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OP71 The Funding Pressures Facing the NHS from 2010/11 to 2021/22
  1. A D Roberts,
  2. L M Marshal,
  3. A Charlesworth
  1. Department of Economics, Nuffield Trust, London, UK


Background Spending on the UK National Health Service (NHS) has risen by an average of 4% a year in real terms since its introduction in 1948. This growth has now halted due to reductions in public spending. The English NHS is therefore targeting efficiency savings of £15–20 billion by 2014–15 to meet rising pressures. This research looks beyond 2014–15 to estimate the financial challenge facing the NHS in England in 2021–22, examining the potential impact of various policies in managing these pressures.

Methods To estimate funding pressures facing the English NHS, healthcare activity was broken down by type: acute, maternity, mental illness, general practice, and prescribing. A least-squares approach was used to model determinants of demand for each type in the base year. Results were applied to projections of population, mortality and chronic conditions, with estimated cost then applied. The cost of projected healthcare activity was compared to potential scenarios for government funding of the English NHS, with the gap representing the required efficiency gain by 2021–22. The effect of three key factors on closing this gap was examined: pay restraint, management of chronic conditions demand, and increased acute sector productivity.

Results Funding pressures on acute NHS services in England are estimated to rise by 3% a year due to combined effects of population change and rising hospital admissions for chronic conditions. If pay rises with recent trend, total acute sector pressure will rise by 4% a year. If spending remains flat in real terms, the funding gap will reach £44–54 billion in 2021–22. If the current efficiency challenge is met in 2014–15, this reduces to £28–34 billion. Closing this gap will require a combination of measures: releasing all savings related to productivity gains made prior to 2015–16 (£6bn), preventing increases in the probability of being admitted to hospital with a chronic condition (£6bn), and restricting pay growth to rising with inflation (£8bn). The remaining £8bn gap will require further productivity gains of 1% a year between 2015–16 and 2021–22.

Conclusion The current austerity experienced by the English NHS is likely to extend beyond the 4-year period to 2014–15 that is currently the focus of planned efficiency savings. If funding pressures increase with recent trends, further savings of 4% a year will be needed between 2015–16 and 2021–22 to meet rising demands on healthcare. This will require unprecedented sustained increases in health service productivity to avoid cuts to services or falls in quality.

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