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Expenditure on healthcare in the UK: 2011

Released: 08 May 2013 Download PDF

Abstract

This release contains updated estimates for total healthcare expenditure in the UK between 1997 and 2011. Estimates are given for current and capital expenditure and public and private expenditure. Healthcare expenditure in the UK as a share of gross domestic product (GDP) is also estimated. All expenditure figures are consistent with international definitions provided by the Organisation for Economic Co-operation and Development (OECD, 2011a and OECD, 2000) and presented in current price terms. OECD use this data to publish international comparisons.

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Key points

  • Total expenditure on healthcare in 2011 was £142.8 billion. Healthcare expenditure grew strongly between 1997 and 2009, since then growth rates have slowed.

  • In 2011, 96.3% of total healthcare expenditure was current expenditure. The remaining 3.7% of total healthcare expenditure was capital expenditure.

  • In 2011, capital expenditure on healthcare fell by 34.2% from its peak of £8.0 billion (2008) to £5.2 billion.

  • In 2011, 82.8% of total expenditure was public spending. The remaining 17.2% was private spending.

  • Expenditure on private healthcare fell by 5.7% between 2008 and 2010, dropping from £24.4 billion to £23.0 billion. However, there was a recovery in private healthcare expenditure during 2011, slightly above its historic trend of 6.0% per annum growth, when it reached £24.5 billion - its highest recorded  level throughout the series.

  • Over the last two years of the series (2010 and 2011) healthcare expenditure has fallen as a share of GDP from 9.9% to 9.4%.

Total expenditure on healthcare in the UK, 1997-2011

The Organisation for Economic Co-operation and Development (OECD, 2011a and 2000) provide international guidelines on which this article’s expenditure figures are calculated. These expenditure figures are provided to OECD annually to enable international comparisons to be made regarding healthcare expenditure, such as Health Data 2012 (OECD 2012). Annex A describes the methodology used.

Figure 1 presents total healthcare expenditure in the United Kingdom, including public and private sectors and expenditure from within the devolved administrations. Expenditure on healthcare in the UK has risen from £54.8 billion in 1997 to £142.8 billion in 2011. In 2009 UK healthcare expenditure stood at £138.9 billion, from which point growth in UK healthcare expenditure has slowed. The annual average growth rate across the 1997-2011 period was 7.1%.

Figure 1: Total healthcare expenditure in the UK, 1997-2011

Figure 1: Total healthcare expenditure in the UK, 1997-2011
Source: Office for National Statistics

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Healthcare expenditure showed a period of strong growth spanning 1997 to 2009 during which healthcare expenditure grew from £54.8 billion in 1997 to £138.9 billion in 2009: an annual average growth rate of 8.1% . Growth slowed after 2009 with expenditure rising from £138.9 billion in 2009 to £142.8 billion in 2011, reflecting an annual average growth rate of 1.4% from 2009 to 2011.

Table 1 shows the growth rates of total healthcare expenditure over the period 1998 to 2011.

Table 1: Total healthcare expenditure in the UK, growth rates 1998-2011

United Kingdom Percentages
   
1998 6.7
1999 9.4
2000 7.0
2001 8.9
2002 9.4
   
2003 9.1
2004 8.3
2005 8.3
2006 7.6
2007 6.9
   
2008 7.4
2009 7.7
2010 0.9
2011 1.9
   
Annual average 7.1

Table source: Office for National Statistics

Table notes:

  1. Means are geometric

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Current and capital healthcare expenditure, 1997-2011

Current expenditure is recurrent expenditure on goods and services consumed within a year, necessary to sustain the production of healthcare services. Some small expenditure on items of equipment, below a threshold cost, is also included as current spending.

Capital expenditure is comprised of three components; Government healthcare capital transfers, government gross fixed capital formation and capital expenditure from private sector providers.

  • Capital transfers are classified by national accounts as ‘unrequited transfers where either the party making the transfer realises the funds involved by disposing of an asset (other than cash or inventories), relinquishing a financial claim (other than accounts receivable) or the party receiving the transfer is obliged to acquire an asset (other than cash) or both conditions are met’ (United Nations, 2008).

  • Gross fixed capital formation is measured by the total value of a producer’s acquisitions, less disposals of fixed assets during the accounting period, plus certain specified expenditure on services that add to the value of non-produced assets (United Nations, 2008).

