Announced shortly after this year’s NHS Confed Expo, the agreed budget echoes many of the ambitions laid out by leaders like NHS England CEO, Jim Mackey, and Secretary of State for Health and Social Care, Wes Streeting, who both called for a clearer, more confident system that puts people first. While questions remain about delivery, it appears the foundations for significant change are starting to be laid.
Here’s what the Labour government Spending Review means in the context of the three major shifts shaping the future of care, what the reactions were from sector leaders following the announcement, and what to expect next.
Investing in Progress: The Headlines
The Department of Health and Social Care has been granted one of the most generous settlements across government:
- 29 billion real-terms increase in NHS day-to-day spending by 2028–29
- NHS England to receive 3% real-terms growth annually, on average
- £2.3 billion real-terms uplift in capital budgets
- Up to £10 billion in digital and tech transformation investment
- £3.4 billion increase in core local authority spending
Taken together, these figures represent a clear signal of support for long-term service improvement, particularly in digital transformation, diagnostics, and community capacity. While not every priority has received dedicated funding, the settlement provides a foundation for moving forward with the next phase of health and care reform.
How Does the Spending Review Align with the NHS 10-year Plan?
Following the release of Lord Darzi’s report last July, Labour set the course for the UK’s health and social care sector to make drastic improvements to its policies, practices and infrastructure through the widely-anticipated 10-year Plan; a plan that outlines three core shifts that are needed for the NHS to tackle the unprecedented demand on its services in recent years, and other major challenges such as underfunding, staff burnout, disjointed systems and other inefficiencies.
Here’s how the latest budget announcements correlate to these shifts:
Analogue to Digital
One of the most exciting commitments in the Review is the government’s support for NHS digital transformation. Up to £10 billion will be invested in areas such as:
- Shared care records and federated data platforms
- Digital triage and diagnostics
- Smarter use of AI and automation to support the workforce
The aim is to reduce duplication, improve safety, and free up clinicians to focus on what matters most: patient care.
Wes Streeting spoke passionately at NHS Confed about putting digital firmly at the heart of the system. “We need to be a service driven by data, powered by digital, and led by people who know what good looks like.” With this level of investment, that vision is starting to look achievable.
Hospital to Community
Alongside hospital investment, the gov Spending Review supports the shift toward more care in the community. Increased funding for primary care, diagnostic centres, and virtual wards shows a clear move to deliver more services closer to home.
A £100 million investment in Community Help Partnerships and an uplift to the Better Care Fund will help expand early-intervention services, including virtual wards. Between 2022 and 2025, £450 million was spent on rolling out virtual wards, but no new ringfenced funding has been confirmed since March 2024. NHS England now expects local systems to fund these services through their core budgets.
Other community measures include £130 million for youth services, including music, drama and sport, plus a separate £1.2 billion to be invested in digital and AI technologies, which will support tools like remote monitoring and digital triage.
Local authorities will also see an additional £3.4 billion increase by 2028/29. While not specifically for social care, this extra funding gives councils more flexibility to support people at home and reduce pressure on hospitals, which is a key aim of the 10-Year Plan.
Treatment to Prevention
Prevention isn’t listed as a separate category in the Spending Review, but it features across the strategy. Nearly £9 billion a year in productivity gains are expected by 2028/29, linked to earlier intervention, smarter use of data, and helping people stay well for longer.
That said, some in the sector have noted that key public health services (like support for smoking cessation, obesity, and wider prevention programmes) haven’t been backed by dedicated funding. There’s hope these areas will be picked up in the delivery of the 10-Year Plan, but for now, details remain limited.
Health leaders have been clear: prevention needs to become part of everyday planning, not something separate. Wes Streeting echoed this when he said, “You get what you pay for, and we need to start paying for health, not just sickness.”
From mental health to managing long-term conditions and providing support at home, prevention remains a core part of future NHS reform. The next step is making sure that ambition is matched by practical delivery.
What’s the General Consensus?
The announcement has drawn mixed opinions about the future of health and social care, with many healthcare leaders feeling divided about whether finances have been allocated to the right places.
Acute and Hospital Providers
The government Spending Review was well received among hospital trust leaders, who see it as a signal that acute care remains a national priority. They also emphasise that translating the money into frontline improvements will take more than just cash.
