The Powerful NHS Budgeting Lie: Why It’s Stifling Change and How We Can Fix It

“You can’t do that, it’s not in the budget!”

“You can’t do that, it’s not in the budget!” This phrase is used time and time again across the NHS, acting as an immovable roadblock to change and innovation. But is it really true? Or is it a convenient lie that maintains existing power structures, stifles collaboration, and keeps the system stuck in the past?

The Budgeting Trap: Why the NHS Is Always Running Out of Money

The Powerful Lie Controlling Change and Budgets.

Funding is the main control mechanism within the NHS. But to maintain the power of control it needs to uphold the deceit that any change or innovation requires more funding.

The NHS Funding Planning Process.

In most NHS organisations budgets are set every year based on the previous year’s funding, with everything divided into fixed silos. The assumption? That this year will be just like last year, with only minor adjustments.

The Additional Funding Problem

But this approach creates a fundamental problem: if anything new is introduced, it requires additional funding rather than a reallocation of existing resources. Instead of enabling flexibility, this system builds layers of budgets on top of each other, making the NHS more expensive year after year.

And, of course, departments never end up needing less money. One area overspending throws everything else out of balance. As no silo can make up for the overspend. The result? The NHS is constantly running out of money, and new ideas are dismissed as “unaffordable.”

A Politically Convenient System That Maintains Power

Setting budgets can often be a challenging stressful process that creates lots of stress and conflict. But starting from fixed silos is a very politically safe, convenient, assumption that keeps many stakeholders happy. 

This rigid budgeting structure protects and reinforces existing power structures, benefits those in power. Senior leaders often embrace it because it protects existing structures and prevents disruptive change. All we end up with is minimum acceptable solutions.

The NHS as a whole likes this process as it holds the government of the day to ransom…if you want change and to modernise the NHS… you have to increase budgets. One of the main reason for the cycle of NHS planning as it enables the leaders of the NHS to ask the government for more cash which is their bill for doing new things. 

The planning cycle focused on top down control then pushes around and around in stress and frustration that never achieves the results we want (read about that here)

This Financial Planning Process is Unsustainable

But here’s the issue: we’re now at a breaking point.

• An ageing, sicker population is creating everincreasing demand. With more people requiring ever more complex treatment.
• Technology is advancing rapidly, often making processes cheaper (if well implemented) So the assumption this year should be like last year doesn’t hold in such a fast changing world.
• The UK’s economic challenges and low growth mean endless budget increases are no longer realistic or sustainable.

If the NHS is to survive, it must fundamentally rethink its approach to budgeting.

The Hidden Costs of Budget Siloes

Most people don’t challenge the NHS budgeting process because it feels “normal.” But normal doesn’t mean effective. The siloed funding model actively creates waste, inefficiency, and unnecessary costs:

• Departments and organisations compete rather than collaborate, protecting their own budgets instead of pooling resources.
• Staff are restricted from innovating (Health Foundation), as anything new requires additional approval and new funding streams.
• The most expensive parts of the system such as hospitals hoard resources, (Darzi Report) while other areas struggle to function.
• Patients are pushed around the system, CQC) as different departments try to avoid costs landing in their budget, until the most vulnerable end up stuck in hospital, at the highest possible cost.

In other words, this budgeting system doesn’t just block new ideas, it actively makes the NHS more expensive and less efficient.

We Need To Break Down Budget Silos and Reward Innovation

If the NHS is to thrive, we need a radical shift in how funding is structured. Instead of reinforcing outdated siloes, we should be asking:

• Why do we separate budgets into rigid categories? Can we create shared budgets and staff across departments and organisations?
• Why can’t staff innovate within their roles and develop new solutions? Could we introduce flexibility that allows teams to test and scale new approaches without requiring additional funding?
• Why do the most expensive parts of the system hold onto resources? Can we redistribute funding to areas that prevent hospital admissions rather than waiting until crises escalate?

Rather than building more layers of budgeting bureaucracy, we need a system that rewards collaboration, flexibility, and forward-thinking care.

A Modern NHS Needs Modern Budgeting

The NHS can’t continue with its current financial structures if it wants to meet the challenges of the future. If we fail to change, we’ll keep falling back into the same cycle: pleading for more money, layering budgets on top of budgets, and declaring every innovation “unaffordable.”

But if we rethink NHS funding, aligning it with real patient needs, breaking down siloes, and empowering a diverse range of staff to innovate, we have a chance to create a system that’s not only financially sustainable but genuinely better for patients and communities.

The future of the NHS depends on it.

Conclusion: The NHS Can’t Afford Not to Change

The way the NHS budgets isn’t just blocking innovation, it’s actively making the system more expensive and less effective. Layering budgets on top of budgets, reinforcing silos, and stifling collaboration has created a system that’s unsustainable.

If we want an NHS that can meet the challenges of the future, we must break free from outdated financial structures. By rethinking funding, rewarding innovation, and enabling collaboration, we can create a system that is both financially sustainable and truly responsive to patient needs.

The NHS doesn’t need more money, it needs a smarter way to use it.

#NHS #Innovation #Healthcare #Budgeting #Transformation