NHS annual budget – how is the health service funded and what did Theresa May say about a Brexit dividend?

THERESA May's claims of a £23billion "birthday present" for the NHS has prompted a flurry of questions about where the money will be coming from.

Here's what we know about the so-called Brexit dividend and the facts behind the funding.

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What did Theresa May say about a Brexit dividend?

In June 2018 the Prime Minister promised the NHS an extra £23billion a year by 2023 as a 70th "birthday present".

Theresa May said the extra £384million a week would be funded partly by a "Brexit dividend" - though she hinted at tax rises.

May has come under pressure to explain how exactly the money would be funded after telling the BBC: "As a country we will be contributing more, a bit more, but also we will have that sum of money that is available from the European Union."

That translates into families having to pay more tax for a better NHS.  

The hefty contribution would mean the £114billion budget would rise by an average of 3.4 per cent annually.

But this is still less than the 3.7 per cent average rise the NHS has had since 1948 - and has attracted cross-party scepticism.

Labour said the government had failed to fund the NHS properly and was relying on a "hypothetical" windfall.

While Tory MP and Commons Health and Social Care Committee chairwoman Sarah Wollaston described the idea of a Brexit dividend as "tosh".

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How is the National Health Service funded?

The annual NHS budget - now around £114billion a year - is mainly funded by general taxation and National Insurance (NI) contributions.

While it's described as "free at the point of use", users have been required since the early 1950s to contribute towards some costs, such as prescriptions and dental treatment.

However, income from patient fees for such services generated just £1.3billion in 2015/2016, amounting to only 1.1 per cent of the Department of Health budget.

This is partly because 90 per cent of all patients getting prescription items were dispensed free of charge.

An even smaller amount of income is generated by the NHS through, for example, parking charges and land sales.

Funding for the NHS has increased year on year by an average of 3.7 per cent since it was founded in 1948.

The funding is set annually by central government through the Spending Review process.

Where NI or patient charges raise less funding for the NHS than estimated, funding from general taxation is used to ensure the level stays the same as the initial allocation.

In 2013, NHS England said it faced a funding gap of £30billion by the end of the decade, even if government spending kept up in line with inflation.

They said the money was required to keep up with delivering care to a growing and ageing population.

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