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Health spending has grown less than planned, finds IFS report

Health spending has grown less than planned, finds IFS report
By Anna Colivicchi
15 May 2024

Health spending has grown ‘by less than planned’ since the last general election, with cash top-ups ‘insufficient’ to offset inflation, a leading think tank has found.

Plans set out in the 2019 election campaign indicated the DHSC budget would increase by 3.3% a year above inflation, however spending has risen by only 2.7% a year on average, according to analysis by the Institute for Fiscal Studies (IFS).

Key findings of the report

Over the past four decades, health spending has shown a clear tendency to rise faster than planned. But in recent years higher than expected inflation has reversed this trend. 

The Department of Health and Social Care (DHSC) budget has grown by less than planned over this parliament, with cash top-ups insufficient to offset the effects of higher inflation.

Conservative party plans at the 2019 general election implied that the day-to-day DHSC budget (for England) would rise by 3.3% per year in real terms; latest plans imply average growth of 2.7% per year between 2019–20 and 2024–25. This is a marked departure from the experience of recent decades.

Source: IFS

The IFS report said that despite the pandemic, ‘record’ waiting lists and ‘growing’ rates of ill health, real-terms day-to-day health spending in England has risen ‘no quicker than was planned five years ago’, despite additional funding.

‘The point is that this additional funding has been insufficient to offset unexpectedly high rates of inflation,’ it added.

DAUK spokesperson Dr Steve Taylor, a GP in Manchester, said that ‘much of the spending’ has been directed ‘poorly’.

He said: ‘The Government has often spoken about record NHS funding. It does this without any mention of inflation, increasing population or the opportunities created by innovation in health.

‘The facts are much of the spending has been directed poorly and at times misspent. There is a national emergency in recovering from the pandemic but also years of previous austerity which have lead to poor facilities and infrastructure.

‘So yet again we hear that even what has been promised has not been met. Sadly this is no surprise to someone who has seen the decline in provision over the past 14 years.’

RCGP chair Professor Kamila Hawthorne said the findings ‘come as no surprise’ to frontline NHS staff who are trying their best to care for their patients in the face of ‘increasingly intense’ pressures.  

She said: ‘This funding situation will mean that NHS services will struggle to meet the current needs of patients, but it will also mean that we’re less prepared for escalating growth in need for care if, as expected, trends continue.  

‘The NHS is highly valued by patients but according to recent surveys satisfaction has fallen. This is all the more reason to invest properly in the NHS, so that it has the resources and workforce necessary to deliver patients the care they need.

‘An appropriately funded general practice service will be vital to this, given that GPs and our teams make the vast majority of NHS patient contacts, in turn alleviating pressures elsewhere in the health service.’  

NHS Confederation chief executive Matthew Taylor said he was worried about of ‘difficult decisions’ that may have to be made over staffing levels and service closures due to squeezed funding.

He said: ‘The fact that health spending has not risen as quickly as planned five years ago leaves the NHS with a mountain to climb in order to improve performance and tackle lengthy care backlogs with the threat of further industrial action looming over it as well.

‘We are very worried about what kind of difficult decisions may have to be made over staffing levels and service closures due to squeezed funding. We also know that unrealistically tight revenue settlements are often followed-up by emergency top-up funding, which is not the way to plan for the future or boost productivity.’

A DHSC spokesperson said: ‘We are providing the NHS with record funding of nearly £165bn a year by the end of this Parliament, an increase of 13% in real terms compared to 2019/20, which is making a real difference in cutting waiting lists.

‘The Chancellor also announced at the Budget that the NHS in England will receive a £2.5bn day-to-day funding boost this year and a further £3.4bn investment in the latest technology from 2025, helping to unlock £35bn in savings.’

A version of this story was first published on our sister title Pulse.

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