Priorities for the Senedd's Economy, Energy and Connectivity Committee

The Welsh NHS Confederation is the only membership body representing all the organisations making up the NHS in Wales: the seven local health boards, three NHS trusts (Velindre University NHS Trust, Welsh Ambulance Services University NHS Trust and Public Health Wales NHS Trust) and two special health authorities (Digital Health and Care Wales and Health Education and Improvement Wales). We also host NHS Wales Employers and are part of the NHS Alliance. 

As the largest recipient of public funding in Wales, it is vital that the NHS is held accountable, and Senedd inquiries play an important role in supporting that scrutiny. The Welsh NHS Confederation has built a strong relationship with the Clerking team from a range of Senedd Committees. These relationships have been very beneficial for NHS organisations and also for previous Committee members to hear directly from NHS representatives. We hope this relationship continues during the Seventh Senedd term so that Committees can draw on NHS expertise and better understand the NHS’s contribution to economic development, research, transport and connectivity.

The Welsh NHS Confederation recommends that the Committee prioritises two areas during the Seventh Senedd: first, the role of the NHS and other anchor institutions in strengthening the foundational economy; and second, the impact of poor health on economic inactivity and wider economic growth. Together, these priorities would support scrutiny of how public services contribute to Wales’ economic resilience, productivity and long-term wellbeing.

What is your first priority for the Committee to consider as part of its work? (Priority 1)

We recommend that the Committee undertakes an inquiry into the foundational economy and the contribution that anchor institutions, including the NHS, make to local and national economies. The inquiry should consider how previous Welsh Government programmes, including the Foundational Economy in Health and Social Services programme, were implemented, alongside the strategic direction set by the current Welsh Government in its Programme for Government. 

Please explain why this should be a priority for the Committee

This priority would allow the Committee to examine how the NHS’s role as an employer, purchaser, estate holder and research partner can be used more deliberately to support local economic resilience, social value and inclusive growth across Wales.

An anchor institution is an organisation that, alongside its core function, makes a significant strategic contribution to the local economy. As highlighted in our previous briefing, Health, wealth and wellbeing: The NHS' role in economic and social recovery, NHS organisations are anchor institutions because they are rooted in place and their long-term sustainability is closely tied to population wellbeing. They are among the largest employers in local areas, major purchasers of goods and services, and significant holders and developers of capital estates. 

The socio-economic impact of NHS Wales therefore extends beyond its immediate economic scale to include employment stability, regional wages, occupational structure and economic activity rates. Collectively, these factors support Welsh productivity and the wider economy, with organisations and businesses benefiting from healthier and more productive workforces. In many ways, health can be seen as the ‘new wealth’.

The NHS can make a difference to local people by:

•    Directly employing people to quality and stable work with above average wages:
The NHS is Wales’ biggest employer, currently employing over 100,000 people, directly supporting around 6% of Welsh employment, making it a critical source of economic opportunity for local people. This employment is linked with around £4bn of salaries and wages which, through living and working in areas of Wales, provides investment in local communities and local people.

•    Purchasing goods and services locally for social benefits:
Almost 14,000 firms and organisations supply NHS Wales with goods and services, with over 6,500 of these based in Wales. The goods and services purchased by the NHS in Wales are wide ranging, from drugs and dressings, medical and surgical equipment, as well as items such as food, utilities and other supplies and services. Cardiff University research estimates that NHS Wales supports almost 145,400 jobs and £5.4bn of gross value added (GVA), accounting for 11% of total Welsh employment and 9% of Welsh GVA. This excludes important impacts via NHS Wales’ capital spending programme. The recently published UK Government policy note, PPN 026: The Social Value Model, highlights that including social value outcomes in procurement can help suppliers deliver good quality jobs, skills and opportunities in the communities that need them most, while supporting growth and productivity across the country.

•    Using buildings and spaces to support communities:
The NHS estate contributes to Wales’ GVA and is a significant source of untapped social and economic value. The NHS estate is both large and varied, reflecting the wide range of services provided by the health system, but it is of variable quality. NHS organisations often have significant physical assets that can be leveraged for community benefit. As highlighted within the Health Foundation report, “Building healthier communities: the role of the NHS as an anchor institution”, communities are more resilient when people are connected through social networks, and opening NHS buildings and land for community use, or supporting the development of green spaces, can provide vital opportunities for social interaction.

•    The role of the NHS in life science research and innovation:
The NHS supports employment in high value sectors such as life sciences, pharmaceuticals and medical technologies. It is also a major driver of health-related research, in partnership with universities, and has a role in inward economic investment to Wales. A KPMG report for Health and Care Research Wales, Impact and value of research supported by NHS organisations in Wales, evidenced that in 2018/19 an estimated total of £93 million in GVA and approximately 1,600 full time equivalent jobs were supported by NHS Wales health research activity. Research provides benefits to clinicians, the population of Wales, and internationally. Clinical, research and operational staff trained in Wales are used worldwide. Selected firms in Welsh life sciences undertake research, development and manufacturing in the region, making use of highly skilled workers, while also benefiting from the presence of universities and medical staff within the NHS itself.

A well-resourced NHS is vital to the functioning of the economy, including by supporting people to enter work and remain in work. Research by the NHS Confederation demonstrates that for every £1 invested in the NHS, the economy receives £4 back in gross value added (GVA). Furthermore, every £1 spent on primary and community care could increase economic output by £14. These findings underline why the Committee should consider the NHS not only as a public service, but as a driver of economic participation and productivity.

 
What is your second priority for the Committee to consider as part of its work? (Priority 2)

We recommend that the Committee undertakes an inquiry to consider the impact that poor health has on the economy.

Please explain why this should be a priority for the Committee

There is clear evidence that poor health negatively affects the economy. Reducing the number of people who are out of work because of health problems would support economic growth, improve prosperity and strengthen public service sustainability in Wales.

The recent UK Government's Keep Britain Working Review evidenced that over one in five working-age adults are out of the workforce, with ill health now the biggest driver of economic inactivity. This is increasing pressure on the NHS, as more people leave work due to health conditions. The cost to the state of economic inactivity due to ill health is estimated at £212 billion per year, including NHS costs of £2 billion annually.

The NHS Alliance's (previously the NHS Confederation) report evidenced that, since 2020 economic inactivity in the UK has risen by 900,000, with 85% of the increase those on long-term sick. The NHS Alliance analysis with Boston Consulting Group found reintegrating half to three-quarters of these people could deliver a £109-177 billion boost to the UK’s GDP (2-3 per cent in 2029) and unlock £35-57 billion in fiscal revenue over the next five years.

Much work is taking place across the UK to address the impact of poor health on the economy. In England, pilots are being launched to offer support to those requesting fit notes, with work and health coaches taking time to work with both patients and their employers. This builds on existing programmes, such as WorkWell, Connect to Work and Health and Growth Accelerators, which offer varying types of holistic support to disabled people and people with health conditions.

Taken together, this evidence, and the work taking place in England and other parts of the UK, highlights the importance of examining how prevention, poor health, economic inactivity and wider economic growth interact in Wales. An inquiry by the Committee would provide an opportunity to scrutinise the Welsh Government’s current strategic direction in this area and identify how policy can better support people to remain in, or return to, work. This should therefore be a priority for the Committee.

As highlighted above, the Welsh NHS Confederation has built strong relationships with Clerking teams across Senedd Committees, and we hope these relationships continue during the Seventh Senedd. If the Economy, Energy and Connectivity Committee would like to hear from NHS representatives as part of any future inquiry, we would be pleased to help facilitate this.