Nuffield Trust Research Analyst Adam Roberts on what might happen when the current period of broadly flat NHS funding in real terms ends in 2014-15.
The path of Government funding for health over the next decade is a key concern for commissioners, providers, as well as patients and the public.
The coalition Government gave the NHS relative protection during the 2010 Spending Review – a 0.1 per cent real-terms annual increase. However, this settlement yielded extremely demanding productivity targets – the so-called ‘Nicholson challenge’ to generate £20 billion in efficiency savings by 2015.
What can be expected in the decade from now up to 2021/22? And what is the likely outlook for social care spending, given that demographic pressures are increasing demand for care services and the Commission on Funding of Care and Support (the Dilnot Commission) called for major reforms that would, if accepted, increase costs to the taxpayer?
Only a long-term freeze in other public service budgets or large tax rises could enable a return to the NHS’ historical average annual growth rate
NHS and social care funding: the outlook to 2021/22, written by Rowena Crawford and Carl Emmerson of the Institute for Fiscal Studies (IFS) for the Nuffield Trust, maps the longer term financial challenge facing the NHS and social care. It is the first output from a Nuffield Trust research programme that is seeking to assess the scale of the challenge and how it can be met.
The report considers some scenarios for spending on the NHS and social care in England into the next decade. The scenarios involve a real-term funding freeze, annual increases in line with any national income growth, and a return to the long term average of 4.0 per cent per year.
The authors attempt to establish what such settlements would mean for other public services, for taxation, and for borrowing.
In summary, the report concludes that public funding for health is set to be tight until at least the end of the decade. As spending cuts continue in real terms through to 2016-17 and beyond, they calculate that only a long-term freeze in other public service budgets or large tax rises could enable a return to the 4.0 per cent average annual growth to which the NHS has become accustomed.
Alongside the report we have produced a range of resources that explain the key messages from the research, including: an audio slideshow by Nuffield Trust Research Analyst Adam Roberts, a blog by Sue Slipman of the Foundation Trust Network, as well as a series of interactive data charts.
Crawford R and Emmerson C (2012) NHS and social care funding: the outlook to 2021/22. Research report. Nuffield Trust and Institute for Fiscal Studies.