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‘Substantial tax rises’ needed to keep the NHS afloat

An extra 4% funded required per year, say experts

Jo Carlowe

Thursday, 24 May 2018

"Substantial tax rises" are necessary to fund the NHS in the long-term, according to experts.

In a report, published today, the Institute for Fiscal Studies (IFS) and Health Foundation, say the NHS would need an extra 4% a year — or £2000 per UK household - for the next 15 years.

The only realistic way to fund this would be through tax rises, it states in its report: Securing the future: funding health and social care to the 2030s.

Commissioned by the NHS Confederation, the report states that just to keep the NHS providing the level of service it does today would require an increased spending by an average 3.3% a year for the next 15 years, with slightly bigger increases in the short run to address immediate funding problems.

This would mean health spending rising faster than national income and would take health spending from 7.3% of national income today to 8.9% by 2033-34.

To secure modest improvement in NHS services, funding increases of nearer 4% a year would be required over the medium-term, with 5% annual increases in the short run, the report states. This would take spending in 2033-34 to 9.9% of national income, an increase of 2.6% of national income relative to 2018-19.

Taken together this means health and social care spending is likely to have to rise by 2-3% of national income over the next 15 years.

These calculations were made by experts using ‘careful bottom-up modelling' of supply and demand factors in the health and social care sectors.

“If we choose to meet these pressures, we would almost certainly need to increase taxes. Funding these projected increases in health spending through the tax system would require taxes to rise by between 1.6 and 2.6% of GDP – that’s between £34 billion and £56 billion in present-day terms, equivalent to between £1,200 and £2,000 per household,” the experts explain.

Paul Johnson, director of the IFS and co-author of the report, said: “We are finally coming face to face with one of the biggest choices in a generation. If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years. This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more in tax. But it is a choice: higher taxes and a health and social care system which meets our expectations and improves over time, or taxes at current levels and a more constrained health service delivering less than we have become accustomed to.”

Anita Charlesworth, director of research and economics at the Health Foundation and an author of the report, said: “After eight years of austerity, the health service will need a sustained injection of funding just to get back on an even keel, let alone to modernise. The Prime Minister has committed to a long-term funding settlement for the NHS. Maintaining current provision and dealing with the backlog of funding problems will require NHS funding to grow by around 4% a year for the next five years. Meaningful progress on waiting times, staffing shortages and mental health will need growth of around 5% a year over that period. Much less than growth of 4% a year and the NHS will be able to do little more than tread water. It will struggle to fulfil Nye Bevan’s vision of 70 years ago.”

Commenting, Niall Dickson, chief executive of the NHS Confederation, said: “If we want a higher quality NHS and care system we will have to pay for it.”

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