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Following the money: from the state to services

How does the money flow in the NHS? We explore how money from taxpayers travels from government to care for patients.
© The King’s Fund
The NHS is largely funded through taxes. In this step, we explore how money travels from government to care for patients.
Diagram illustrating the funding flow from Parliament to NHS England
Adapted from National Audit Office – Departmental overview: Department of Health and Social Care 2019.
The government decides the amount of money the NHS receives, and does top-level priority setting. The Department of Health and Social Care passes most of the money on to NHS England which oversees the commissioning (in other words, the planning and buying) of NHS services.
The rest of the money is split up among other organisations such as Health Education England who oversee the training of NHS staff, and Public Health England who aim to make the public healthier by addressing issues such as obesity and smoking. In August, it was announced that Public Health England will be abolished however it will remain in place until March 2021.
NHS England plans and buys some services itself. This includes specialised services (like rare cancers and genetic disorders) and primary care services (like GPs, dentists and opticians), which are the first point of contact for patients. However, in most parts of England, NHS England has now devolved the commissioning of GP services to clinical commissioning groups (CCGs).
NHS England passes most of its money on to a little under 200 of these CCGs across England. The amount each CCG receives is determined not only by the number of people in their local area, but also by factors like their age and level of deprivation as these are linked to how much health care they need.
CCGs assess the health needs of their local population to make decisions about the health and care services they need. They then buy as many of those services as their budget allows.
CCGs buy services from lots of different organisations. This includes community services, which deliver care like health visitors, physiotherapy and school nursing to people in community settings (e.g. at school and home). CCGs also buy services from hospitals, GPs and other organisations that provide NHS care such as charities and the private sector.
© The King’s Fund
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The NHS Explained: How the Health System in England Really Works

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