Briefing for Senedd debate on the Welsh Government's Draft Budget 2025-26
Key points
Along with the rest of the public sector, the health and care system is facing multiple challenges. Heightened pressures are a result of inflation, the elective care backlog, recruitment and retention of the health and care workforce, the rising cost-of-living and high demand on NHS and social care services, alongside high public expectations.
The NHS requires clear and more focused priorities, underpinned by a long-term vision for the system. While the long-term aim is to shift money towards preventative and community-based services, demand on frontline services remains extremely high.
NHS leaders recommend the following areas are prioritised:
Introduce longer-term funding cycles to ensure financial certainty: The UK and Welsh Governments must move away from short-term thinking to give sectors some long-term financial certainty.
Capital: Develop a ten-year investment plan for service change to reshape NHS estates and infrastructure and look at how fiscal rules might be amended to allow recycling of capital. Invest in digital as a key driver to deliver a reformed and transformed NHS.
Workforce: Support the development of an overarching long-term workforce plan and sustainably increase investment in the NHS workforce.
Social care: Increase funding for local authorities to ensure the sustainability of the social care sector. Ring-fenced funding should have clearly defined outcomes to ensure spend drives the change needed.
Tackling inequalities through prevention and health in all policies: Shift funding to better resource the wider determinants of health and publish a delivery plan outlining the resources, funding, priorities, and actions taken across all government departments to tackle inequalities.
Digital investment: Adequately invest in digital infrastructure to underpin ambitions to maximise the potential of digital advancements in the NHS.
NHS and the economy: Consider health as part of wider budget setting and its contribution to the economy, both nationally and locally.
Introduction
This briefing is for Members of the Senedd (MSs) in preparation for the debate on the Welsh Government Draft Budget 2025-26, on Tuesday 10 December 2024.
Introduce longer-term funding cycles
Across the UK, the NHS’s ability to meet its long-term plans to transform services and prevent more illness is being hindered by short-term funding constraints and annual budgets. Demand for healthcare has grown significantly across the UK and is projected to accelerate as the population continues to get older, with more people living with multiple complex health conditions. Therefore, Welsh and UK Governments must move away from short-term thinking when setting budgets to allow health and care leaders to plan for, and invest in, projected long-term demand.
Capital (including digital infrastructure)
The NHS is faced with an ageing estate, including digital infrastructure, which was not designed with current demands and risks in mind. While NHS leaders share the government’s commitment to boost NHS productivity and are doing all they can to tackle the elective care backlog, the lack of capital funding is a major barrier.
Capital investment is key to continuing to deliver high-quality, safe health services. By having a ten-year investment plan for service change it will reshape NHS estates and infrastructure, making it more sustainable, boosting productivity, reducing carbon emissions, maximising public assets, and improving patient outcomes.
Workforce
A sustainable workforce is essential for a sustainable NHS. Investment in student education and staff training across a range of professional groups should continue to be a priority. This includes investment in alternative training and education pathways including apprenticeships. It is also essential to invest in education and training for existing staff to upskill and enable adoption of innovative ways of working. Workforce wellbeing is also key and staff retention plans are essential.
Social care
Social care services play a crucial role in care pathways by keeping people well for longer outside of hospital and enabling faster, safer discharges home. Social care must be sufficiently resourced to enable health and wellbeing systems to operate effectively.
We recommend local authorities receive ring-fenced allocations for social care with clearly defined target outcomes to ensure social care spend drives the change needed and supports system-wide sustainability.
Tackling inequalities through prevention and health in all policies
As highlighted in the Welsh NHS Confederation Health and Wellbeing Alliance report, ‘Mind the gap: what’s stopping change?’, only 20% of a nation’s health and wellbeing is dependent on healthcare services. This is why we need to focus not just on public health initiatives delivered through the NHS and local authorities, but also address factors such as education, poor housing, unemployment, transport and food quality. Addressing the factors that cause ill-health in the first place should be a central focus for the Welsh Government and a cross-government approach to tackling inequalities is needed.
NHS leaders recognise that partners across the public sector are facing acute financial challenges. Therefore, we support an approach to further protect funding for preventative measures to ensure the sustainability of services in the longer term.
Digital investment
It is vital governments invest in digital infrastructure and functionality to realise the opportunities digital can bring to the economy and the NHS. Capital and associated revenue funding is needed to invest in digital infrastructure and capitalise on digital innovations, which are increasingly important to mitigate cyber security risks, improve productivity, enable enhanced self-care and connecting parts of health, care and the wider public sector to enable people to keep safe and healthy at home for longer.
COVID-19 highlighted the opportunities afforded by digital technology across the health and care system. Its availability, dependency, access, resilience and security are now essential to ensure the continuity of services and NHS organisations are committed to building on the progress made.
NHS and the economy
A physically, psychologically and socially healthy population results in a more economically active population. Interventions designed to improve health, inclusive growth and wellbeing are in the interests of all local, regional and national partners, businesses and communities and act as a key driver for economic activity and employment.
As large employers, purchasers, and capital asset holders, NHS organisations are well positioned to use their spending power and resources to address the adverse social, economic, and environmental factors that widen inequalities and contribute to poor health outcomes. Research by the NHS Confederation demonstrates that for every £1 invested in the NHS, the economy gets £4 back in gross value added (GVA). Furthermore, for every £1 spent on primary and community care, there could be increased economic output (GVA) by £14. NHS organisations are well positioned to use their spending power and resources to address the adverse social, economic, and environmental factors that widen inequalities and contribute to poor health outcomes.
Conclusion
NHS leaders understand the current budget limitations facing the Welsh Government and believe we must work together with the government, all political parties and public sector leaders to effectively balance short-term need with long-term vision.
Ultimately, creating a sustainable system requires a cross-sector effort to build healthier and more prosperous communities, reducing demand well into the future. To this end, healthcare, prevention, reducing inequalities and maintaining people’s mental health and wellbeing should be at the heart of the Welsh Government’s draft budget and be considered across government departments.
Further information
For further information, please read our detailed response to the Finance Committee consultation on the draft budget.
If you would like further information on any of the issues raised in the briefing, please contact Nesta Lloyd-Jones on nesta.lloyd-jones@welshconfed.org
The Welsh NHS Confederation represents the seven Local Health Boards, three NHS Trusts (Velindre University NHS Trust, Welsh Ambulance Services University NHS Trust and Public Health Wales NHS Trust), and two Special Health Authorities (Digital Health and Care Wales and Health Education and Improvement Wales). The twelve organisations make up our members. We also host NHS Wales Employers.
