The UK Government’s Spending Review 2025, outlined significant investments in health and science, aiming to address longstanding challenges with the UK’s health and wealth. But what lies below the headlines? BIVDA’s Director of Policy and Programmes, Paul Fisher, looks deeper.
The government is in an invidious position. With a moribund economy and a significant proportion of the population economically inactive cash is tight. The NHS is performing poorly with historically high levels of patient dissatisfaction. An unhealthy population hinders economic performance; a poor economic outlook damages health delivery and leads to an unhealthy population. Russia and China sit menacingly in the shadows, diverting resource and capital into defence. Blaming the financial “black hole” they inherited became old in 2024; in mid-2025 it is simply not being heard.
The 2025 spending review, setting out the government’s financial plans for the next three years, looks to address this challenge. Reeves reiterated her commitment to her fiscal rules and to not raising “working” taxes (income tax, national insurance, VAT, or corporation tax). Her plan also clearly showed Labour’s priorities – wealth driving better health and security.
The key take-away is the long term nature of this review. Labour’s plan is clear – fund day-to-day operations from taxation, and use borrowing to invest in long term capital programmes which will drive economic recovery. But this will not quick – NHS senior leaders are already beginning to stress that the Ten Year Plan is exactly that; not a one or three year plan.
It is encouraging to see government putting in place a genuine long-term strategy and acknowledging quick fixes won’t address the underlying structural issues the NHS and health face. But there is still the need for urgent improvement – not least because without it, Labour face a challenging next election. And the concern that this review will lead to taxation rises at the next budget lingers and affects business confidence.
On the face of it there is good news for health, with significant funding allocated to the NHS and life sciences. There is a welcome offer on capital investment and digital infrastructure, which will be key to delivering NHS reform. There is also a strong focus on life science R&D, naturally with a view to AI. The settlement was welcomed at Wednesday’s NHS Confederation Expo by NHSE Chief Executive James Mackey.
There was the expected emphasis on economic growth, despite some of the government’s recent policies – such as the NI rise and proposed MHRA fee increases – contradicting this aim. Today’s news that the economy shrunk by 0.3% in April suggests these concerns are well-founded.
It should be noted the 3% increase in NHS funding is below the historic average of 3.6% and smaller than the 4% Health Secretary Wes Streeting lobbied for. Much of this increase is also likely to be absorbed by pay settlements and an announced £1 billion increase in medicine spending.
Behind the headline numbers, there are interesting details. The supporting documents reveal significant concerns around productivity (healthcare productivity stated to be 9.6% lower than pre-pandemic) and there are clear aims to “lean” (presumably by reducing staff numbers) the civil service.
Arms Length Bodies (ALB) have already been targeted, with the merger of NHSE into DHSC. The review commits to streamlining ALBs. Throughout the review, the NHSE decision is used as an example of the government’s willingness to make tough decisions – so could this include the MHRA or UKHSA?
What really matters though is how this funding will be spent. The long-awaited NHS Ten Year Plan is due this month, but is rumoured to be delayed until July. We expect the Life Science’s Sector Plan and Industrial Strategy Plan to be released soon – the Spending Review documentation confirming the former will be published this month. With BIVDA having heavy input into the plan, we are confident the role of diagnostics will be recognised.
With Baroness Merron reiterating her commitment to diagnostics as part of the Ten Year Plan last week, stating “we will ensure that more tests, including in vitro point-of-care diagnostics, take place in the community, which will be closer to people’s homes” there is reason to be optimistic.
BIVDA will continue to advocate for members and to ensure that diagnostics remain a key, funded, part of the health system. Our industry offers solutions to the economic and health challenges the government is seeking to resolve, and we take our responsibilities seriously.
Interested in discussing this further? BIVDA hold monthly meetings of our government affairs working party, where this and other topics are discussed. Details can be found on our Eventbrite page.
At a glance:
NHS Funding and Reform
- Budget Increase: The NHS England budget will rise from £193 billion in 2024–25 to £232 billion by 2028–29, marking a 3% real-terms annual increase over five years. This includes a £29 billion uplift, equating to approximately 1.5 times Portugal’s GDP
- Technology Investment: A £10 billion allocation will modernise services through digital tools like the NHS app and electronic patient records,
- Capital Investment: £4.9 billion is earmarked for day-to-day operational investments, £1.1 billion for previously committed schemes, and £4.1 billion for national priorities, including elective recovery and diagnostics
- DHSC: annual capital budget will increase by £2.3bn in real terms, equivalent to a 20% increase. Their administrative budget will be reduced by 15% by 2029-30, as part of the wider integration of NHS England into DHSC.
