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Report warns of £11 billion NHS funding gap30 October 2006Additional funds for the NHS have to be found when the current cash injection stops, if a return to the pressures of the nineties are to be avoided, a report for Bupa Health Insurance by economic consultancies NERA and Frontier warns today. The report, launched today at the Social Market Foundation, predicts an £11 billion funding shortfall by 2015 which could lead to longer waiting lists, staff cuts and low employee morale. Current increases in NHS funding of seven percent a year end in 2008. The NHS will need real terms increases of 4.9 percent a year after that, the report says, against the 3.5 percent it predicts it will receive. This will lead to the £11 billion gap. The report predicts reductions in capital expenditure, followed by constraints on salaries, both of which would directly affect treatment of patients and lead to the prospect of a return to waiting lists of over a million. The report suggests a number of possible solutions:
The report predicts a “generous” ten percent staff productivity gain for the NHS by 2015 but cautions that productivity growth recently has been negative or 'at best zero'. The report says options to increase public funding of the NHS are limited because of government commitments to spending on education, transport, international development and defence, and because the increase in the level of tax needed to fill the gap would be politically unpopular. The NHS could raise revenue by charging co-payments for services such as GP visits. The government could also introduce incentives to encourage employers and individuals to use private healthcare services, which would help to ease the funding pressures on the NHS and improve the level of service offered to everyone. Bupa is calling for a cross-party debate on the issues among politicians, think tanks and the public. Fergus Kee, managing director of Bupa Insurance, said: “The NHS in England is going through a transformation. The last few years have rightly seen large increases in money going into the health system but recent improvements in patient care may not be sustainable in the long-term unless urgent action is taken to relieve future financial pressures. “We have no interest in overstating the financial challenge facing the NHS. A stable and secure NHS is good for both the public and private health systems. No one wants to see a return to long waiting lists and poor infrastructure. The report shows clear evidence of a funding gap and we need to consider ways to address it. Our sole aim in publishing this report is to start a debate that will help secure the future of the healthcare system for everyone.“ Edward Bramley-Harker, associate director of NERA Economic Consulting, said: “In projecting future demands on the NHS we have been careful to set modest targets for improvements in the services offered and have been generous in our assumptions about how much more productive the NHS can become. Our projection of the resources needed by the NHS in the coming years is consistent with previous studies and falls well within the range suggested by Derek Wanless in his 2002 report for the Chancellor on the future of the NHS.” Michael Ridge, partner, Frontier Economics commented: “We looked at the competing pressures on public expenditure over the coming years. Having considered the relative importance of these challenges we have come to the conclusion that the risk of a financing gap in the NHS is substantial. This report clearly sets out the range of options available to the government to fill it.”
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