Director for patients says ‘We are about to run out of cash in a very serious fashion'

The scale of the financial crisis facing the NHS has been laid bare after a senior official warned that the organisation faced a £30bn funding gap by 2020.

Speaking on the 65th anniversary of the foundation of the health service, Tim Kelsey, NHS England’s director for patients and information, said: “We are about to run out of cash in a very serious fashion.”

Ever-increasing demand on NHS services and a slowdown in Government funding have created serious doubts about the health service’s long-term future. Next week NHS England will publish a major report which is expected to make the case for dramatic changes in how health services are provided.

In a separate report, the accountancy firm Price Waterhouse Coopers warned that even if the NHS continues to make drastic savings up to 2023, the potential shortfall could be as high as £38bn.

“Such a large funding gap would have a significant impact on how services are delivered,” the report’s authors said. “In today’s prices, it would make the majority of non-urgent acute hospital care unaffordable.”

Sir David Nicholson, the outgoing chief executive of NHS England, warned in a speech last month that the NHS faced a choice between a radical new strategy or the “managed decline” of the health service.

Proposals to cut costs in the health service have included encouraging patients to take more responsibility for their own health and integrating care services so that local councils and social care providers share the cost burden of caring for Britain’s ageing population.

However, there are fears that the Government may turn to private providers to plug the gap.

Mr Kelsey confirmed to an audience of technological entrepreneurs that the UK and US governments were trying to agree a common standard of certification for health companies.

“One of the things that we agreed with the US government, which we will  hopefully be signing at the G8 meeting in November, is that we want to make it as easy as possible for small businesses to get access to both the US and the UK market places,” he said.

The health service’s budget for 2012-13 was £108.9bn. In the recent spending review, the Chancellor confirmed that the NHS will get a funding increase of only 0.1 per cent in 2015-16.

Labour’s shadow Health Secretary, Andy Burnham, said that the Government had made a “monumental mistake” by attempting to reform the NHS at a time when the health service should have been saving money.

“The result has been two wasted years in the NHS where people have been thinking about their jobs instead of making the service changes we need,” he said. “This Government must be held responsible for failing to get ahead of this future funding gap.”

Mike Farrar, the chief executive of the NHS Confederation, said that the health service was facing “challenges greater than any it has had to deal with in its lifetime”.

A Department of Health spokesperson said: “We’ve taken steps in the Spending Review to alleviate pressures – we’ve protected the health budget and increased health spending in real terms.”