What was austerity's toll on the NHS before the pandemic?

The Covid-19 public inquiry has been in the news this week, with former Chancellor George Osborne and ex Prime Minister David Cameron denying that austerity policies in the UK before the pandemic weakened how prepared the NHS was for such a crisis. In this blog, Leonora Merry and Sally Gainsbury take a closer look at how true this is.

Blog post

Published: 21/06/2023

The Covid-19 public inquiry is finally underway in earnest. The warm-up to these substantive public hearings on the pandemic preparedness and resilience module has been dominated, in news headlines at least, by talk of WhatsApp messages and the peculiarity of a government taking out a judicial review against an inquiry it commissioned. But this week’s sessions with former Chancellor George Osborne and former Prime Minister David Cameron have shone a light on a more fundamental question: the extent to which the policy of austerity affected the UK’s pandemic resilience.

“Austerity” in UK public policy refers to the period from 2010 to about 2015 and then again from 2016 to 2019 when the UK government pursued policies aimed at reducing the public sector net deficit and getting national debt to fall as a proportion of GDP. And while we are on definitions, the European Observatory on Health Systems and Policies defines health system resilience as “the ability to prepare for, manage (absorb, adapt and transform) and learn from shocks”. A shock is defined as “a sudden and extreme change which impacts on a health system”.  

Witnesses like Michael Marmot have discussed how widely austerity affected the British state, with social care bearing a terrible brunt as we have shown recently. But what about the health service? Both Cameron and Osborne have robustly denied that austerity weakened the NHS prior to the pandemic, pointing to the health ringfence and wider fiscal picture. But does this argument really stack up?

Our own work, and that of many others, has indicated that austerity was a contributing factor to declining resilience in the NHS in the years leading up to the pandemic, hampering its ability to manage the shock of Covid. Indeed, on 8 December 2016, three years to the day before the first Covid patient was hospitalised in Wuhan, we warned that "slowing improvement in some areas of quality, combined with longer waiting times and ongoing austerity, suggests the NHS is heading for serious problems. It seems likely that a system under such immense pressure will be unable, at some point, in some services, to provide care to the standards that patients and staff alike expect”.

Health funding effectively flat for a decade before the Covid crisis

Back in 2010, great play was made by the coalition government of the fact that the NHS had been ringfenced from public sector austerity. And in a literal sense it had: the NHS budget was not directly subject to the wide-ranging cuts that affected other departments from 2010 onwards. But, as we have recently documented, spending has not kept pace with the population’s health needs: once adjusted for the age of the population, health funding was largely flat in the decade running up to the pandemic. This is significant: flat spending per head of population after adjusting for age (in particular, significant increases in the proportion of the population over 70) means no extra funds for investment in technology, innovation, upgrading buildings and equipment or training and developing staff, nor to pay for the public’s gradually rising expectations of health care as society advances.

And later in the decade, the NHS ringfence came at the expense of wider health spending through a sneaky accountancy trick that redefined “health” spending as “NHS” spending from 2015. This protected the NHS England budget at the expense of the wider Department for Health and Social Care budget – the very same budget that covers public health, staff training and capital spending, all areas critically important to pandemic resilience. Failing to ringfence the public health budget could be one reason that the government ended up outsourcing the Test and Trace programme at great financial cost.

At the level of NHS finances, the funding squeeze translated into trusts having to make a series of short-term, often self-defeating savings to balance the books as they lurched from one year on the precipice to the next, propped up only through haphazard emergency injections of extra cash. This spared the NHS from the sort of total financial collapse seen in the public health system in Greece from 2010, but left trusts in England without the financial security or certainty needed to recruit adequate numbers of staff or invest in its disintegrating estate and equipment. Indeed, in the year before the pandemic hit, NHS trusts had a gap between their secure income and regular outgoings of £5 billion – a budgetary black hole equivalent in size to the NHS pay bill for an entire month.

The result of NHS organisations having to operate in this “hand-to-mouth” way was an inability to invest in longer-term capital projects (worsened by repeated raids on the capital budget in the years leading up to the pandemic), leaving services poorly placed to cope with the infection control requirements of the pandemic (like the need to separate Covid and non-Covid patients and provide air changes to reduce infection risks). It also reduced their ability to invest in the sorts of “transformational” changes that would have enhanced the long-term resilience of the NHS – like improved care for long-term conditions, better joined-up health care and moving care closer to home.

This short-termism driven by austerity also contributed significantly to the problems we see today in the NHS workforce – and which saw the health service resort to drastic measures to surge capacity to cope with the influx of Covid patients in 2020. The decision to cut nurse training places in 2011 led to chronic shortages. It was during the initial period of austerity that our analysis shows staff pay fell far behind inflation – the central issue in today’s unprecedented NHS strikes. And away from NHS funding, the impact that wider austerity had on the health of the British public has rightly been the focus of much discussion already.

Yet more short-termist thinking 

Of course, austerity was not the start of the UK’s chronic short-termism when it comes to investing in health care. Since the 1970s, the approach to hospital buildings has been to cut costs by squeezing internal areas and circulation space needed to aid the flow of patients through buildings, making the UK an outlier in Europe. This approach was found wanting when social distancing and infection control measures were quickly required during the pandemic. The woeful approach to workforce planning too predates austerity, and meant the UK went into the pandemic with fewer doctors, nurses and beds per head than its European neighbours.

But examining the impact of austerity on the NHS's resilience before the pandemic is important and the inquiry is right to pursue this line of investigation. Many remember repeated pledges to “ramp up” capacity – testing, nightingale hospitals, the “ventilator challenge”, the NHS volunteer programme. Even countries like France, with more beds and staff, had to stretch for capacity and take similarly drastic measures, including cancelling planned procedures, as Covid infected millions within weeks. But the high death rate and slow recovery seen in the UK raise the question of whether underinvestment left a deficit that was particularly difficult to make up – and our evidence suggests that spending before the pandemic was an important part of the picture, despite Cameron and Osborne’s protestations.

Suggested citation

Merry L and Gainsbury S (2023) “What was austerity's toll on the NHS before the pandemic?”, Nuffield Trust blog