Closing the NHS Black Hole

The NHS needs an increase in funding of at least 4% per year if it is to continue to provide the current level of service, without a loss in quality.

After considerable pressure, the government has given the NHS two funding boosts, one in November 2017 and the second in June 2018. However, the increase does not amount to the 4% per year widely regarded as the bare minimum needed to provide the current level of service.  There continues to be a gap in funding for the NHS and as a result services will continue to suffer.

Graph from the HSJ 16 June 2018

In the November 2017 budget, the NHS received some extra funding, however this was generally deemed not sufficient by a long margin. The Health Foundation, The King's Fund and the Nuffield Trust all agreed that the rise was far below what is needed to maintain standards of care and meet rising demand. They estimated, based on data from the Office for Budget Responsibility (OBR), that health spending would need to rise to approximately £153 billion by 2022/23. The rise in funding from the budget November 2017 meant there would be a funding gap of £20 billion by 2022/23.

In May 2018, a joint report by The Health Foundation, the IFS and the NHS Confederation concluded that:

spending increases will need to be front-loaded, with the NHS requiring increases averaging around 4% a year over the next five years to maintain provision at current levels and address the backlog of funding problems.

The report also notes that tackling health and social care together means that spending will need to rise by 2% of GDP over the next 15 years, and by 3% if there are to be improvements in the services offered. This means finding at least "£40 billion of additional funding, and perhaps more than £60 billion."

In an open letter to the Prime Minister in May 2018, The King's Fund, The Nuffield Trust and The Health Foundation wrote:

"All authoritative independent analysis undertaken in recent years, including estimates based on the Office for Budget Responsibility’s projections, indicate that the NHS needs real terms funding increases of around 4 per cent a year. This is the minimum required to keep pace with rising demand for services, provide some investment in key priorities such as mental health, cancer and general practice and continue the transformation of services set out in the NHS five year forward view. Anything less than this risks further deterioration in standards of patient care and would delay tackling the growing backlog of buildings maintenance, including safety critical repairs. If sufficient funding is not provided, patients and families will pay the price as the service declines."

As a result of the pressure, in June 2018 the government announced that it will give NHS England an annual increase of 3.4% for five years beginning in April 2019. This might be a significant rise on the planned level of just 0.9%, but it is still not the 4% required by the NHS to maintain its current level of service and there are other shortcomings: -

  • The increase only applies to NHS England, not the entire Department of Health, leaving other important areas, such as public health and training with inadequate funding;
  • The announcement does not deal with the rising demands of social care.

Responding to the government’s announcement of additional NHS funding, Anita Charlesworth, Director of Research and Economics at the Health Foundation, said:

Increases of at least 4% a year are the minimum needed to tackle the backlog of financial problems from eight years of austerity. Increases of just 3.4% a year mean longer waits for treatment, ongoing staff shortages, deterioration of NHS buildings and equipment, and little progress to address cancer care. Tackling the huge disparity in access to mental health care will have to be an aspiration, rather than reality for another five years.

The Nuffield Trust noted that:

this settlement is significantly lower than the 4% we, and many others, said was needed as a minimum to prevent deterioration in patient care. While a welcome respite, it will not equip the NHS to make much-needed changes to services, adopt new technologies, or expand the workforce.

The increase in funding shown in context of previous funding increases is shown below, highlighting just how low recent funding increases have been: