None of the major political parties is pledging to spend enough money on the NHS in England to close its funding gap, the Nuffield Trust has warned.
Following a week in which all three parties revealed the different amounts they would spend on the NHS if elected, the independent health research charity has costed four possible scenarios for planning expenditure on the NHS and finds that Conservative, Labour and Liberal Democrat plans all fail to reach even the lowest projection of possible future NHS spending patterns. As a consequence, health spending as a proportion of GDP is set to fall under each of the three main parties’ proposals.
The NHS in England currently has a budget of £124 billion. Under the previous Government’s plans, funding was due to reach £126 billion by May 2020. This meant average funding increases of only 0.75% a year and would have significantly constrained the health service’s ability to provide the care patients expect.
However, the Conservatives, Labour and Liberal Democrats have now all made promises to increase funding over the lifetime of the new Parliament, running to the financial year 2022/23. Each party has claimed it will give the NHS the money it needs, but the report’s authors argue that none of the amounts committed so far will be enough to cover the funding gap that will have arisen in the health service in five years’ time.
The briefing (NHS funding choices and the 2017 General Election) sets out four spending scenarios, setting them alongside a continuation of existing government plans and calculates how much money each would require by 2022/23. These amounts run from £137 billion to £155 billion. Even the lowest figure in this range is higher than anything pledged by the Conservatives, Labour or Liberal Democrats last week.
The four approaches are:
• Firstly, to keep pace with the country’s economic growth: some have argued that NHS spending should be increased in line with the growth in the whole of the economy, i.e. the UK’s Gross Domestic Product (GDP). GDP is forecast to increase by around 2% a year between now and 2022/23 – if funding were increased in line with this measure, spending on the NHS would total £137 billion by that point. That is £13 billion more in real terms than spending this year.
• The second measure sees funding keeping pace with NHS inflation and predicted demand for care, and a removal of the cap on staff pay, offset by some increased productivity: accounting for all these factors would require NHS spending to rise to around £141 billion in 2022/23, £18 billion more in real terms than spending this year. Spending as a share of GDP would increase modestly from 7.3% now to around 7.5% by the end of the Parliament.
• The third approach looks at the long-term average of funding increases the NHS has received since its inception: between the early 1950s and 2009, the average real terms increase in funding has been around 4% per year. Recent annual increases have been lower and were set to be only 0.75% between now and 2020. Getting back to the long-term spending trend would suggest spending of around £150 billion in 2022/23 - £27 billion more than current spending.
• The final method of forecasting future spending uses the projections for health produced by the independent Office for Budget Responsibility: the central projection by the OBR’s economists based on factors such as future population increases, patient demand and medical advances, entails spending £155 billion by 22/23, or an extra £31 billion above expenditure this year.
In contrast to these four projections for the amount the NHS could be spending by the end of the new Parliament, the Nuffield Trust’s briefing calculates that the three main parties’ plans would produce the following funding settlements for the health service by 2022/23 – none matches even the lowest of the four spending scenarios described:
• The Liberal Democrats originally made a combined pledge to supplement existing annual spending plans by £6 billion for both health and social care across England, Wales and Northern Ireland. The pledge amounts to £132.2 billion for the NHS in England by 2022/23.
• Labour plans to supplement existing annual plans by £8 billion across the Parliament bringing health spending to £135.3 billion by 2022/23.
• The commitment by the Conservatives of a minimum £8 billion increase in real terms over spending this year is not fully explained in their manifesto but could bring total NHS spending in England to £131.7 billion by 2022/23.
Commenting on the new analysis, report author and Nuffield Trust senior policy analyst Sally Gainsbury, said: “How much we spend on the NHS is a choice that always involves a cost of some sort. We can choose to put more money into the health service, whether that is raised through higher taxes, more borrowing or changing other government spending priorities.
“But equally, not spending more also implies a cost, in terms of longer waits and deteriorating quality of care for patients, and failing to keep up with the latest drugs and medical treatments that may become available in other countries”.
Report author Prof John Appleby, Nuffield Trust chief economist and director of research, added: “After a week in which the three main parties in England have all claimed they are going to put significant extra funding into the health service, we thought it important to compare their pledges with some independent measures of where spending might be in five years’ time.
“What our new analysis shows is that in fact none of the parties’ promises matches even the lowest projections of what funding should be. Spending as a proportion of GDP looks set to fall slightly whichever party forms the next government, unless additional funds can be found."
