The content of this website is intended for healthcare professionals only

General taxation still best way to generate NHS funds

Experts explore financial models to fund health

Jo Carlowe

Friday, 15 June 2018

What is the “right” amount of money to spend on the NHS?

This is the question debated in The BMJ* today, with experts exploring which models of funding are best for a healthy and just society, as the NHS approaches its 70th birthday.

Debate about the “right” amount to spend on the NHS has recurred regularly over the past 70 years, writes Anita Charlesworth, director of research and economics at The Health Foundation, and Professor Karen Bloor at the University of York.

The UK currently spends around 10% of its gross domestic product (GDP) on health, which is broadly in line with other European countries and double the proportion of spending when the NHS was founded in 1948.

However, in terms of tangible resources, the UK compares poorly, with below average numbers of doctors, nurses, hospital beds, MRI machines, and CT scanners per head than many of our European neighbours, say the authors. Measures of process, such as waiting times, have been falling recently, particularly since 2013.

Metrics to determine the “right” amount of funding can focus on inputs (eg, comparing spending with other countries), processes (eg, waiting times), and outcomes (eg, life expectancy).

By any measure, over 70 years the NHS has succeeded in the core objectives at its creation: financial protection and equity of access to care, they say.

Some of the current pressures on the NHS and other systems around the world “are a product of the success of healthcare,” they add, while Brexit “is likely to cause further resource constraints, particularly in terms of staff.”

NHS expenditure is essentially a political choice, they write**. But regardless of political trends or economic circumstances, public support for the founding principles of the NHS remains high.

And despite recurring debate about the need for a hypothecated “NHS tax,” they believe that general taxation “remains the most efficient and equitable way of generating NHS funds.”

After eight years of historically low funding growth for the NHS, coupled with unabated demand pressures, “the NHS is finding it increasingly difficult to maintain performance on several high profile targets,” say Mark Hellowell at the University of Edinburgh, John Appleby, chief economist at the Nuffield Trust, and Mark Taylor at the National Institute for Health Research.

They argue that the immediate prospects on funding “do not look good” and ask whether existing sources - general taxation - will be sufficient.

They discuss the principles of fair funding - from increasing user charges to creating a specific NHS tax - but say, “it is hard to see that the benefits claimed for such changes outweigh the costs of moving away from the current source of general taxation.”

The 10-fold increase in funding since 1948 has largely been financed from changes in government spending priorities - notably much reduced spending on defence, housing, and what were previously nationalised industries, they explain. And there is now much less room for this sort of reallocation.

They argue that other areas of public service - including housing, welfare, and education, which are important determinants of health - “have already been cut to the bone and extra money will inevitably have to come from new, or higher, taxes.”

And they conclude that more than ever before, “higher taxes are an inevitable consequence of a desire to spend more. The choice, as they say, is ours.”

*Charlesworth A, Bloor K. 70 years of NHS funding debate: how do we know how much is enough? BMJ, 2018;361:k2373.
**Hellowell M, Appleby J, Taylor M. What models of funding are best for a healthy and just society? BMJ, 2018;361:k2566.

Registered in England and Wales. Reg No. 2530185. c/o Wilmington plc, 5th Floor, 10 Whitechapel High Street, London E1 8QS. Reg No. 30158470