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Think tank warns NHS of £34bn funding shortfall

3 December 2012

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General practice consultations is set to rise to 7.8 per person per year during the next decade amid a bleak financial outlook for the NHS.
This figure is up from 5.5 GP consultations per person per year in 2009.
According to a report by the Nuffield Trust A decade of austerity: the funding pressures facing the NHS from 2010/11 to 2021/22 the NHS may face a funding shortfall of up to £34bn in ten years time even if the current efficiency savings target is met.

This funding gap could rise to £54bn if the unprecedented £20bn worth of productivity savings, otherwise known as the Nicholson Challenge, is not delivered.

Nicholson Challenge extension

This means NHS organisations will be forced to extend savings plans beyond the expected four years to “at least a decade”.

Commenting on the report, Nuffield Trust Chief Economist and report co-author Anita Charlesworth said there are “no easy options” for heath beyond the current spending review.

“Without unprecedented, sustained increases in productivity, funding for health in England will need to increase in real terms after 2014/15 to avoid cuts to the service or a fall in the quality of care patients receive,” she said.

“The pressures from demography, illness and increasing costs will remain. It is very unlikely that under current tax and spending policies growth in NHS funding at rates experienced prior to 2010 could resume, particularly as other areas of public spending have already been cut much more than health.

“Productivity must increase and be sustained. Management and clinical leadership will need to focus beyond the current four year plans, extending them for at least a decade. Particular attention should be placed on improving quality and performance, and turning these improvements into cash releasing efficiency savings.”

As well as the rise in GP consultations, prescribing costs are also set to increase by 2% per year from £8bn in 2010/11 to £10bn in 2021/22.

Public support

New Ipsos MORI polling data – commissioned by the Nuffield Trust – shows the NHS is the number one area the public wants to be protected from cuts.

Almost half of those polled said they would not support cuts to the NHS, and instead think taxes should increase to maintain the current level of care and services provided by the NHS.

Unite head of heath, Rachael Maskell, warned the NHS funding shortfall will hit those “most deprived” in society hardest.

“The stark message underpinning the Nuffield report is a future world of increasing health inequalities where the most deprived in society will bear the brunt of a cash-starved NHS,” she said.

“This will ripple out when local authorities in England take on the public health portfolio next spring.

“Continuing coalition reductions to the local councils’ budgets will mean serious knock-on effects to their finances which will result, in turn, to steep cuts to lunch clubs for the elderly and day centres by town halls and cash-strapped charities.

“This will have an accumulative negative effect to the health and well-being of some of the most disadvantaged groups in society.”

Health Minister Lord Howe said: “As one of this country’s most treasured institutions, it is only right that the public want to protect the NHS. This is why we are committed to investing an additional £12.5bn over the course of this parliament.

“However, if the NHS is to meet the needs of an ageing population we need it to be more efficient so it can provide more and better treatments. The NHS is well on its way to achieving this. This year alone it has admitted over half a million more planned patients.”