On Wednesday 6 March, the UK government announced its Spring Budget 2024, delivered by Chancellor of the Exchequer Jeremy Hunt. The government’s strategic financial drive towards healthcare, underscored by substantial investments and tax reforms, indicates that the future of UK healthcare is inextricably linked to technological advancement and research. Med-Tech companies have been promised increased investment and support, whilst the NHS is poised to undergo a technological revolution.

The impact of the UK Spring Budget 2024 on the NHS and Med-Tech Companies

The delivery of the Spring Budget 2024 by Jeremy Hunt is a significant event in the context of an upcoming general election. Ahead of the Spring Budget, Hunt came under pressure from Conservative MPs to commit to tax cuts to try and win votes at the upcoming general. The UK being declared as in a ‘technical recession’ prior to the Spring Budget announcement increased pressure on Hunt to consider the long-term implications of the Budget on the economy.

The Budget also has the potential to reshape the public sector, and create an environment conducive to investment in the Med-Tech industry. The commitments outlined by the Chancellor signal a strong governmental intention to foster growth, enhance efficiency, and ultimately, bolster the quality of healthcare services through technology and innovation.

Impact of the UK Spring Budget 2024 on the NHS

For the NHS, the Budget indicates a government commitment to increase funding to the NHS. The NHS Productivity Plan, bolstered by a £3.4 billion fund, with an additional £2.45 billion in funding demonstrates a commitment to supporting the NHS. However, the NHS Confederation, which has previously called for a £6.4 billion annual capital funding increase for the NHS, and the Institute for Fiscal Studies (IFS) have both shown caution about optimism with the Budget’s impact on the NHS. NHS Confederation Chief Executive Matthew Taylor indicates that the £2.5 billion boost in funding announced in the Budget is insufficient to tackle “the triple threat of ongoing industrial action, significant waiting lists and uncertainty over staff pay”.

It is important to note that capital funding for the NHS Productivity Plan will not arrive until the 2025-26 fiscal year. The delivery date scheduled for after the next election means the funding will be the responsibility of the next government in the next Spending Review. Resultingly, the funding promised in the Budget has a degree of uncertainty regarding its implementation. As a result, the country is likely to see a continuation of the existing public sector crisis which has been detrimental to the NHS. For the healthcare sector, the Spring Budget’s increases in public expenditure are unlikely to counter several years of austerity and cuts to public expenditure since 2010, as evidenced by the graph below that highlights the need for caution about optimism regarding the Spring Budget’s prospects for the NHS. The country is likely to see a continuation of long waiting lists both in A&E and for GP appointments.

Impact of the UK Spring Budget 2024 on Med-Tech Companies

For Med-Tech Companies, this Spring Budget can indicate that the UK government intends to create an environment conducive to R&D investment. The government has followed a similar path from its Life Sciences Vision set out in 2021. The government has indicated its intent to invest further in the Life Sciences Sector through its allocation of £45 million to medical charities, resulting in Med-Tech Companies being able to expect a supportive environment for innovation, particularly in the fields of cancer, dementia, and epilepsy research. The UK government appears committed to creating a prosperous future for UK-based Med-Tech Companies.

Lessons for Med-Tech Companies and the NHS

The Chancellor’s levelling-up investments aiming to support high tech across the country, including in health tech in Canary Wharf, promise infrastructure and an ecosystem which encourages innovation. For Med-Tech firms, this translates to access to state-of-the-art facilities, potential funding, and an environment conducive to growth. The allocation of £45 million to medical charities for research into diseases such as cancer, dementia, and epilepsy directly benefits Med-tech firms specialising in these areas. Additionally, the Chancellor’s aim to not just develop but also manufacture medicines within the UK could open new opportunities for Med-Tech Companies in the supply chain. However, this could lead to a prioritisation of UK-based Companies and those with UK-based manufacturing holding a position of preference in the eyes of the government. The focus on the Life Sciences Sector, with a £45 million investment, is an opportunity for Med-Tech Companies to be at the forefront of research. It could promise medical innovation, focused on developing new medicines and technologies for integration into the healthcare system. With the aim to make the UK a hub for medicine manufacturing and the overall drive towards high-tech innovation, Med-Tech Companies could see an expanded market for their products and services, both domestically and internationally.

For the NHS, the Budget underscores a shift towards technology and AI. Med-Tech Companies can expect an increase in demand for digital solutions such as app development, paperless processing systems, and AI-driven diagnostics tools. These technologies have the potential to streamline operations and enhance patient care in the NHS, aligning with the national agenda to reduce waiting times and improve service delivery. Furthermore, as the NHS seeks to reduce waiting times, it may turn to technology for solutions, potentially leading to partnerships with Med-Tech Companies.

In sum, the UK Spring Budget 2024 sets a positive tone for Med-Tech Companies and the NHS. By embracing a future where technology underpins healthcare delivery, the government has laid out a framework for growth, efficiency, and innovation. For Med-Tech Companies, the Budget indicates the need to focus on investment, innovation, and production. For the NHS, the future promises enhanced technology driving productivity and patient care. The commitments outlined by the Chancellor are not just fiscal; they are a vision for a healthier, more technologically advanced UK.

The Budget is likely to significantly shape the Conservative Party’s campaigning strategy, highlighting their economic and healthcare policies while addressing the concerns of the public. The Spring Budget 2024 has a clear short-term focus on tax cuts, aligning with the Conservative Party’s focus on the upcoming general election and the gain of political capital. For the country, these tax cuts are unlikely to provide a significant improvement for the vast majority of people. Recent polls by YouGov found that British voters prioritise spending on public services rather than tax cuts. The IMF has also warned the Chancellor about the side effects of tax cuts, and advised the focus to centre on healthcare and public services more widely.

The Conservatives are likely to campaign on the platform of being a low-tax party with economic responsibility, which is bolstered by the changes to tax policies such as the abolition of non-dom status and the cut in employee National Insurance contributions. The commitments made towards the NHS and medical research will likely feature prominently in the Conservative campaign. The pledge to increase NHS funding and the focus on utilising technology and AI can be presented as evidence of the party’s dedication to improving healthcare services. This could resonate well with voters for whom the NHS is a crucial issue. The investment in Med-Tech and the Life Sciences Sector can be leveraged as a demonstration of the Conservative’s commitment to making the UK a global leader in technology and innovation.

However, it’s important to note that these budgetary commitments also pose challenges for the Conservative campaign. The opposition parties, especially the Labour Party, will likely scrutinise the feasibility of these promises, the actual impact on voters’ day-to-day lives, and whether these measures are sufficient to address broader economic challenges and threats to public services such as the NHS. Moreover, voters will consider the Conservatives’ track record on healthcare and economic management, particularly in the context of the pandemic and recent financial issues, most prominently evidence through the UK being announced as in a ‘technical recession’ in 2024.