Hospital Dr News

“NHS and social care need long term funding solution with substantial tax rises”

With the older population growing rapidly, along with the numbers suffering chronic health problems, and a growing pay and drugs bill, demands on the health service will only continue to grow.

Spending on the NHS needs to increase by an average of 3.3% each year for the next 15 years just to keep providers delivering the same levels of service as it does today.

This is the conclusion of a new analysis, which also says health spending has to rise from 7.3% of national income today to 8.9% of national income by 2033–34.

The Institute for Fiscal Studies and Health Foundation analysis shows how the increasing pressures on social care also demand a significant funding uplift.

If the Government continues with the current funding arrangements, adult social care spending is likely to have to rise by 3.9% a year over the next 15 years.

This would represent an extra 0.4% of national income relative to today.

Put these figures together and health and social care spending is likely to have to rise by 2–3% of national income over the next 15 years.

If the Government chooses to meet these pressures, taxes will have to rise.

Funding these projected increases in health spending through the tax system would require taxes to rise by between 1.6 and 2.6% of GDP – that’s between £34 billion and £56 billion in present-day terms, equivalent to between £1,200 and £2,000 per household (out of projected net income growth of about £8,500 per household).

Paul Johnson, director of IFS and an author of the report, said: “We are finally coming face to face with one of the biggest choices in a generation. If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years.

“This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more in tax.

“But it is a choice: higher taxes and a health and social care system which meets our expectations and improves over time, or taxes at current levels and a more constrained health service delivering less than we have become accustomed to.”

Health spending has risen by an average 3.7% a year in real terms since the NHS was founded 70 years ago. At 1.4% a year, spending growth over the last eight years has been slower than at any time in the NHS’s history.

Once you take account of the increased size and age of the population, there has been barely any growth in spending since 2010. Age-adjusted per-capita spending has risen by just 0.1% per annum since 2009–10.

Anita Charlesworth, director of research and economics at the Health Foundation and an author of the report, said: “After eight years of austerity, the health service will need a sustained injection of funding just to get back on an even keel, let alone to modernise.

“The Prime Minister has committed to a long-term funding settlement for the NHS. Maintaining current provision and dealing with the backlog of funding problems will require NHS funding to grow by around 4% a year for the next five years.

“Meaningful progress on waiting times, staffing shortages and mental health will need growth of around 5% a year over that period. Much less than growth of 4% a year and the NHS will be able to do little more than tread water. It will struggle to fulfil Nye Bevan’s vision of 70 years ago”.

Where the money goes:

  • Over the last 20 years, there has been a 70% increase in the number of hospital doctors per 1,000 people. Even so, the UK has fewer practising doctors per 1,000 people than any other EU15 country.
  • The number of GPs per 1,000 population has fallen since 2010 along with spending on primary care.
  • The NHS is a much better service on nearly all measures than it was 20 years ago with much lower waiting times and improved survival following cancer, heart attacks and stroke. But public satisfaction is beginning to fall and performance against targets is beginning to dip significantly.
  • The NHS is more productive now than it was in the past, with significant increases in productivity in the last eight years. Length of stay in hospital is much shorter, more patients are treated as day cases, and advances in surgery and anaesthesiology mean less invasive operations and faster recovery.

Future pressures: 

  • Over the next 15 years, the population over age 65 is likely to increase by 4.4 million, with the number over 85 rising by 1.3 million. This demographic change alone will increase costs significantly.
  • The numbers of people with chronic diseases, and especially the numbers with multiple chronic diseases, are also growing rapidly. Over the next 15 years, spending in acute hospitals to treat people with chronic disease is expected to more than double.
  • Spending on hospital drugs has been rising by more than 5% a year in recent years – this is likely to continue.
  • With pay needing to rise with earnings in the rest of the economy, and assuming productivity growth at its long-run average, these pressures between them mean that spending will need to grow at about 3.3% a year on average for the next 15 years just to maintain current service levels. That growth is likely to need to be front-loaded to deal with the current backlog of funding problems.
  • Faster growth, of perhaps 4% a year, will be required if targets are to be met, capital spending is to rise, and services such as mental health services are to be improved.
  • Careful long-term planning, especially of the workforce, will be required if such increases are to happen effectively. The NHS could need around 179,000 more staff over the next five years if services are to meet demand pressures. This is over 100,000 more staff than the NHS is currently expecting to be able to recruit and retain over that period.
Bookmark and Share

Post a Comment

Enter this security code

Submit Comment for Moderation