NHS still affordable by 2030, experts conclude

Nuffield Trust Chief Economist John Appleby comments on new OBR projections, which show that health spending as a share of GDP could increase from 7.4 per cent now to 8.8 per cent in 2030.

Press release

Published: 21/09/2016

New OBR projections show NHS share of GDP could increase by almost a fifth by 2030.

Despite the current short-term funding crisis in the NHS, and constant speculation about the need for alternative sources of funding for healthcare (such as an insurance-based system or 'top-up' fees for patients), the amount the health service is projected to cost the UK in the long term continues to be affordable through general taxation, say experts at the Nuffield Trust health think-tank today.

Prof John Appleby, Chief Economist at the Trust, was commenting on new long-term projections from the Office for Budget Responsibility (OBR) on how much spending on the health service could grow in the future, based on increases in the population and other factors. At the same time, a new House of Lords Committee is taking evidence on the long-term sustainability of the NHS up to 2030.

The OBR's projections show funding on the NHS as a percentage of GDP.  The U.K. currently spends 7.4 per cent of its national wealth on healthcare, or £140 billion - the projections show that by the end of the current Parliament in 2020, that figure will have dipped to 6.9 per cent, based on the existing known funding settlement from the Government; but that by 2030, spending could increase to 8.8 per cent of GDP, or £234 billion at today's prices.  This would translate into almost an extra £100 billion of spending in real terms by 2030.

Commenting on context of the OBR's projections, Professor Appleby said:

“Only five years after the NHS was established in 1948, Parliament was so worried about its long-term affordability that it appointed a commission to examine whether funding would be able to meet demand in the future. At that point the UK was spending a mere three per cent of its national wealth on healthcare, or around £13 billion at today's prices. That figure for share of GDP has now more than doubled to 7.4 per cent and funding has risen in real terms by around four per cent each year on average.

“So looking at the historical trends, an increase to 8.8 per cent of GDP from the current 7.4 per cent over a decade and a half is actually not that high - less than a tenth of one per cent of GDP each year. The potential increase of £100 billion represents an average annual real terms increase of 3.5 per cent, less than the historical UK average of four per cent each year.  This projected increase in share of GDP of 1.4 per cent over the next 15 years is the same as the increase over just five years between 1999/2000 and 2004/5. From this perspective, then, the increase in projected spending does not seem out of line with history - and indeed, is slightly lower than the long-term growth in spending.

"The real debate the UK needs to have is over how much more we want to spend on the NHS, not whether we need to change the way the health service is funded".

Professor Appleby added that from an international perspective, a national public spend of 8.8 per cent by 2030 would simply take the UK to the levels of public spending for France, the Netherlands, Denmark, Sweden, Germany and Japan - in 2015.

Notes to editors

  • Professor Appleby and Nuffield Trust Chief Executive Nigel Edwards have both given oral evidence to the Committee, which will report in March. The Trust is also submitting written evidence.