The NHS is facing a £38bn shortfall in the funding needed to significantly improve its services by the end of next parliament, according to new research from the Health Foundation.
The analysis — conducted by the organisation’s REAL Centre — suggested that to achieve sustained improvement over the next decade, an average real-terms funding growth of 3.8% would be needed.
This includes a slightly elevated annual growth of 4.5% over the first five years to enable Covid-19 recovery and service modernisation, ultimately totalling an extra £46bn of funding by 2029/30.
This requires the health budget to swell significantly more than if it grew in line with the Office for Budget’s Responsibility’s latest fiscal outlook — 0.8%.
This would see the Department of Health and Social Care budget increase to £197bn by the end of the decade (or an extra £8bn), which is £38bn short of the Health Foundation’s scenario of sustained improvement that would tackle the elective backlog in 10 years and prioritise spending in primary, mental health, and community care.
It is also predicated on productivity growth in line with the highest 10-year average seen in the NHS which is 0.9%, as well as broader efficiencies like more moderate growth in A&E attendance resulting from a stronger primary care sector.
It may be important to note that previous work from the Health Foundation has estimated the historic long-term average funding growths and found that, in England, that was around 3.8% from 1979/80 to 2019/20 — the highest being the ‘New Labour’ government from 1997 onwards with 6.7% and the coalition period marred by austerity between 2010/11 to 2014/15 the lowest at 1.1%.
“The health service is in crisis and all the main political parties have said they want to fix it — yet the funding they have so far promised falls well short of the level needed to make improvements,” said Anita Charlesworth, director at the Health Foundation’s REAL Centre.
She added: “Politicians need to be honest with the public about the scale of the challenge the NHS faces and the reality that an NHS fit for the future needs long-term sustainable investment.
“Honesty about this has so far been conspicuously lacking from the general election debate, with both the main parties unwilling to spell out the difficult choices on public spending and taxation that will confront the next government.”
The scenario set out by the Health Foundation is not “overly ambitious” according to Charlesworth and is broadly aligned with political promises and public expectations.
Responding to the news, Dr Layla McCay, policy director at the NHS Confederation, said: “This analysis by the Health Foundation is a stark warning for the next government that trying to achieve the NHS improvement that they aspire to deliver with current investment plans could lead to a potential £38bn health service shortfall in five years' time.
“Put simply, if a new government is going fulfil campaign promises to tackle NHS backlogs and improve performance then it will have to invest further.”
The Nuffield Trust has already described the NHS spending plans from the Liberal Democrats, Labour Party, and Conservative Party as not credible, with manifesto plans implying growth in the regions of 1.5%, 1.1% and 0.9% respectively.
“This would mark an unprecedented slowdown in NHS finances, and it is inconceivable that it would accompany the dramatic recovery all are promising,” said the Nuffield Trust’s CEO, Thea Stein.
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