  • Private sector capital expenditure is capital expenditure by private healthcare organisations.

For further definitions of national accounts see the System of National Accounts, 2008 (United Nations, 2008).

Figure 2 presents estimates of current and capital healthcare expenditure in the UK.

Figure 2: Current and capital healthcare expenditure, 1997-2011

United Kingdom

Figure 2: Current and capital healthcare expenditure, 1997-2011
Source: Office for National Statistics

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Current expenditure

Current expenditure accounted for £51.9 billion in 1997 rising to £137.5 billion in 2011, representing 94.6% and 96.3% of total healthcare expenditure respectively.

Current expenditure increased at an annual average rate of 7.2% between 1997 and 2011. An average annual growth rate of 8.0% was seen between 1997 and 2009 but expenditure slowed to an annual average growth rate of 2.4% between 2009 and 2011.

Capital expenditure

Capital expenditure increased from £3.0 billion in 1997 to its peak of £8.0 billion in 2008. It then fell by 34.2% to £5.2 billion between 2008 and 2011. The strongest capital expenditure growth was seen between 2004 and 2008, where expenditure rose from £4.0 billion to £8.0 billion respectively.

As a share of total healthcare expenditure capital expenditure increased relative to current expenditure from 5.4% in 1997 to 5.8% in 1999. It then fluctuated between 4.2% and 4.7% between 2000 and 2006, following which it increased to its peak of 6.2% in 2008. From 2009 to 2011 the share of total healthcare expenditure represented by capital fell from 5.6% to 3.7%.

Capital expenditure has increased at an annual average growth rate of 4.2% between 1997 and 2011. Annual average growth between 2009 and 2011 was negative at 18.2%.

Public and private healthcare expenditure, 1997-2011

Public expenditure on healthcare is made up of all governmental expenditure on healthcare including expenditure in prisons and defence. Research and development and education and training in healthcare are not included (See annex A).

Private expenditure is made up of three main components; private healthcare expenditure, private healthcare insurance claims and private healthcare capital. Private healthcare expenditure is based on final consumption expenditure on health by households and can be found in Blue Book 2012 (ONS, 2012b). Private healthcare expenditure also includes non-profit institutions serving households (NPISH) which is largely made up of charities.

Figure 3 is a breakdown of public and private expenditure on healthcare.

Figure 3: Public and private healthcare expenditure, 1997-2011

United Kingdom

Figure 3: Public and private healthcare expenditure, 1997-2011
Source: Office for National Statistics

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Public expenditure

Public expenditure on healthcare accounted for the largest proportion of total UK expenditure on healthcare, representing £44.0 billion (80.4%) of healthcare expenditure in 1997 rising to £118.3 billion (82.8%) in 2011.

In 2009, public healthcare expenditure grew by 9.7%: the strongest annual growth rate since 2004. Public expenditure on healthcare then slowed after 2009, with annual growth dropping to 2.0% for 2010 and 1.1% for 2011.

Public expenditure on healthcare increased at an annual average growth rate of 7.3% between 1997-2011. Average annual growth from 2009 to 2011 was 1.5%.

Private expenditure

Private expenditure on healthcare more than doubled between 1997 and 2008, rising from £10.8 billion to reach £24.4 billion in 2008. Private expenditure fell by 5.7% between 2008 and 2010 to £23.0 billion. However, there was a return to positive growth in private health expenditure in 2011, with an annual growth of 6.3%.

Private expenditure on healthcare increased at an average annual growth rate of 6.0% between 1997 and 2011. Annual average growth from 2009 to 2011 was 0.7%.

Total healthcare expenditure in the UK as a share of GDP, 1997-2011

The Organisation for Economic Co-operation and Development (2011b) suggest that over the past 50 years healthcare expenditure as a share of GDP has increased for most countries internationally. Total expenditure on healthcare in the UK as a share of GDP followed this trend.

Figure 4 shows the change in total expenditure on healthcare in the UK as a share of GDP over the period 1997-2011.

Figure 4: Total healthcare expenditure in the UK as a share of GDP, 1997-2011

Figure 4: Total healthcare expenditure in the UK as a share of GDP, 1997-2011
Source: Office for National Statistics

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Healthcare expenditure as a share of GDP in the UK rose steadily from 6.6% of GDP in 1997 to 9.9% in 2009, then fell to 9.4% in 2011. Years 2008 and 2009 saw the largest increases of 0.5 percentage points and 0.9 percentage points respectively.

