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Huge funding gap looms for English NHS, warns Nuffield Trust

By Richard Johnstone | 3 December 2012

The English NHS could face a £54bn funding gap in 2021/22 if it fails to meet its efficiency targets and government spending remains constrained, the Nuffield Trust has warned.

Its analysis of NHS funding pressures, published today, highlighted that even if the health service met its £20bn efficiency target by 2014/15, the gap between demand and funding could still top £34bn. Such a lack of money could lead to reductions in the level or quality of services, the think-tank said.

The figures are based on modelling carried out by the trust ahead of Wednesday’s Autumn Statement.

Health spending is largely protected in the current Spending Review period, with funding broadly flat in real terms until 2014/15.

However, to meet the pressures of rising demand, the NHS needs to make productivity improvements worth around 4% of annual spending, totalling £20bn. This is known as the Quality, Innovation, Productivity and Prevention programme.

The trust’s Decade of austerity report stated that even if the NHS budget continued to be protected from cuts beyond 2014/15, it was unlikely the available funding would keep up with demand.

Report co-author Anita Charlesworth, chief economist at the Nuffield Trust, said this represented a ‘profound challenge for those running NHS hospitals’, and would mean additional savings were needed. 

However, the report also highlighted ‘large dents’ that could be made in the shortfall through greater integration of services and more effective use of telehealth, as well as service reconfiguration.

Charlesworth added: ‘There are no easy options for health 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. 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. Management and clinical leadership will need to focus beyond the current four-year plans, extending them for at least a decade.’

The Nuffield analysis is based on modelling carried out by the trust into the future pressures on NHS services in England. Health care costs have been derived by analysing trends in population growth, fertility, mortality, hospital activity for selected chronic conditions and primary care activity. These were combined with likely growth and spending scenarios to identify the scale of the financial gap.

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