Labour has been warned that a failure by the NHS to achieve ‘unprecedented’ productivity growth could leave a £13billion black hole in the public finances.

A new analysis by the Health Foundation piled pressure on NHS bosses to hit the Government’s target for a 2 per cent productivity boost across the health service.

The research found, if the NHS fails to meet this target, it would cause a ‘significant fiscal headache’ for Chancellor Rachel Reeves and Health Secretary Wes Streeting.

This would leave the Government having to choose between either cutting NHS services, or finding the money from elsewhere.

The Health Foundation’s analysis is part of the think tank’s response to Ms Reeves’ spending review, as she takes a line-by-line look at all Whitehall expenditure.

The Chancellor is already under huge pressure to find billions of pounds in spending cuts in order to meet her fiscal rules at her spring statement later this month.

She will then deliver the full results of her wider spending review in June, with her plans complicated by sluggish economic growth and increased defence demands.

The Health Foundation report noted how £183billion has been allocated for the NHS in England in 2025/26, with the spending review due to allocate funding up to 2028/29.

The think tank found, if the NHS achieved the Government’s target of 2 per cent productivity growth from 2021/22 to 2029/29, then the NHS revenue budget would need to rise to £198billion at the end of that period.

But if NHS productivity growth is only 1 per cent over the period – in line with the long-run average – then NHS funding would need to rise to £211billion by 2028/29.

As a result, lower productivity growth would add £13billion to the cost of the NHS in 2028/29.

The Health Foundation highlighted how NHS England has recently reported productivity improvements in the hospital sector.

But it warned sustained productivity improvements across the health service at or above 2 per cent have not been achieved in recent times.

Mr Streeting is bidding to tighten his control of the health service as he scrambles to boost NHS productivity.

Anita Charlesworth, co-chair of the Health Foundation’s NHS productivity commission, said: ‘The Government has set a huge task for the NHS to consistently deliver 2 per cent annual productivity growth.

‘Our new analysis underlines how important it is for the NHS to improve productivity and the potential funding shortfall that could emerge if it doesn’t.

‘If the NHS is unable to meet the Government’s target then this could create a significant fiscal headache for Government who will be faced with either having to find the money from elsewhere or scale back what the NHS is able to deliver.

‘Capital spending on new buildings, equipment and technology in the spending review will be key to help boost productivity over the long term but reform to create the conditions for boosting productivity is just as vital.

‘A key factor will be how quickly investment can be translated into service improvements. Much is now riding on the forthcoming 10-year health plan.

‘The Government’s ambitions to reduce waiting times, boost community-based services, increase the use of digital technology, and prevent ill-health are the right ones.

‘But achieving these ambitions will require significant investment in the NHS in the forthcoming spending review, accompanied by a relentless focus on boosting productivity.’

Matthew Taylor, the chief executive of the NHS Confederation, said the analysis showed the importance of boosting productivity and that NHS leaders were committed to achieving this.

‘Leaders know that in this difficult financial environment they have to get the most from existing capacity or they will not be able to manage the rising demand for care from an ageing population,’ he said.

‘But we know that the NHS is facing some very complex challenges which are impacting on performance and productivity, including being starved of capital investment.’

A health service representative said: ‘The NHS is relentlessly focused on getting better value for the taxpayer and is delivering 2.4 per cent improved acute productivity levels this financial year – above the Government target and more than double historic rates.

‘But there is more to do, and the NHS is targeting a 4 per cent overall improvement in productivity in 2025-2026 through further reductions in agency staff, shortening patient stays in hospital, and harnessing technology and data.’