PPL Perspectives

'Will you still need me, will you still feed me, when I'm sixty-four?' - what does the government's funding announcement mean for the future of the NHS?

28 June 2018

Toby Irving, Principal Consultant

Never mind 64 - the NHS turns 70 in July. There has been a lot of discussion recently around what funding is needed to keep our venerable health service going, and how it will be paid for. To recap, the government has committed to increasing spending on the NHS by on average 3.4% a year in real terms over the next five years. In other words, by 2023 the NHS budget will be £20.5bn higher than the current £114bn budget, once inflation has been taken into account.1 This increase is in line with the 3.3% which the Institute for Fiscal Studies says is the minimum required just to maintain NHS provision at current levels.2 It is, however, well below the 4% the same report says is necessary if services are to be improved.

Whilst there are definitely areas where the NHS could do better (improving speed of access to services, and liaising more closely with social care to name just two), there have been significant improvements in health outcomes across a large number of areas. For example,3

  • life expectancy has increased by over five years in all regions of the UK since the early 1990s;
  • quality outcomes within acute care have improved, especially in cardiology, stroke, cancer and maternity care;
  • and the majority of quality measures in primary care have generally improved.

This is in the context of both an ageing and a more demanding population, in terms of health and care need and expectations.

That said, it is estimated that the number of people aged 85+ will rise by 1.3 million in the next 15 years - almost as much as the increase in the entire under-65 population (64 is no longer the grand old age it seemed to be back in 1967) . This has significant additional cost pressures, with eight times more being spent on average on a 90 year old than on a 30 year old.4 We cannot therefore expect current improvements to last as pressures increase without additional measures.

There has, and will continue to be, significant debate around what is the “right” amount of funding where ‘right’ is a difficult balancing act between what is required (to either maintain, or improve current savings), and what the country can, or is willing to, afford. Notably, public opinion has become more positive in the last few years about the idea of paying more for the NHS, with 26% of people surveyed by the King’s Fund in 2017 saying they would be willing to pay more through the taxes they currently pay if the NHS needed more money (up from 17% in 2014). 35% of people said they would be willing to pay through a separate tax that would go directly to the NHS (up from 24%).5

Talks of a ‘Brexit dividend’ to pay for this are not realistic and so payments will have to come from one of the three main taxes: VAT, income tax, or national insurance, with income tax being the most progressive of the three (shown below), although national insurance increases are most favoured by the public.

Funding graph

Source: https://www.ifs.org.uk/uploads/publications/comms/R143.pdf - “Securing the future: funding health and social care to the 2030s”, Institute for Fiscal Studies and Health Foundation, May 2018

While we await more detail from the government’s autumn budget on exactly how it will fund the promised increase in spending, it is startlingly clear that social care needs similar attention. The IFS states that “social care funding will need to increase 3.9% a year to meet the needs of an ageing population and an increasing number of younger adults living with disabilities.”6 Interestingly, there has been no such funding announcement yet for social care, although the government has said they will release ‘proposals to reform social care later this year’.

Much of the work we do at PPL is around improving outcomes for local populations by improving integration and links between health and care systems. We know first hand that it is no good merely improving separate systems in isolation. People need different systems to collaborate to improve their experience of care. As the NHS turns 70, it’s more important than ever to debate and challenge how much, and where, additional investment should be focused. That said, let’s also take time to reflect on the many benefits the existing service has provided, and continues to provide, to ourselves and our families and friends up to age 64 and beyond.

Sources:

  1. https://www.gov.uk/government/news/prime-minister-sets-out-5-year-nhs-funding-plan - “Prime Minister Sets out 5-year NHS funding plan”, Gov.uk Press Release, 18 June 2018
  2. https://www.ifs.org.uk/uploads/publications/comms/R143.pdf - “Securing the future: funding health and social care to the 2030s”, Institute for Fiscal Studies and Health Foundation, May 2018
  3. https://www.ippr.org/files/2018-05/slide-deck-lord-darzi-review-summary-of-findings.pdf - “The Lord Darzi Review of Health and Care: 10 years on”, The Institute for Public Policy Research, 25 April 2018
  4. https://www.ifs.org.uk/uploads/publications/comms/R143.pdf - “Securing the future: funding health and social care to the 2030s”, Institute for Fiscal Studies and Health Foundation, May 2018
  5. https://www.kingsfund.org.uk/publications/does-public-see-tax-rises-answer-nhs-funding-pressures - “Does the public see tax rises as the answer to NHS funding pressures?”, The King’s Fund, 12 April 2018.
  6. https://www.ifs.org.uk/uploads/publications/comms/R143.pdf - “Securing the future: funding health and social care to the 2030s”, Institute for Fiscal Studies and Health Foundation, May 2018