NHS leaders are calling for change after a new report from the Institute for Fiscal Studies (IFS) revealed that real-terms health spending has risen less quickly than originally planned – despite a pandemic, record waiting lists, and growing ill health.
At the 2019 general election, the Conservative Party implied that, over the course of this parliament, England’s day-to-day health budget would increase by 3.3% per year once inflation had been accounted for.
The government’s latest plans imply average growth of 2.7% per year – something which, in the IFS’ words, breaks the habit of a lifetime as across the last 40 years the NHS budget has almost always grown more quickly than planned.
Responding to the analysis, NHS Providers’ deputy CEO, Saffron Cordery, said: “The NHS has been through its toughest financial year ever as budgets and services are stretched to the limit in the face of mounting demand and pressure.
“We can’t go on like this.”
Furthermore, the IFS says that, because the UK’s economic performance has been so poor, health spending as a share of GDP has grown quicker than usual – i.e., as a result of such little national income growth, more has had to be taken to secure below-average rates of health budget growth.
The IFS says that the latest plans imply no real-terms growth for the NHS England budget between 2023/24 and 2024/25, with no plan yet set out for anything beyond that timeframe.
Keeping health spend flat in real-terms is unlikely to bring long-term stability given current pressures, according to the IFS, and the last time the health budget did not grow for two consecutive years was in the 1950s – barring recent years when exceptional pandemic funding has been withdrawn.
Author of the report and IFS research economist, Max Warner, said: “Whichever party takes office after the next election won’t have long to set out departmental budgets for the next fiscal year, and the choice of how much to give to the Department of Health and Social Care – which now represents more than 40% of total day-to-day departmental spending – will effectively dominate everything else.
“Spending on the health service will – absent a big reduction in the role of the NHS, or further deterioration in quality – have to rise in real terms to meet the pressures the service faces and deliver the workforce plan which both the main UK parties have signed up to.”
The NHS Confederation’s CEO, Matthew Taylor, added: “This analysis will be of no shock to health leaders who were very aware that the additional £2.5 billion of revenue funding announced in the Spring Budget was at best flat in real terms against a backdrop of significant financial deficits and immense pressure on services.
“But the fact that health spending has not risen as quickly as planned five years ago leaves the NHS with a mountain to climb in order to improve performance and tackle lengthy care backlogs with the threat of further industrial action looming over it as well.”
NHS leaders are calling for a more long-term approach to healthcare planning and investment – rather than the current stop-start nature.
“The next government needs to work with the 'next generation' NHS to create the picture of health we all want to see,” added Saffron.
The full IFS report, The past and future of UK health spending, is available here. It was funded by the abrdn Financial Fairness Trust and the Nuffield Foundation.
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