NHS Productivity Slump Threatens £20bn Public Finance Gap by 2028-2029

The Centre for Policy Studies warns that the NHS’s failure to meet annual 2% productivity growth targets could create a £20 billion hole in public finances by 2028-29, exceeding current borrowing forecasts. A pre-pandemic output return would add £20 billion to deficits, requiring income tax to rise by 2p per pound. Lord Redwood’s review found NHS productivity remains 8% below 2019 levels despite expanded staffing and spending, with output still lagging. If productivity does not return to pre-pandemic levels by 2028-29, borrowing would be £20 billion higher than forecast. Since 2008, annual productivity growth averaged 0.4% versus 2.1% previously. The report highlights overstocked public sector capacity and excessive staffing, with savings achievable through better management and extending tenure in effective roles. The government claims a 2.6% productivity increase in the NHS in H1 2026 and a 312,000 reduction in the waiting list since July 2024.