Comment

13.06.18

NHS long-term funding: what's in store?

Source: NHE May/June 2018

Anita Charlesworth, director of research and economics at the Health Foundation, discusses Theresa May’s recent announcements on long-term NHS funding and considers the options available.

The prime minister’s appearance in front  of the Liaison Committee of the House of Commons last month has caused quite a stir in the health world and no doubt a fair amount of angst in the Treasury. This is not the first time a prime minister has made large, blank cheque commitments for NHS funding. In 2000, Tony Blair famously told Breakfast with Frost that he’d bring health spending up to the EU average. In the decade that followed, health spending increased by 7% a year in real terms, waiting times fell from 18 months to 18 weeks, and the NHS employed 70,000 more nurses. In keeping with May’s very different political style, her statement was less bold and clear-cut, but her promise to “provide a multi-year funding settlement” in conjunction with NHS leaders has clearly raised expectations.

The political case for extra NHS funding is clear: Ipsos MORI’s monthly polling reports that the NHS and Brexit are tied as the biggest issues facing Britain, with 54% citing the health service as a big concern. Notably, the NHS is a worry for Conservative as well as Labour supporters.

While the world looks very different today compared to 2000, some things are the same. Most importantly, the pressures on the NHS continue to grow at a much faster rate than either inflation or economic growth. The Office for Budget Responsibility (OBR) estimates that, over the next decade, demand and cost pressures on the NHS will increase by more than 4% a year in real terms. The picture is the same across the EU and developed economies, no matter how their healthcare system is funded. Populations are ageing, chronic health problems are increasing, technological advances mean an ever-expanding array of treatments, and more people are surviving the historic big killers of cancer, stroke and heart disease. Modern medicine’s huge successes in improving life expectancy have a price tag.

But these triumphs cause a massive Treasury headache. If the government announces a long-term funding settlement that falls short of what the OBR estimates is needed, something will have to give and the government will have to explain this to the public. This decade has already seen the lowest funding increase of any decade in NHS history. To try to protect  frontline  services, the government has held down pay and had a big push to improve productivity. The NHS is more efficient today than it was in 2010, but it can’t work miracles and continue indefinitely to outperform productivity growth across the economy as a whole. The health service is struggling with staff shortages and rising emergency demand. Just as there is no magic money tree, there is no magic productivity tree.

One other lesson from this decade of austerity is that funding the NHS while cutting social care is bad for patients and bad for the taxpayer. The distinction between a health need and a social care need is increasingly tenuous with an ageing population, and a credible long-term funding plan must cover health and social care. To do that, the government will need to bite the bullet with this summer’s social care green paper and make firm decisions about the future of this Cinderella service.

But the biggest challenge will be how to pay for a long-term settlement for the NHS and social care. The sums of money are huge – in England alone, the two services account for almost £1 in every £5 of public spending. Providing more for health and care at the expense of other public services, many of which, like education and housing, impact on people’s health, would be a false economy. The level of funding growth the NHS and care system need cannot be found within current government spending plans. Plan B might be to borrow more. In his Spring Statement, the chancellor was ‘Tiggerish,’ but it is worth remembering that even with a more positive forecast the UK’s debt to GDP ratio is over 80%, and taxes aren’t expected to match spending until well into the middle of the next decade.

While the funding commitment is laudable and much needed, long-term funding growth for the NHS and care system at the level required will almost certainly require  a commitment to increase tax. This is how the Labour government met Tony Blair’s pledge almost 20 years ago. Gordon Brown increased national insurance by 1p in the pound and earmarked the money raised for the NHS. This was a remarkably popular tax increase. A similar increase today would raise about £11bn, which is a lot of money, but only about half the £20bn-plus funding gap the NHS alone is facing by the end of the current parliament. Is the government warming up the public for a repeat of that history and hoping for a similarly popular response?

 

Enjoying NHE? Subscribe here to receive our weekly news updates or click here to receive a copy of the magazine!

Comments

There are no comments. Why not be the first?

Add your comment

 

national health executive tv

more videos >

latest healthcare news

MS Society announces 13 new tech projects worth £1.3m

06/12/2019MS Society announces 13 new tech projects worth £1.3m

Multiple Sclerosis Society (MS Society) announced this week (Dec 3) that they are committed to raising £1.3m to fund 13 new research projec... more >
Nuffield Trust: One in four hospital staff born outside of the UK

06/12/2019Nuffield Trust: One in four hospital staff born outside of the UK

New statistics analysed by Nuffield Health show that people born outside the UK make up for almost a quarter of all staff working in hospitals an... more >
Moulding The Future With 3D Printing

06/12/2019Moulding The Future With 3D Printing

Source : NHE Nov/Dec   Professor Peter Marsden, head of Medical Physics & Biomedical Engineering, UCLH 3D printing i... more >

681 149x260 NHE Subscribe button

the scalpel's daily blog

Caregivers are looking for meaningful work

03/12/2019Caregivers are looking for meaningful work

Ergotron EMEA discusses how they can support organisations to make caregivers’ work meaningful and promote better wellbeing. Caregivers always focus on sharing their dedication to their patients. However, this choice is unfortunately not always up to expectations: the lack of staff, the demanding workload, the system’s digitalization lead to less time spent at the patients’ bedsides. In addition, these constraints... more >
read more blog posts from 'the scalpel' >

interviews

Matt Hancock says GP recruitment is on the rise to support ‘bedrock of the NHS’

24/10/2019Matt Hancock says GP recruitment is on the rise to support ‘bedrock of the NHS’

Today, speaking at the Royal College of General Practitioners (RCGP) annual conference, Matt Hancock highlighted what he believes to be the three... more >
NHS dreams come true for Teesside domestic

17/09/2019NHS dreams come true for Teesside domestic

Over 20 years ago, a Teesside hospital cleaner put down her mop and took steps towards her midwifery dreams. Lisa Payne has been delivering ... more >
How can winter pressures be dealt with? Introduce a National Social Care Service, RCP president suggests

24/10/2018How can winter pressures be dealt with? Introduce a National Social Care Service, RCP president suggests

A dedicated national social care service could be a potential solution to surging demand burdening acute health providers over the winter months,... more >
RCP president on new Liverpool college building: ‘This will be a hub for clinicians in the north’

24/10/2018RCP president on new Liverpool college building: ‘This will be a hub for clinicians in the north’

The president of the Royal College of Physicians (RCP) has told NHE that the college’s new headquarters based in Liverpool will become a hu... more >

last word

Haseeb Ahmad: ‘We all have a role to play in getting innovations quicker’

Haseeb Ahmad: ‘We all have a role to play in getting innovations quicker’

Haseeb Ahmad, president of the Association of the British Pharmaceutical Industry (ABPI), sits down with National Health Executive as part of our Last Word Q&A series. Would you talk us th... more > more last word articles >

editor's comment

25/09/2017A hotbed of innovation

This edition of NHE comes hot on the heels of this year’s NHS Expo which, once again, proved to be a huge success at Manchester Central. A number of announcements were made during the event, with the health secretary naming the second wave of NHS digital pioneers, or ‘fast followers’, which follow the initial global digital e... read more >

health service focus

Moulding The Future With 3D Printing

06/12/2019Moulding The Future With 3D Printing

Source : NHE Nov/Dec   Profess... more >
Six Ways Technology Is Benefiting The Older Generation

05/12/2019Six Ways Technology Is Benefiting The Older Generation

Source: NHE Nov/Dec   Accordin... more >