Education And Debate

Blair's billions: where will he find the money for the NHS?

BMJ 2000; 320 doi: https://doi.org/10.1136/bmj.320.7238.865 (Published 25 March 2000) Cite this as: BMJ 2000;320:865
  1. John Appleby (j.appleby@kehf.org.uk), director, Health Systems Programmea,
  2. Sean Boyle, research associateb
  1. a King's Fund, 11–13 Cavendish Square, London W1M 0AN
  2. b Department of Operational Research, London School of Economics, London WC2A 2AE
  1. Correspondence to: John Appleby

    This paper was first posted on www.bmj.com on 13 March 2000

    Government ministers have often committed to increased levels of NHS expenditure—but conditional on real growth in the economy as a whole. The prime minister's new spending pledge—to raise total (public and private) healthcare spending to match the European Union (EU) average as a proportion of gross domestic product by 2006—is largely independent of the performance of the economy.1 No matter how well the economy does, health spending must grow much faster to meet the pledged target.

    Since this pledge, many have queried the arithmetic rigour of Tony Blair's calculations and the financial feasibility of hitting the target he has set, 24 It now seems that the government's interpretation of the EU average (8.0%) is wrong and that a more accurate figure is 9.0%. If this new figure is accepted, what are the options open to thegovernment in order to fulfil Blair's pledge?

    Summary points

    The prime minister has pledged to raise total UK healthcare spending by 2006 to match the European Union (EU) average as a proportion of gross domestic product (9.0% in 1997, not 8% as indicated by the prime minister)

    All other things being equal, NHS spending would need to increase in real terms by 9.7% a year over five years (by £29.2bn in total) to reach the 9% target

    There are three ways to increase healthcare expenditure: increased government spending, shifts in public spending towards the NHS, and increased private healthcare spending

    Increasing taxes (such as 10p on the basic income tax rate or increasing VAT to 27%) or borrowing could fund the necessary increased spend but would be politically and economically unacceptable and could substantially increase government spending as a proportion of gross domestic product (from 39.7% to over 56%)

    At one extreme, money …

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