Why the UK Budget 2025 Matters More Than Ever
The UK Budget has always been a pivotal moment for public sector suppliers, but the 2025 Budget carries particular weight. Following years of fiscal pressure, NHS recovery plans, and the introduction of the Procurement Act 2023 (fully in force since February 2025), this Budget will set the direction for healthcare investment and procurement over the next five years. For suppliers, understanding where funding is headed—and how procurement rules are evolving—will determine who thrives in the upcoming tender cycle.
The 2025 UK Budget will also have significant implications for the wider economy, influencing public sector investment and fiscal stability.
Need to prepare for upcoming NHS and public sector procurement changes? Get expert advice from HCI.
When Is the UK Budget? Key Dates to Know
The Spring Statement took place on 26 March 2025, followed by the Spending Review on 11 June 2025, which set multi-year departmental budgets through to 2029/30. An Autumn Statement is also expected later this year, but the Spending Review remains the most important fiscal event for suppliers—it locks in funding envelopes for both revenue and capital across the NHS and wider health sector for the upcoming Spending Review period (2025/26 to 2028/29). The autumn budget is also a key event, as it announces the government’s financial plans for the year ahead, including any potential tax changes or policy decisions that could impact suppliers’ financial planning.
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UK Budget Predictions: What Might Be Announced?
Based on government statements, NHS England guidance, and fiscal forecasts, several themes are expected to dominate: These predictions are closely tied to the government’s spending plans, the long-term health plan, and the broader fiscal plan, all of which will shape the allocation of resources across the NHS and public sector.
Digitisation and technology
- Up to £10bn earmarked for NHS tech and digital upgrades from 2025–29, covering projects such as electronic patient records, AI diagnostics, and cybersecurity improvements. For example, trusts may invest in AI-driven triage tools to cut A&E waiting times.
Elective recovery
- Continued focus on reducing waiting lists through expanded capacity, including more surgical hubs and diagnostic centres. Suppliers of equipment like MRI scanners and outpatient service models are likely to see opportunity.
Community and primary care
- Investment in GP, nursing, and social care capacity to shift demand away from hospitals. This could open contracts for digital monitoring devices, home care technology, and workforce training providers.
Disease prevention
- New initiatives in public health, such as smoking cessation programmes and obesity prevention campaigns, where charities and specialist service suppliers can partner with the NHS.
Productivity and efficiency
- Targeting ~2% annual improvements across the NHS, with emphasis on solutions that reduce costs or improve outcomes. For instance, facilities management firms might win contracts by embedding energy efficiency and sustainability practices into estates management.
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UK Budget Key Points Likely to Affect Health and Procurement
The Spending Review confirmed that the Department of Health and Social Care (DHSC) remains the largest beneficiary of additional funding. These funding decisions directly impact the delivery and quality of public services, including health, education, and social care, by shaping resource allocation and supporting essential operations across these sectors. Government departments receive budget allocations based on spending plans, which determine the level of government spending across sectors and influence how resources are distributed. However, growth is modest: NHS England’s day-to-day budget rises to ~£202bn in 2025/26 (1.8% real growth), below the 4% target set by NHS leaders. Key points include:
Capital funding uplift
- £13.6bn in 2025/26, growing to £14.6bn by 2029/30. For suppliers, this signals targeted opportunities in estates modernisation, diagnostic hubs, and digital infrastructure, though overall growth remains tight.
Estates investment
- £750m ringfenced for hospital safety, plus £122m for primary care IT and premises. Construction and facilities management providers should prepare for bids linked to backlog maintenance and GP estate upgrades.
Procurement reforms
- The Procurement Act 2023 introduces a simpler, more transparent regime, with greater opportunities for SMEs and social enterprises. Early engagement with Integrated Care Systems (ICSs) will be key to securing contracts under the new system.
Mandatory Social Value Model
- Updated in March 2025 and fully mandatory from October 2025, embedding sustainability, equity, and innovation into all public contracts. Suppliers will need clear, evidence-backed strategies to show measurable impact on carbon reduction, workforce equality, and community benefit.
Departmental budgets
- The impact on departmental budgets reflects government spending priorities, as allocations to different government departments are shaped by policy objectives and overall public expenditure plans.
