In this briefing we set out our analysis of the funding issues facing the NHS. The briefing prese...
What are the funding projections for the English NHS over the coming years?
This overview accompanies our briefing NHS finances: the challenge all political parties need to face.
Each year, the English NHS faces additional spending pressures of around 4% in real terms. These are the result of a growing and ageing population, the increasing prevalence of long-term conditions, higher expectations of care and rises in the relative prices of health care inputs (principally of staffing).
These pressures will result in a potential funding gap of £30bn by 2020/21 unless additional funding is made available or substantial productivity savings are made.
NHS England suggests that this potential £30bn funding gap can be reduced through further productivity savings as follows:
- productivitygrowth of 0.8% a year could bring the gap down to £21bn
- productivity growth of 1.5% a year could bring it down to £16bn
- productivity growth of 2.0%–3.0% a year could bring it down to £8bn.
The funding gap for 2020/21 will be closed if public funding for health rises by 1.5% a year in real terms and the NHS achieves a rate of productivity growth of 2–3% a year. However, this is substantially higher than the recent rate of acute productivity growth.
The period between 2010/11 and 2020/21 will be the most financially austere decade in NHS history, even if funding rises by 1.5% a year in real terms from 2014/15 onwards, in line with NHS England’s Five year forward view. This would result in an average increase of 1.4% a year in real terms over the decade from 2010/11 to 2020/21. During the last 50 years, the lowest average funding increase over a ten-year period has been 2.0% a year, between 1975/76 and 1985/86.
Spending pressures will continue beyond the next parliament. Pressures on the English NHS are projected to be £65bn higher than current spend by 2030/31 (in 2014/15 prices), assuming that the English NHS continues its current rate of productivity growth of 1.5% a year (from 2004/05 to 2011/12). Meeting this demand would require additional funding of 2.9% a year above inflation between 2014/15 and 2030/31, and would see the English NHS take a growing share of total national GDP.
Funding pressures on the English NHS are substantial, but not unique. The OECD estimates that public spending on health will grow at a faster rate in 11 of the other EU-15 countries than in the UK.