News / Investment in community or primary care significantly grows economy

24 August 2023 Martyn Bryson

The new research, published in Creating better health value: understanding the economic impact of NHS spending by care setting, is a follow up to a 2022 report. The earlier report showed that every £1 invested in the NHS results in a return of roughly £4 of gross value added (GVA). GVA is used to measure the contribution made by the sector to the economy, taking account of the total value of goods and services produced.Matthew.Taylor l

The new report shows that, between 2015 and 2019, local areas in England with the highest increases in NHS primary and community care spending had far higher GVA growth than the areas with the lowest spending. By matching the funding patterns of the areas that increased spending the most, other areas could have increased economic output by £14 for every £1 spent on primary or community care, the report argues.  

Higher increases in acute care spending had a smaller but still significant impact, showing potential GVA growth of £11 for every additional £1.

According to the report additional extra investment in the NHS could mean tens of billions of pounds ploughed back into the wider economy.

‘Increasing spending in line with those high increase areas could have delivered average benefits of a higher GVA for a typical-sized integrated care system of £1.7bn from the primary care spend, £1.2bn from the community care spend and £1.1bn from the acute care spend,’ the report said. ‘This is a significant economic impact, which some places in England have missed out on.’

Though it wasn’t tested directly, the researchers suggested that increases in mental health investment would show similar high rates of return.

The potential GVA growth rates might also result in more tax income. Assuming that the current levels of taxation and distribution of public spending remain the same as today, more investment in the lowest increase areas could more than pay for itself in tax revenue alone. Specifically, the research found that an additional £1bn of investment in community, primary or acute care in these areas would create enough economic growth to add more than £1bn in tax revenue to the national NHS budget.

The report provides two possible, reasons for these high rates of GVA growth. The first is that increased investment leads to better health outcomes, which in turn makes people more economically productive. A person who has easy access to community care is less likely to get sick in both the short- and long-term, which in turn reduces the risk that they’ll drop out of the workforce due to sickness.

The second is that higher investment grows the economy in the local area. With extra spending, NHS organisations are likely to directly employ more people. But increased spending will also boost local business, which may also increase recruitment.

‘These significant findings show clearly that investment in the NHS, particularly in primary and community care, is very beneficial to the entire economy,’ said Matthew Taylor (pictured), chief executive of the NHS Confederation. ‘The message for the government is clear: without the necessary investment upstream in prevention and in primary and community care it will be difficult to make the crucial shift to preventing ill health in the first place.’