Health doesn’t account for 40% of day-to-day public spending

“Incredibly, 40 per cent of all day-to-day spending by the State now goes to the health sector.”

The Daily Mail has claimed that “incredibly” 40% of day-to-day state spending goes to the health sector. 

The figure is incredible, in the sense that it isn’t actually true. In fact, health spending is forecast to make up 23% of day-to-day spending this year.

The error comes down to misunderstanding that public spending figures are often presented as a share of budgeted expenditure, which itself accounts for about half of public spending as a whole.

Understanding public spending 

As we have reported before, public finances are separated into two main categories. 

There’s the spending that departments can budget for and have expenditure limits on, like the cost of running a hospital or a school.

And then there’s the spending which it can’t easily budget for, like the amount it will need to spend on welfare, which is driven by demand. This is called annually managed expenditure (AME). 

Each of these pots can then be further split into resource (or “day-to-day” spending) and capital spending on one-off investment projects like building a hospital or a new road. 

So that gives you essentially four types of spending. In 2020/21 the total spent on each and as a proportion of all public spending were as follows:

• Departmental budgeted day-to-day spend (£500 billion, 46%) 
• Departmental budgeted capital spend (£94 billion, 9%) 
• AME day-to-day spend (£487 billion, 45%) 
• AME capital spend (£14 billion, 1%)

In the Autumn Budget and Spending Review, the Treasury announced the day-to-day budget for the UK health department this year, excluding Covid-19 ringfenced funding, was forecast to be £147 billion. 

That’s 38% of the government’s budget for day-to-day spending across all departments in 2021/22 (£385 billion). Next year it’s forecast to be 39%. Hence the “40 per cent” claim in the Mail.

But this is just as a share of day-to-day departmental budgets, not “all day-to-day spending by the State” as the Mail claimed.

The government’s total day-to-day spend this year, including departmental budgets and AME, is forecast to be £964 billion.

Of that, spending on health is forecast to be £225 billion, which is 23% of the total, not 40%.