Copyright Moore Barlow LLP (Moore Blatch and Barlow Robbins merged May 2020)

NHS funding warning sees likely increase in taxes

It is no secret the NHS is in slipping deeper and deeper into financial crisis – more so now than ever before in its 70 year history.

Two think tanks – The Institute for Fiscal Studies and The Health Foundation (IFS and HF) have just released a report explaining that the NHS has been suffering the most severe financial fiscal squeeze since its creation, particularly over the recent austerity era spanning the past 8 years. This has come during an unprecedented rise in patient demand due to an increase in adult life expectancy, an increased patient population, and an increase in chronic illnesses meaning the NHS has to treat more elderly and sick patients than ever before.

The report comes as the NHS Confederation chief executive, Niall Dickson, was quoted as saying that ‘it is now undeniable that the current system and funding levels are not sustainable’ and ‘This report is a wake up call and its message is simple – if we want good, effective, and safe services we will have to find the resources to pay for them’.

The signs of strain in the health service have been getting more and more evident in recent times. General practice is reportedly on its knees with demands on doctors and the need for extended hours to provide care making primary care a more undesirable career option for aspiring medical graduates. Hospital A&E waiting time performance hit a new low record this winter with just 85% of patients seen within 4 hours for example, and overnight bed occupancy rates in NHS hospitals between January and March 2018 the worst ever recorded, reaching 92.6% – exceeding the recommended minimum 85% required to maintain patient safety standards. The 18-week target for planned treatment has also been missed for the second year in a row.

Many of the wonderful people I have assisted in the past, and am assisting now, have been patients inadvertently caught up in this conflict between what was needed and what was actually available to them. Longer queues for appointments and imaging/tests, shorter (sometimes less detailed or thorough) consultations, and clinical staff shortages have become a familiar, though not excusable, story, setting the scene for and sometimes contributing towards substandard care, that goes on to cause what would have otherwise have been avoidable injury.

The IFS and HF have said that the NHS would need an extra 4% a year or £2,000 per UK household – for the next 15 years with the only realistic way to pay for this increase considered to be tax rises.

On top of this, additional funds will also be required to fund council-run social care for the elderly (an increase from 1% of GDP to 1.5% – a share already devoted to the elderly in comparable societies in places like Germany and Holland for example).

All of this would mean spending as a proportion of national income rising from the current 8.4% figure to 11.4% – a big jump in fiscal terms. Yet this projected increase in funding would only lead to modest improvements to care over the next 15 years as demand continues to rise. It may in fact just about cover the cost of preserving the existing status quo during that period (i.e. leaving us on an even keel instead of funding improved future care).

There is now a tussle behind the scenes in cabinet between the Prime Minister (who has promised a long-term funding plan for the NHS) and the Health Secretary, Jeremy Hunt on the one hand and the Chancellor on the other, with the Treasury wanting to keep average rises at about 2% a year.

Mr Hunt has said that ‘Families would back a £2,000 a year tax rise to fund the NHS as long as the cash isn’t wasted’ which appears to be supported by a recent survey carried out by the British Social Attitudes research centre which recorded a jump in support for higher taxes from 41% to 61% at the end of last year. The same survey revealed that 90% of those surveyed thought quality of healthcare was declining and most expected it to get worse still.

Putting the proposed tax increase in perspective, it is worth noting that the UK is one of the lowest health care spenders amount the G7 countries, with 9.8% of its GDP spent on healthcare. In contrast in the US 17.2% of GDP was spent on (non-universal) healthcare in 2017.

However other commentators have argued that investing more money into the healthcare system is not in itself enough. Some have argued for a better strategy when budgets and finances are allocated to ensure security in the long term. This is particularly relevant now with Brexit as the NHS seeing falling numbers of healthcare staffing applications from the European Union and with 11% of existing GP’s based in England coming from the EU facing anxiety about their future in the UK.

Whatever the answer, and whatever decisions are made and implemented this year and in the years to come, let us hope that the challenges faced can be met so that more patients’ lives are not damaged or destroyed than is sadly already the case each year due to underfunded healthcare.


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