Everything you need to know about NHS finance


The National Health Service or NHS is the largest publicly funded service in the world. It came into existence on July 5, 1948 with an aim to provide free healthcare to the entire population based on the need for treatment and not the ability to pay. It is now the 4th largest employer in the world with 1.7 million staff across the United Kingdom. There are many questions that arise with relation to the NHS such as how much does the NHS receive in funding? How are the funds put to use? And finally the big question – Is the NHS being funded properly?

Despite the fact that the NHS is undergoing constant change, its primary motto remains the same and that is to provide treatment to patients free of cost at the point of delivery. This is part of the NHS constitution which sets out the guiding principles of the NHS alongside the rights of patients. This article will shed light upon some of the questions that arise when considering the fact that the NHS is the world’s largest publicly funded service provider. 

How does funding flow through the NHS?

A service as large and extensive as the NHS, is an expensive thing to manage and costs more than education, transport, or defense. The public and businesses pay for public services by means of taxation. Taxes such as income tax, corporation tax, value-added services, and national insurance go directly to the government to pay for public services including the NHS. The government receives public money and therefore it is imperative that the money is distributed and used fairly. The same is the case with the NHS.

How is NHS funding distributed?

In what is known as a spending review, the government decides how much money is to be allocated for public services based on how important that public service is and the amount of money available. Since health is a priority, the amount of money the NHS receives is greater than anything except social protection which includes welfare benefits. Funding for the NHS is handled by the governments of the respective countries and the amount of money to be given to the NHS is decided by them.

How are NHS funds spent?

Most of the money in the NHS is used in paying the salaries of its employees. The rest of the money is allocated to areas such as drugs, medical supplies, equipment, energy, and building maintenance. Every check-up costs the government and therefore the general public money. The cost of treatments varies due to a number of factors such as the complexity of the treatment, the location where it is administered, the number of health professionals involved, and whether it involves any drugs or diagnostics.

Sadly a lot of people fail to realize that if they fail to attend an appointment, it still costs the NHS money leaving them with less to spend on their other patients. There is increasing pressure on NHS money because these days people live with a lot of chronic diseases such as diabetes and other long-term or terminal diseases that require intense and expensive treatment. 

Over the years, the NHS has enjoyed annual funding increases above the level of inflation to enable them to keep pace with the increasing demand for services. However, with the recent economic pressures of the pandemic, the funding that the NHS receives is expected to remain the same in the near future, meaning there will be no above-inflation increase in funds to pay for the rising demand for health services.

How do we know that NHS money is being spent properly?

A large amount of the taxpayers’ money is being channeled into the NHS and as a result, we need to know that it is being properly spent. Although the NHS is referred to as a single organization, it comprises a wide range of bodies with specific purposes. Each organization functions independently and is responsible to the government.  

To ensure that NHS organizations are performing as per expectations and are spending the allocated funds as they should, there are many systems, rules, and processes in place. This is done to ensure that the health system is managed effectively, with integrity and that the taxpayers’ money is put to good use.

How does the money flow from the government to the patient?

In most countries, Parliament is the highest legislative body and sits at the top of the accountability chain. Parliament holds the Secretary of State accountable for the functioning of the Department of Health and its optimum use of resources. 

In turn, the Secretary of State for Health is politically responsible for the NHS and for the resources allocated to health and Social Care. The Secretary of State is an MP and is chosen by the government. The treasury transfers the money allocated to the Department of Health which is the organization responsible for the NHS.

There are various aspects of the NHS and its operational mechanism. To know more about NHS finance, get in touch with the experts. CoffeeMug.ai is an AI-powered networking platform equipped with a highly qualified team of analysts, incubators, accelerators, and mentors with diverse backgrounds. With the help of a vast global network and resources, Coffeemug.ai has successfully managed to support a number of startups through multiple rounds of funding, adding significant value at each stage and providing valuable inputs on finance and investments for various purposes.


Q. Where does the NHS money go?

A. The money is mainly used to fund a number of healthcare services such as public health, hospitals, ambulance services, GP services, all of which are authorized by the NHS. 

Q. How much of the NHS is privately funded?

A. The NHS gets all of its drugs, supplies, and equipment from private companies. This corresponds to almost 40% of the NHS expenditure in total. Furthermore, several NHS organizations outsource work to commercial companies.

Q. How is the NHS financed?

A. The NHS is primarily supported by general taxes, which are supported by National Insurance contributions (NICs).

Q. Does the NHS make profit?

A. The NHS is not profit-driven and is still funded by taxes. NHS does not have any shareholders, and is classified as a universal service provider rather than a business enterprise. 

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