NHS will run out of extra cash promised by government in two years, IFS analysis shows

Health service funding will have to be increased again or budgets slashed, warns think tank

Adam Forrest
Friday 10 September 2021 01:28

Related video: Boris Johnson announces plan to fund health and social care

Boris Johnson’s plan to boost health spending will not be enough for the NHS to deal with its coronavirus demands past 2024, a leading economic think tank has warned.

The Institute for Fiscal Studies (IFS) said the new funding announced by the prime minister this week would only cover the health service in dealing with pandemic-related pressures for two years.

The economists said another £5bn – not included in the government’s plan for health and social care – would be needed in 2024-25 to allow the NHS to cope with the enormous extra demands caused by the Covid crisis.

“Based on our best estimates the funding announced by the prime minister this week should be enough to meet these pressures for the next two years,” said Max Warner, research economist at the IFS.

The think tank said it was “almost inevitable” that NHS funding would have to be increased again or budget cuts would have to be made. Longer-term demands “would likely require additional funding, or large savings from elsewhere in the NHS budget”, the IFS warned.

The analysis will raise fears that extra cash promised for Britain’s ailing social care sector will be swallowed up by the NHS in the years ahead.

Mr Johnson’s government revealed its plan to hike national insurance from 2022 to raise £36bn over three years, earmarking £5.4bn for the social care sector over the period.

But ministers have offered only vague pledges that the balance will shift towards social care after 2025, refusing to say what proportion it will receive. Care leaders claim the plan does nothing to address low pay and staff shortages in the cash-strapped sector.

After removing the money set aside for social care, the NHS would only enough deal with Covid-related pressures for two years, the IFS said – with £9bn of additional funding for the NHS in 2022-23 and £7bn in 2023-24.

The think tank’s report warned that the new funding is “far less likely to be sufficient in the medium-term”, since the impact of the pandemic will put pressure on the health service for many years to come.

Although direct costs such as treating patients with Covid, test and trace, vaccinations, PPE and other infection control measures would likely fall away, the indirect costs and pressures would be “greater and more persistent”, said the think tank.

The IFS report said: “Millions of people missed out on NHS care during the pandemic. Much of this care will need to be delivered eventually and waiting lists are likely to rise rapidly as these ‘missing’ patients come forward.”

Health secretary Sajid Javid said tackling the growing NHS treatment backlog was a “top priority”, having been warned the waiting list could reach 13 million. But the minister said he could not “guarantee” the extra money for the NHS would clear the current backlog

Figures released on Thursday showed hospital waiting lists in England hitting a new record high. A total of 5.6 million people were waiting to start treatment at the end of July, said NHS England.

Speaking on a visit to visited Moorfields Eye Hospital in London on Thursday, Mr Javid said the NHS would need to be “more innovative, more creative, more efficient and get more done” in order to tackle the waiting lists.

Labour MP Jonathan Ashworth, shadow health secretary, called for a clear plan to tackle the backlog. “Tory MPs are imposing an unfair, punishing and permanent tax rise on working people while failing to detail any credible long-term plan to bring the soaring waiting times back to the 18-week standard,” he said.

Ms Ashworth added: “Given ministers are forcing many patients and staff to pay more tax, the least they could do is explain when and how they plan to clear the backlog.”

It will be up to chancellor Rishi Sunak will decide how much of the £12bn annual proceeds from the national insurance hike will go to the NHS and how much will go to the social care sector after 2025.

The health and social care levy bill show the proceeds of the tax hike will be allocated “in such shares as between health care and social care, and in such shares as between England, Scotland and Northern Ireland, as the Treasury may determine”.

Although MPs voted to approve a plan to raise national insurance contributions at the first reading, they will be asked to pass the bill in a single day, next Tuesday.

Labour MP Thangam Debbonaire, shadow Commons leader, accused the government of trying to “ram the bill through in just one day”, adding: “Why the urgency ... Is it because the so-called plan is nothing more than a Tory tax rise?”

Meanwhile, Labour mayor of Greater Manchester Andy Burnham warned Sir Keir Starmer that the party has no time to waste in setting out an alternative to Mr Johnson’s plan for social care.

“My advice to my party would be not to leave it too long before presenting one. Criticism of the Tory plan alone won’t cut through unless we say what we would do,” he wrote in the Evening Standard.

Labour voted against the plan on the basis that the national insurance rise will hit young people and those on low incomes disproportionately hard. Sir Keir said his plan for social care was to “ensure those with the broadest shoulders pay their fair share”.

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