NHS ‘may need to cut run of free services’

Public funding for health is set to be tight for at least 10 years, the Institute for Fiscal Studies (IFS) said.

In a report mapping the longer-term financial challenge facing the health service, researchers claim NHS spending to 2015 will be the tightest four-year period in the last 50 years.

The research, funded by the Nuffield Trust, concludes that “serious thought” must be given to NHS spending including reconsidering which services should be freely available or the level of taxation needed to finance the service in the future.

The authors of the study said that continuing the real freeze in English NHS spending between 2015 and 2017 would mean cutting spending on other public services by an average 2.3 per cent a year.

NHS spending in the UK reached £137.4bn in 2010/11, the authors said, with the spending in England accounting for a quarter of all public spending. The report states that increasing health spending in line with national income between 2015 and 2022 would still leave the NHS budget growing less quickly than what is needed to care for an ageing population.

The seven-year increase, along with increases to other public service spending by one per cent a year in real terms, would require an increase of taxation, borrowing or further welfare cuts – over and above the £10bn hinted at by Chancellor George Osborne in this Budget speech – amounting to roughly £9bn.

The authors said this is equivalent to an increase in the main rate of VAT from 20 per cent to just over 22 per cent.