Daniel Elkeles, Chief Executive of NHS Providers, commented on the day of the Review:
“The NHS was front and centre in today’s spending round, underscoring its importance to the health of the nation and the economy… Trust leaders back the three shifts from hospital to communities, sickness to prevention, and analogue to digital. But politicians must give local leaders the freedom to lead.”
There’s a sense of cautious optimism. Acute services have the funding framework that’s backed by the £29 billion uplift and sustained 3% real‑terms growth. Nevertheless, leaders urge that local decision-making power, especially around capital and operational freedoms, is essential for delivering the reforms healthcare professionals need.
Primary Care
Pharmacy and primary care leaders have been among the most vocal. In a Joint Primary Care statement, organisations representing GPs, dentists, pharmacists, optometrists and audiologists described the Review as “the single opportunity in this Parliamentary cycle to transform investment into primary care” - a part of the system that sees over three-quarters of all daily NHS interactions, yet remains under increasing strain.
While the group welcomed the government’s intention to shift care out of hospitals and into the community, they warned that this vision cannot be realised “without further investment in primary care.” Without that support, delivering truly integrated, preventative, community-based care will remain out of reach.
Social Care
While the spending review confirmed a £3.4 billion boost in local government funding and acknowledged the rising demand for adult social care, many sector leaders felt the response fell short of what’s truly needed.
The National Care Association voiced particular concern, stating: “While the review clearly prioritises certain industries for investment, it once again excludes social care, a vital sector that supports the most frail and vulnerable in our society. This continued omission is not only short-sighted but devastating for communities.”
Without clearer funding pathways or a long-term plan to stabilise the workforce and expand capacity, providers fear that social care will continue to be treated as an afterthought - despite its central role in preventing hospital admissions and enabling community-based care.
VCSE
The Spending Review gave local government a modest uplift, but for VCSE organisations that deliver vital prevention and community services, the response has been underwhelming.
NCVO warned that, despite some gains for welfare and housing, voluntary organisations are facing a “triple threat: rising costs, falling income and increasing demand.” It noted that local authority funding may help, but doesn’t sufficiently protect charities from deeper pressures.” Nottingham CVS, representing smaller, local charities, highlighted that while some policy measures (like free school meal extensions) could ease future demand, “many frontline charities are already stretched, and decisions made earlier this year on welfare cuts risk increasing pressure still further.”
Mental Health
Mental health was mentioned in passing within the review, but lacked the prominence that many hoped for. With growing demand and widespread agreement about the need for earlier intervention, leaders have expressed disappointment that no specific funding was allocated to accelerate reform.
The Centre for Mental Health stated that “While the Government has pledged to employ 8,500 more mental health workers, this compares with an increase of around 40,000 during the last Parliament and represents only a fraction of what is needed to turn the tide. With mental ill-health costing £300 billion every year in England, the Government cannot afford to keep sidelining mental health investment.”
The biggest concern is that, without targeted support, existing pressures on CAMHS, crisis services, and community mental health teams will continue to mount.
ICBs
ICB chairs and CEOs appear to have kept quiet on the Spending Review so far, but system-wide partners like the King’s Fund flagged this moment as a potential reset for ICS/ICB systems, stating that “This has to become a reset moment where we return to the original purpose of integrated care systems.” KF also highlighted that the £29 bn day-to-day uplift and ‘core’ 3% growth present both opportunity and challenge - particularly for ICBs tasked with delivering change amid flat capital budgets and a 50% reduction in operating costs.
Echoing this, NHS Confed reaffirmed that capital investment will be “essential to deliver reform and get better value.” However, it also noted growing concern over whether ICBs will retain sufficient capacity to plan and manage the implementation of digital, community and prevention-focused initiatives.
What Comes Next?
The 2025 Spending Review offers some welcome clarity after a long period of uncertainty. With the 10-Year Plan due on July 3rd, there’s now a window of opportunity to move from high-level ambition to real, on-the-ground progress.
The investment in digital, capital and community services could make a meaningful difference, but only if local systems are given the tools, support and flexibility to turn that funding into action.
There’s a sense of potential here, but also realism. We’ve been here before with bold promises. The real test will be whether this new direction comes with the practical backing to help services recover, adapt and improve for the people who rely on them most.
