NHS needs up to 5% a year to improve services

The report from the Institute for Fiscal Studies, the Health Foundation and NHS Confederation said demand on health services will continue to grow as the population ages and the numbers suffering from chronic conditions increase. Rising pay and drugs costs will add to the financial pressures facing the service.

Overall, the report said health spending as a proportion of national income should rise from 7.3% to 8.9% by 2033/34 to maintain current service levels. And, though the average 3.3% increase in funding looked ‘formidable’, it was below the long-term average and would come after eight years of the tightest spending settlements in NHS history.

Modest improvements in NHS services would require an average of 4% a year in the medium term, coupled with 5% rises in the short-term. This would allow waiting times targets to be met and tackle underfunding in mental health services and would take spending as a proportion of national income to 9.9% by 2033/34.

Maintaining the status quo in adult social care would require increases of 3.9% a year for the next 15 years (an extra 0.4% of national income).

Unlike the usual top-down method of forecasting spending need, the report uses bottom-up modelling of supply and demand using detailed models of demographic change, population health and cost data.

The report, Securing the future: funding health and social care to the 2030s, said tax would almost certainly have to rise to fund the increased spending on health and care. Tax rises could vary between 1.6% and 2.6% of gross domestic product – equivalent to £1,200 to £2,000 per household (with household income projected to grow by about £8,500).

Anita Charlesworth (pictured), Health Foundation director of research and economics and an author of the report, said the prime minister had committed to a long-term funding settlement for the NHS.

But she added: ‘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. 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.’

Saffron Cordery, deputy chief executive of NHS Providers, said trusts were clear that two requirements were needed from a long-term funding settlement.
‘First, after eight years of the longest and deepest financial squeeze in NHS history, there will need to be substantial increased spending to fill in the gaps that have emerged, for example on buildings and infrastructure, and to recover lost ground on waiting times. Only then can we look to develop and extend the ambitions of a service which is currently very overstretched.’

She added: ‘Second, trusts want to improve standards of care as part of what we hope will be an exciting vision of the NHS for the future, but that vision must be rooted in reality. We must not repeat past mistakes of creating national plans with unrealistic expectations that cannot be delivered.’