According to a new report by the Health Foundation, inefficiencies and waste since the pandemic have effectively erased a decade of productivity gains. Despite higher spending and a record increase in staff numbers, the NHS has not seen a proportional rise in treatments or operations, with many hospitals “clinging to old ways of working.”
The report revealed that had pre-pandemic productivity trends continued, the NHS in England would have been 14 per cent more productive in 2022–23 equivalent to about £20 billion of the NHS budget. That figure could have funded millions of outpatient appointments or tens of thousands of major operations.
While NHS productivity had steadily improved before Covid, it fell sharply in 2020 and has yet to recover. The Office for National Statistics (ONS) found that NHS productivity in 2024 was 7.8 per cent below 2019 levels, with further decline seen in mid-2025.
Separate NHS England data covering acute hospitals showed a modest 2.4 per cent productivity increase between April and July.
Wes Streeting, the Health Secretary, has pledged radical reform, but insiders warn progress has slowed due to budget disputes. In March, Streeting announced the abolition of NHS England, which would see 9,000 jobs cut. Yet, the lack of £1.3 billion in redundancy funding has left tens of thousands of staff in limbo.
Other key barriers include outdated medical equipment, neglected hospitals, and GP surgeries that have not received essential upgrades. Rising staff costs, partly driven by strikes and higher wages, have not translated into better patient outcomes. Pay now accounts for nearly two-thirds of total NHS spending.
Anita Charlesworth, co-chair of the Health Foundation’s NHS Productivity Commission, described the £20 billion loss as “a huge missed opportunity” and a major drag on the wider economy.
“The NHS is 10 per cent of our economy, so this is not just a health issue — it’s an economic one. Productivity gains in the NHS will be crucial to whether Rachel Reeves can balance the government’s books,” she said.
Charlesworth urged the government to prioritise capital investment in infrastructure and technology, arguing that “the NHS has spent far too little on modern equipment and facilities for decades.” She added that ministers must resist becoming “bogged down” in short-term crises such as doctor strikes, and instead focus on long-term reforms outlined in Labour’s ten-year NHS plan.
However, she warned that these reforms are “on a go-slow,” as many NHS leaders remain distracted by Labour’s large-scale restructuring.
Streeting defended the government’s record, saying:
“We’ve deployed top clinical teams, expanded services at evenings and weekends, and reduced agency spending by a third. More patients are being treated with better value for taxpayers.”
A spokesperson for the Department of Health and Social Care added that NHS productivity grew by 2.7 per cent last year and 2.4 per cent in the first quarter of this financial year, signalling early progress.
“Our investment and reforms are turning things around,” the department said. “Improving productivity will boost the economy, save billions, and deliver better care for patients.”
