Spending on care, health and pensions set to soar

9 Aug 11
Spending on health, long-term care and pensions is set to rise fast, presenting future governments with some tough choices, economists are warning.

By Vivienne Russell | 10 August 2011

Spending on health, long-term care and pensions is set to rise fast, presenting future governments with some tough choices, economists are warning.

Research by the Institute for Fiscal Studies published today demonstrates how much the shape of public spending has changed over the past 30 years.

In 1978/79, a third of public spending went on health, long-term care and pensions. Now it is two-thirds. This increase is in line with reductions in spending on defence, housing and industrial support over the same period.

The IFS says the spending cuts planned up to 2014/15 are largely consistent with this trend, with health ‘protected’ and housing set to decline even further. Spending on police, prisons and other aspects of the justice system is also set to fall dramatically.

By 2014/15, NHS spending alone will account for almost 30% of all public spending, up from 20% at the start of the 1990s, the report predicts/calculates.

IFS director Paul Johnson said: ‘The way the state spends our money has shifted to a remarkable extent towards spending on health and social security over the past 30 years.

‘The current government’s plans are very consistent with this trend. This change has been possible because the state has withdrawn from other areas of activity – defence, housing and industrial support.

‘Going forward, pressures on health and pension spending are severe. Governments have three choices – increase total spending to accommodate these changes, reform health and pension spending dramatically to cap future costs, or cut back elsewhere.’

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