NHS investment is boosting the UK economy overall, a study shows

The NHS makes an important contribution to the UK economy, with every £4 spent on health generating £ of economic growth, according to a study arguing for investment as a productivity driver.

The study, conducted by consultancy Carnall Farrar, comes at a time when healthcare is grappling with rising inflation, high energy costs and the prospect of further spending cuts as the government enforces “fiscal discipline” in the wake of its “mini” budget.

Against a backdrop of high sick leave rates, the study commissioned by the NHS Confederation showed that a 1 per cent reduction in the number of Britons out of work due to sickness could increase the number of people able to work by 180,000 – “equivalent to the working-age population of Bolton”.

But achieving that would require greater investment in the NHS to reduce the backlog of treatments, which hit a record high this week, and the number of people living in conditions that left them unable to work, he concluded.

Matthew Taylor, chief executive of the NHS Confederation, which represents health organizations across the country, suggested that economic growth cannot be achieved without an increase in the UK’s labor force.

More than 200,000 people have left the labor market for health reasons since the start of the Covid pandemic, with a record 2.5 million people out of the labor force due to long-term illnesses, almost 500,000 more than five years ago.

Taylor said the analysis “debunks the myth that the NHS is a drain on public resources – in fact it is a major engine of labor productivity and broader economic activity”.

With around 1.4 million employees, the NHS is one of the UK’s largest employers and the main source of employment in many sectors, he stressed.

Carnall Farrar drew on economic and health data from 2015 to 2020 and concluded that spending on the NHS has quadrupled ‘gross value added’ in individual localities.

It states that “the link between an effective health care system and a high-performing economy” is underscored by the fact that “those who have not been currently employed report poor health far more often than those who are still employed”.

Reducing the number of people absent from the labor market due to illness would have “an overall positive impact on the productivity of this workforce,” the researchers said.

When a population becomes healthier, “the employment rate increases, but so does the quality of employment — with healthier workers who are able to perform higher-quality jobs,” Carnall Farrar said.

The study showed that investment in primary care staff and reduced visits to the emergency department and emergency departments would have the greatest impact on the overall economy.