NHS funding crisis: how can it plug the gap?

Jul 10, 2014

New spending review reveals annual deficit of £100m, raising fears that free healthcare could end

Scott Barbour/Getty Images

An increasing number of NHS trusts are falling into debt, with an overall deficit of £100 million in the last financial year, a new spending review has found.

The report, conducted by the Nuffield Trust think tank, contrasts this with a £383m surplus from the previous year, the BBC reports.

The NHS has "reached a tipping point", says , said report author Andy McKeon. "[It] is heading for a funding crisis this year or next."

Leading health experts say the NHS is "creaking at the seams" and is facing a overall funding gap of up to £2bn for the next financial year. So how has this happened and what can be done?

What is the NHS budget?

The NHS budget in England for 2015 is around £100bn. The country's health service has faced a prolonged budget freeze as part of the Coalition's plan to reduce the UK deficit. NHS funds were protected from the deeper cuts that affected most other government departments, rising only at the rate of inflation, but the New Statesman says this is still the "toughest spending settlement in [NHS] history". The government aimed to save up to £20bn through NHS efficiency measures between 2011 and 2015, partly by reducing the costs of management, abolishing primary care trusts and closing some NHS-funded agencies and councils.

Where does all the money go? 

The NHS employs more than 1.7m people, making it one of the biggest employers in the world. The UK's population growth and higher pension costs for NHS workers have added to the financial pressure. People are living longer, there has been a significant increase in the number of people with long-term conditions such as heart disease and diabetes, and new drugs are often expensive.

How will a £2bn funding gap affect the NHS?

The Department of Health has said it is "confident" that it will be able to make the necessary savings. But Anita Charlesworth, chief economist at the Health Foundation, has warned that planned efficiency savings are not on the scale that is required. Without reducing services or quality, the only other solution is to find £2bn, she says. "You don't find that down the back of the sofa and even for the Treasury that's not small change." Mike Farrar, chief executive of the NHS Confederation, says his members have been doing their utmost to sustain services and maintain standards on a tight budget. "Now we've probably got to fundamentally rethink the way the NHS provides its services," he says.

What can be done to plug the gap?

Health Secretary Jeremy Hunt yesterday revealed that hospitals will be paid financial incentives to claim back the costs of treating foreigners, in a bid to recoup £500m from overseas. NHS trusts will be offered a 25 per cent premium, paid for by the government, on top of the tariff they receive from the EU when they report treating EU nationals, reports The Independent. The UK currently pays other EU countries more than £800m a year to cover the cost of Britons receiving healthcare on holidays and other visits abroad, but receives only £29m for nationals of the EU and European Economic Area treated here.

Hunt also said that cosmetic surgery, such as breast enlargements, dental work and slimming treatments, should not be offered by the NHS on the basis of simply improving a person's looks. However, he accepted that there would be times when there is a mental health need and said the crackdown would not apply to women offered reconstructive surgery following breast cancer treatment. The Royal College of Nursing has proposed the introduction of a £10 fee for patients to see their GP, but Hunt has ruled this out under the current government.

Sign up for our daily newsletter

Disqus - noscript

Sack most of the middle management who get paid ridiculous salaries yet contribute nothing but beaurocracy,privatise all hospitals that are loosing money,this is proven to work and produces far better service

,"privatise all hospitals that are loosing money,this is proven to work"

If you look at healthcare just in terms of money or the bottom line you are sure to end up at nonsense. There are many and substantial externalities of healthcare that cannot be captured in simple accounting terms.

Better service for all or just those who can afford?

Where is your evidence?

2bn doesn't sound all that big when tallied against the 147bn needed for the banks. ask "Dad" I'm sure he's got some secret account he can dip in to pay for it.