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How much money does the NHS need?

How much money does the NHS need?
By Léa Legraien Reporter
15 June 2018

In less than three weeks, on 5 July, the NHS will turn 70.

Although there have been many medical progresses over the past 70 years, one question remains a challenge: How much funding does the NHS need to function properly?

Prime Minister Theresa May recently pledged that she would draw up long-term NHS funding plans by the summer.

As we wait to hear about the exact amount of money that will be put into the health service, Health Foundation director of research and economic Anita Charlesworth and Karen Bloor, professor of health, economics and policy at the University of York, ask how much would be enough.

Current and future pressures

In a study – 70 Years of NHS Funding Debate: how do we know how much is enough ­– published in the British Medical Journal yesterday, Professor Bloor and Ms Charlesworth reported that the NHS faced its first winter crisis in 1948 and that substantial overspend in the first two years of the NHS alarmed the Treasury.

According to the Office for National Statistics, the UK spent 9.8% of its gross domestic product (GDP) on healthcare in 2016, making it the second lowest-spending nation in the G7 – which also includes Canada, France, Germany, Italy, Japan and the US.

Over the past eight years, the NHS has been underfunded, with an annual growth of around 1.3% between 2009/10 and 2015/16 compared to the annual 4.1% average growth from 1955/56 to 2015/16.

With an estimated 4.4 million more people aged 65 and over and 1.3 million more people over the age of 85 by 2033 and more complex conditions than ever, demand and pressures on the health service will only continue to grow.

The Institute for Fiscal Studies (IFS) argues that to secure ‘modest improvements in NHS services’, funding should increase by 4% a year over the medium term and 5% in the short term.

The IFS believes that plans are likely to be reflected in a substantial rise in taxes to meet future health and social care pressures, which could range between 1.6 and 2.6% of the GDP.   

‘Political choice’

In the UK, health spending is public, which means decisions are made through a political process.

Since the creation of the NHS, many have argued that the service is often used as a ‘political football’. British Medical Association honorary vice president Dr Kailash Chand says the debate around privately vs publicly-funded services brings ‘all manner of conflicts and restructuring’.

He adds: ‘We should take politics out of the NHS, but it’s a very important part of the whole concept – even in 1948 there were two opposing views’.

Professor Bloor and Ms Charlesworth argue that ‘spending has been volatile, driven by both political ideology and the need to fund substantial reforms’.

They continue: ‘Periods of relative famine, creating political crises fuelled by concerns about quality of care, have been followed by periods of relative feast, often stimulating price and wage inflation.

Particularly at crisis points, governments and other organisations have tried to identify how much needs to be spent and how to convince the public and service that it is spending the right amount.’

Right level of funding

Talking about the NHS in a speech given at the Royal College of Nursing in 1948, NHS creator Aneurin (Nye) Bevan said: ‘We shall never have all we need. Expectations will always exceed capacity.’

If it seems difficult to find the right answer to how the NHS should be funded and where the funds should come from, Professor Bloor and Ms Charlesworth highlight that we can use data to determine the ‘right’ amount of funding.

These include:

– Examining inputs by comparing spending with other countries

– Looking at processes by, for example, examining waiting times – which can indicate mismatch between demand and supply

– Determining outcomes by analysing life expectancy over time

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