In 2009 a fall in GDP while healthcare expenditure continued to rise increased the estimate of healthcare expenditure as a share of GDP. However, in 2010 and 2011 GDP expanded (in current price terms) at a higher rate than healthcare expenditure, when healthcare expenditure as a share of GDP declined to 9.6% and 9.4% respectively.

Revisions

Annual average growth rates for total healthcare expenditure remained unchanged to 1 decimal place at 7.5% in this article and the previous article (ONS 2012a) over the period 1997 to 2010.

Small revisions in this article were caused by data revisions in:

  • Underlying data for estimates of capital expenditure for the private healthcare sector

  • Estimates of private healthcare expenditure by households and private healthcare insurance

  • GDP estimates

Capital expenditure for the private healthcare sector

Underlying data for capital expenditure for the private healthcare sector has been revised as the healthcare industry has been redefined in a revision of the standard industrial classification (SIC03 has been revised to SIC07). This move reflects a requirement across Europe that has been incorporated into all statistical outputs at ONS.

There were also revisions made to the Blue Book methodology, for example improved deflation techniques. For more information on these changes please refer to ‘Blue Book 2011: Improvements to gross capital formation estimates’ (McClaren, 2011).

Private healthcare expenditure

The revisions in private healthcare expenditure were mainly due to improved data from financial corporations. This improvement was introduced as a Blue Book revision in the Blue Book 2012 publication (ONS 2012b).

GDP

Annual average growth of GDP in current prices remained unchanged at 4.4% from 1997 to 2010, however small GDP data revisions are evident compared to those in the previous article (ONS, 2012a).

The largest of these revisions was seen when GDP was revised up by 0.7 percentage points in 1997; down by 0.6 percentage points in 2002; up by 0.7 percentage points in 2005; up by 0.5 percentage points in 2008; and up by 0.6 percentage points in both 2009 and 2010.

Annex A

In accordance with OECD guidance for the calculation of healthcare expenditure the following steps have been carried out to produce the final healthcare expenditure figures.

Table A1: Components of healthcare expenditure calculation

Component   Adjustment   Source
         
Government current and capital expenditure on healthcare   Base series   Consistent with data submitted to Eurostat in order to meet requirements defined in the Maastricht Treaty (ONS, 2013) and published in Blue Book 2012 (ONS, 2012b) 
Household expenditure on private healthcare   Added   Published in Blue Book 2012 (ONS, 2012b)
Expenditure on private healthcare by NPISH (mainly charities)   Added   UK estimate provided by the Department of Health
Expenditure on healthcare in prisons   Added    UK estimate provided by the Department of Health
Expenditure on healthcare in the armed forces   Added   UK estimate provided by the Department of Health
Capital expenditure by private sector healthcare providers   Added   Estimated using data consistent with Blue Book 2012 (ONS, 2012b), and data submitted to Eurostat and published on the ONS website
Expenditure on healthcare and training of healthcare personnel by the National Health Service (NHS)   Deducted   UK estimate provided by the Department of Health
Expenditure on research and development in healthcare by the NHS   Deducted   UK estimate provided by the Department of Health
         
Government benefits paid to those providing home healthcare for their relatives   Added (no estimate available)   No source
Occupational healthcare    Added (no estimate available)   No source
Non-NHS expenditure on nursing care in nursing homes   Added (no estimate available)   No source

Table source: Office for Standards in Education

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The System of Health Accounts (SHA) definitions do not include education and training or research and development but they can be classified as ‘related expenditure’.

It should be noted that the new SHA guidance (OECD 2011) changes the focus of the main aggregate of healthcare expenditure to current expenditure only. Capital expenditure may be reported independently. Data is likely to have to comply to this standard by 2016 under a forthcoming Eurostat regulation.

The estimates of healthcare expenditure in the UK in this article are based on updated estimates from the Department of Health and the national accounts produced by ONS. The national accounts estimates are sent to the European Statistical Office, Eurostat, to meet the requirements of the Maastrict Treaty (ONS, 2013).

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  4. Expenditure on Healthcare in the UK 2011 Pre release access

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