Liberal Democrat manifesto pledges extra money for NHS but leaves £9bn funding gap by 2020/21

The Liberal Democrats today pledged to increase funding for health and social care in England through a 1p in the pound (£) rise in income tax. Taking into account inflation, this would result in a £3.5bn real terms cash injection for the English NHS next year (2018/19) rising to £5bn extra in 2020/21, with an additional £2bn a year ring-fenced for social care. But it would leave a funding gap for the NHS in England of £9bn by 2020/21, according to analysis from independent charity the Health Foundation.

The proposed funding would be higher than the government’s existing plans up to 2020/21, and would mean health care spending reaching £131.6bn in 2020/21, up from £123.7bn this year (17/18 prices). This would be slightly above the minimum recommendations from the House of Lords’ Select Committee on the Long-Term Sustainability of the NHS, which called for health care funding to increase at least in line with GDP growth. Under the Liberal Democrats’ plans, health care spending would increase by an annual average of 1.8% a year between now and 2020/21. As a share of GDP, health spending would rise slightly from 7.3% in 2016/17 to 7.4% in 2020/21.

The coalition government’s funding for the NHS increased by an average of 1.2% a year from 2009/10 to 2014/15. This compares with annual NHS funding growth of an average of nearly 4% a year in its first 70 years. The Liberal Democrat funding pledge is under half the independent Office for Budget Responsibility’s (OBR) projection of funding pressures on the service – over 4% a year above inflation.

In our recent briefing NHS and social care funding: three unavoidable challenges, the Health Foundation outlined that the pace of funding growth for the NHS will need to accelerate, taking a greater share of GDP. This will be necessary to keep pace with a growing and ageing population, rising chronic disease levels, as well as to meet public expectations for health care and fund new technologies and medical advances.

The Liberal Democrats’ funding pledge would be very unlikely to meet growing demands (based on the most recent OBR projections) on the service or fund additional pay increases. To protect the quality of patient care would require continuation of the current requirement for the NHS to achieve average efficiency improvements of 2-3% a year. York University shows that the recent rate of improvement was below this at an average of 1.7% a year between 2009/10 and 2014/15.

Anita Charlesworth, Director of Research and Economics at the Health Foundation, said:

‘The Liberal Democrats’ proposals would result in a £3.5bn cash injection for the NHS in England next year rising to an extra £5bn in 2020/21, with an additional £2bn a year ring-fenced for social care. But it would leave a funding gap for the NHS in England of £9bn by 2020/21.

‘Under the Liberal Democrats’ manifesto plans, health care funding would not match the demand and cost pressures on the health service, which the independent OBR estimates at more than 4% a year above inflation. A projected £9bn funding gap by 2020/21 would require the NHS to continue to deliver major efficiency savings if quality and access to services are to be protected. 

‘This is a stark reminder of the task ahead if England is to secure a sustainable NHS. With an ageing and growing population, new technologies and significant workforce pressures, the NHS will need significant funding growth year in, year out.’

Charts

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Media contact

Creina Lilburne
creina.lilburne@health.org.uk
020 7257 8027