News

NHS needs another £65bn by 2030-31, think tank says

BMJ 2015; 350 doi: https://doi.org/10.1136/bmj.h441 (Published 23 January 2015) Cite this as: BMJ 2015;350:h441
  1. Nigel Hawkes
  1. 1London

The NHS in England will need to find another £65bn (€85bn; $98bn) by 2030-31 to balance the books, even if it maintains its current, higher than usual productivity gains, a new analysis from the think tank the Health Foundation shows.1

The gap could be closed if productivity gains rose to 2-3% a year and governments undertook to increase funding by 1.5% a year in real terms from 2014-15 onwards. But that would demand productivity improvements at a rate two to three times the long run average and funding to increase at more than twice the rate achieved in the current parliament.

NHS England said in its Five Year Forward View published in October that a total of £8bn of additional money was needed to sustain the existing pattern of services up to 2020-21, and the chancellor of the exchequer’s autumn statement promised the first £2bn of this in 2015-16.

The Health Foundation also calls for the incoming government after the next election to establish and resource a “transformation fund” to make changes in the pattern of services and to commit to further annual funding increases beyond 2015-16.

Anita Charlesworth, the foundation’s chief economist, said that NHS England’s £8bn figure could be achieved only by big improvements in productivity—2% a year up to 2017-18 and 3% a year thereafter—and furthermore that these improvements required a change in care patterns that would need funding not included in the £8bn. “The transformation fund that we and the King’s Fund are calling for is in addition to the £8bn,” she made clear. “We need to watch out for claims that the transformation can come from the £8bn.”

She said that the projections were “not unaffordable or unsustainable” and that most similar countries spent more than the United Kingdom on healthcare. But a report on international comparisons of spending published by the foundation shows that, because the UK has a smaller private healthcare sector than almost any other European country, it is very close to the average for the EU-15 countries (the 15 countries in the European Union before the 2004 accession of several more) in terms of public spending on health. At 7.8% of gross domestic product its spending is higher than that of Sweden, Italy, Spain, Finland, Greece, Portugal, Ireland, and Luxembourg but lower than Belgium, Austria, Germany, France, Denmark, and the Netherlands.

Charlesworth said that the hoped-for improvements in productivity were “incredibly ambitious, but given the backdrop it must be beholden on the NHS to really try.” NHS England’s productivity projections were based on data showing that over the past five years productivity had risen by 1.5% but with significant variation between trusts. If all hospital trusts could do as well as the best had done, the necessary productivity gains could be achieved, but that implied the elimination of variation, which tended to be endemic in the system, she said.

The detailed reports published by the foundation (www.health.org.uk/publications/funding-overview-nhs-finances) include one on current spending in England, which shows how severe the squeeze has been on primary care. Spending on GP services fell at an average annual rate of 1.3% in real terms from 2009-10 to 2013-14, while funding for secondary care rose by an average rate of 2%, “despite government ambitions to move care out of hospital,” the report remarks. Community health services have risen faster still, at an annual rate of 4.8%, to reach £10.1bn. Funding for general practices, by comparison, was £8.26bn.

Earnings have remained flat since 2009-10, one reason for above-average productivity gains. But Charlesworth said that pay pressure was growing and posed the biggest risk over the next parliament. The recent rapid growth in payment for temporary staff was an indication of this, because it implied that people had chosen to become agency staff to increase their pay.

The raw figures showed how well the NHS had performed over the past five years, she said. Services had been maintained on a relatively small increase in resources, amounting to 0.6% a year, in spite of the population increasing by 1.65 million and the very elderly population by 10%. “The NHS has had to run very fast to stand still,” she said.

Notes

Cite this as: BMJ 2015;350:h441

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