Whilst the twists and turns to get to this year’s Budget have been extraordinary (not least the shambolic OBR leak today), the final narrative is remarkably similar to the first Budget Rachel Reeves delivered in October 2024: Labour says it will ‘keep’ its manifesto pledge not to raise income tax, national insurance or VAT; the fiscal rules will be met and the UK’s fiscal position strengthened; a plethora of other smaller taxes will rise, and that will deliver meaningful improvements to public services – most notably the NHS.
For many voters, keeping manifesto pledges on tax will seem little more than a technicality: more meaningful to Westminster watchers than the real world. Make no mistake, frozen thresholds mean that the amount most people pay in tax will rise, and many a ‘pasty tax’ may well be hidden in the smorgasbord.
Passing over whether a Budget shaped in this way has a good chance of delivering either politically for the Government or economically for the country (although the word omnishambles has been muttered enough in the run up to Budget Day to make the Government nervous on both counts), what does this Budget suggest for the NHS? Will the Government’s pledges to cut waiting times, modernise services and deliver the long-trailed reform the system has been promised for over a decade be delivered?
Waiting times are a barometer of success
As they have been since the start of the Labour Government, progress on NHS waiting times will be a key barometer of success. The Government knows it needs to improve performance over this Parliament if it wants a positive story to tell at the next election on the state of the NHS – and by extension, the Government’s competency on the largest and most politically important area of public spending.
As the Prime Minister promised in the Plan for Change (anyone remember that?), 92% of patients should wait no longer than 18-weeks from referral to non-urgent treatment (RTT) by the end of the Parliament. To date, progress has been sluggish at best (see Nuffield’s handy performance tracker to the right). The interim March 2026 target of 65% of patients looks in serious doubt, and current trajectories make hitting the final target a brave bet.
Early progress has been undermined in recent months, both by renewed industrial action – a growing problem with no sign of a resolution – and by the NHS’s understandable strictures on financial control. Choosing the 18-week RTT target as the headline performance measure was always risky. When finances are tight – and there’s been too little recognition of how tight they are in the second half of this year – then reducing elective activity is one of the few measures NHS bosses have to control in-year costs.
What does the Budget change?
Rachel Reeves and Keir Starmer are visiting a hospital and answering questions from NHS staff this afternoon. NHS improvement is the retail offer for the public from this Budget, and they know they need to land it, but what does it actually deliver?
The confirmation of the small headline funding growth announced in the spending review earlier this year, is of course welcome, but, as the Health Foundation highlights, the NHS needs close to £20bn just to meet growing demand and cost pressures. This uplift barely covers that. When it comes to NHS finances, more is always welcomed (at least by NHS finance directors). But the big question is whether DHSC will have the space to settle with the Resident Doctors (and keep Agenda for Change staff from striking) – it’s not looking positive – alongside delivering any transformative investment.
However, there are some positive moves. The pre-briefed agreement with HMT to enable private finance to fund new neighbourhood healthcare centres (or refurbishments or existing facilities) will make a tangible difference in the longer-term – though it is a long way short of fixing the wider NHS’s capital regime.
What needs to go right in 2026?
All that adds up to a lot resting on Wes Streeting’s reform programmes bearing fruit in 2026: the merger of NHS England into the Department of Health and Social Care has to start moving more smoothly than it has to date (and a new NHS CEO needs to be found); the Integrated Care Board and Commissioning Support Unit staffing reductions need to be achieved whilst retaining critical strategic commissioning capabilities; the provider-side changes introduced in the Ten Year Plan need to not be bogged down in the same delays that plagued Accountable Care Organisations the last time this was tried in the late 2010s; fundamental reforms to financial flows, commissioning pathways and service frameworks need to bear productive fruit.
Whilst there are tangible opportunities here, there is also substantial risk of continued disruption that the Government can little afford. And looming over all this is the mammoth legislation that the Government plan to introduce in 2026 – a gamble given this Government’s recent parliamentary handling.
Where does this leave the NHS?
This Budget leaves the Government much where it started: promising major improvements to the NHS while working within fiscal limits that make delivery uncertain. The funding uplift offers stability, not transformation, and real progress on waiting times in 2026 will be the ultimate test. With industrial action unresolved, financial controls biting, and the NHS mid-reorganisation, the risk of stalled momentum remains high.
Positive steps on neighbourhood care centres and the use of private finance hint at longer-term potential, but they sit alongside unresolved pressures on capital, workforce and – crucially – medicines. Ongoing VPAG negotiations loom large for both Treasury and industry, and the absence of clarity today adds another layer of uncertainty to an already delicate landscape.
Everything now depends on whether the reform programme can deliver real improvements at pace. Who can guarantee who the Prime Minister will be by the time of the next Budget, but – despite the briefing wars of the past few weeks – Starmer and Streeting’s political fortunes are closely bound together. If the NHS hasn’t improved by this time next year, the Prime Minister will be further wounded, but the chances of moving vans heading directly from Victoria Street to Number 10 will also be greatly diminished.