do about it
BMJ 2023; 381 doi: https://doi.org/10.1136/bmj-2023-075144 (Published 25 May 2023) Cite this as: BMJ 2023;381:e075144- Samuel Rigby, research fellow1,
- Hadjer Nacer, research fellow1,
- Samantha Field, research fellow1,
- Irene Papanicolas, professor 2 3,
- Martin McKee, professor 1 4,
- Jonathan Cylus, , senior health economist1 2 3 4 5 6
- 1London School of Hygiene and Tropical Medicine Faculty of Public Health, London, UK
- 2London School of Economics and Political Science, London, UK
- 3Brown University, Providence, USA
- 4European Observatory on Health Systems and Policies, London, UK
- 5World Health Organization Regional Office for Europe, Barcelona, Spain
- 6Barcelona Institute for Global Health, Barcelona, Spain
- Correspondence to: J Cylus j.d.cylus{at}lse.ac.uk
Inflation in the UK has soared to a rate not seen in four decades. Growth in the consumer price index (CPI), which captures price changes across a standard basket of household goods and services, reached a peak of 11.1% between October 2021 and October 2022 and remains above historical averages.1 As a major employer and purchaser of goods and services, the NHS is inevitably exposed to macroeconomic conditions, including price changes. Internal estimates suggest inflation alone may cost the NHS £6bn-£7bn in 2023-24,2 equivalent to around 4% of the £160bn NHS England budget.3 At the same time the NHS is facing record demand. In February 2023, 7.2 million people were on waiting lists for NHS consultant appointments, twice the number waiting for care in 2015.4
Health chiefs have reacted to the combined effects of increasing health needs and rising prices by arguing that NHS spending levels are inadequate.5 Some commentators have also argued that the NHS cannot afford to pay higher prices and still provide access to quality services on its current budget.67 But the government insists that the additional £3.3bn it has committed in 2023-24 and 2024-25 will enable the NHS in England to address inflationary pressures and still deliver both improved primary care and emergency services.8 Who is right?
How inflation affects the NHS
The NHS depends on “inputs” ranging from energy needed to power lighting and machinery, to skilled labour needed to coordinate and deliver complex surgery. To obtain these inputs, it either accepts market prices or, where possible, uses its purchasing power or other mechanisms to lower the costs.
Crucially, the headline inflation figure conceals …
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