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UK Budget Breakdown: Healthcare in Focus
The 2025/26 DHSC budget separates into ~£202bn for revenue (RDEL) and ~£13.6bn for capital (CDEL). These figures are presented in cash terms, which are also referred to as nominal terms, representing the actual cash allocated for spending in the budget year. Real terms figures are calculated by adjusting for inflation using the GDP deflator, allowing for more accurate comparisons of funding over time. Revenue covers frontline services such as staff pay, drugs, and operations, while capital funds major projects like new hospitals, equipment, and IT. By 2029/30, revenue will rise to ~£232bn and capital to ~£14.6bn. This breakdown confirms that operational funding growth continues to dwarf capital investment, and it is important to analyze both growth rates in nominal and real terms to understand the true value of funding trends over time. Accurate accounting is essential for comparing funding across years, and the figures presented are based on the latest estimates available from government sources. This means suppliers should expect greater opportunities in workforce support, service delivery, and digital solutions, alongside selected capital programmes.
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NHS Capital Funding: Will It Increase in 2025?
While capital allocations are rising modestly, they remain constrained compared to demand. Capital funds major projects like new hospitals, equipment, and IT. These investments contribute to the creation and maintenance of public sector assets, which play a key role in the government’s balance sheet and long-term service delivery. Trends include:
- Estates safety first: £750m dedicated to tackling hospital maintenance backlogs.
- Primary care focus: £122m for GP IT systems and premises.
- Diagnostic hubs and elective recovery schemes: Funded nationally outside core allocations.
- Net zero and digital retrofits: Priority funding for sustainability and modernisation projects.
Suppliers in construction, facilities management, diagnostics, and digital infrastructure should prepare for targeted opportunities rather than broad increases.
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How Much Does the UK Spend on Healthcare?
Total healthcare expenditure in the UK (public + private) is around £317bn in 2024, equivalent to 11.1% of GDP. This figure represents the total spending on healthcare, encompassing both public and private contributions. Health expenditure refers to the overall spending on health services, including all sources of funding. Public funding accounts for ~81% of this total (£258bn). By 2025/26, DHSC’s day-to-day spending will reach ~£202bn, continuing its dominance as the single largest area of UK government expenditure.
When analyzing trends over time, it is important to consider healthcare spending in real terms (adjusted for inflation), as this provides a clearer picture of funding growth and purchasing power. Healthcare’s share of departmental spending has risen from 26% in 1998 to ~43% today, and is expected to remain around 40–45% through the mid-2020s; tracking these changes in real terms is crucial to assess the true impact of funding increases or decreases.
The UK’s health spend as a share of GDP is similar to, or slightly below, that of some other countries, but international comparisons can be challenging because data may not be directly comparable due to differences in definitions and data sources across countries. Population growth and demographic changes have contributed to rising healthcare expenditure in recent years, further impacting long-term trends in health spend.
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Percentage of UK Budget Spent on the NHS: A Closer Look
Roughly one pound in every five of UK public spending is directed to health, reflecting the sector’s enduring political and economic priority. This funding supports a wide range of health services delivered by the NHS and other providers. Local authorities also play a role in funding and delivering public health services, alongside the NHS. In 2025/26, DHSC will account for around 39% of departmental budgets, underlining health’s central role in government priorities and ensuring continued demand for suppliers across services, equipment, and infrastructure. Payments for health services are managed through various funding schemes and contracts, tracking expenditure and ensuring resources are allocated efficiently.
However, this concentration of resources inevitably narrows fiscal space for other departments, which may limit cross-sector collaboration opportunities. For NHS contractors, the implication is twofold: while growth will continue to favour healthcare, the high proportion of funding directed here means competition for contracts will intensify, with successful bids needing to demonstrate not only cost-effectiveness but also added value through innovation, sustainability, and measurable impact.
Be prepared for the next NHS tender cycle—speak with our bid advisors.
Turning Budget Insights into Action
Many suppliers see the headlines—but miss the detail that determines which bids succeed. Access to clear market intelligence makes the difference. For suppliers seeking to understand funding trends and opportunities, a detailed analysis and more detailed analysis of healthcare expenditure data provides valuable insights beyond preliminary estimates. Using procurement data and competitive benchmarking, suppliers can:
- Track spend forecasts and category-level analysis across NHS regions.
- Understand competitor positioning on frameworks and identify early opportunities.
- See where funding is being spent in real time, rather than just promised.
This type of intelligence helps suppliers move beyond surface announcements to create data-driven bid strategies—bridging the gap between government policy and procurement success.
How to Prepare for the 2025 UK Budget
The 2025 Budget confirms healthcare as the UK’s top spending priority, but also highlights the challenges of modest growth, capital constraints, and demanding procurement reforms. Suppliers who succeed will be those who:
- Align bids with NHS digital and estates priorities.
- Demonstrate strong social value and sustainability outcomes.
- Leverage data to anticipate tenders and tailor responses.
Want to stay ahead of the UK Budget impact on healthcare procurement? Contact HCI today.