British households will need to pay an extra £2,000 a year in tax to help the NHS cope with the demands of an ageing population, according to a new report that highlights the unprecedented financial pressures on the health system.
Two thinktanks – the Institute for Fiscal Studies and the Health Foundation – have said there can be no alternative to higher taxation if there are to be even modest improvements to care over the next 15 years, adding that demands on the health service will continue to rise.
The report said the NHS has been struggling to cope after the toughest financial constraints in its 70-year history had been imposed on the service. Costs were bound to increase due to demographic change, an increase in chronic illnesses and bigger bills for staff and drugs.
Niall Dickson, chief executive of the NHS Confederation, which commissioned the report and represents 85% of NHS bodies, said: “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 research was published as the Spectator reported that Theresa May had decided to increase the NHS’s budget by 3% a year for each of the remaining four years of this parliament. It means that, by 2022, the health service would be getting the £350m a week extra that was promised on the side of the Brexit battlebus in 2016. The magazine’s cover story, on changed Conservative attitudes to NHS funding, stated that, in making her decision, May had overridden Philip Hammond’s concerns that such large sums would be difficult to afford.
All political parties accept that NHS funding will need to be increased over the coming years, but the IFS and Health Foundation report said the resources needed far outstripped any tax pledges already made.
It said even modest improvements to services and higher pay to recruit and retain staff would require health spending to grow by 4% a year over the next 15 years, with front-loaded increases of 5% a year for the next five years. Health spending would rise from 7.3% of GDP to 9.9% of GDP by 2033-34 – £56bn at today’s prices.
Household incomes are expected to rise by £8,500 between now and 2033-4, and under the report’s calculations, almost a quarter – £2,000 – of that would go on extra tax to pay for the NHS. A further 0.4% of GDP – around £300 per household – will be needed to pay for adult social care.