NHS Spending Facing Real Terms Cuts According to Institute for Fiscal Studies

Public policy analysis has revealed that NHS funding will fall by 1.3% in real terms by the end of the decade.

This will be due to the growth and ageing of the population, while inflation will also play a role in this phenomenon.

Research by the Institute for Fiscal Studies (IFS) indicates that Department of Health spending will have increased by 12% in real terms since 2009.

This will outstrip population growth over the same period, once the age structure of the same population is taken into account, and the IFS indicates that this will equate to a 1.3% slump in capital spend.

Central to this process is the greying population, which means that the number of people aged over 85 will increase by 16% by 2020.

And the additional healthcare costs required for elderly citizens mean that spending would need to increase by 13.5% in real terms over the decade in order to retain parity.

Analysts from the Institute of Fiscal Studies also believe that costs in the NHS will rise by 1.6% annually between 2013/14 and 2020/21.

This is attributed to the rising prevalence of long-term health conditions and improvements required in medical technology within the healthcare system.

Report author George Stoye, a senior research economist at IFS, outlined the figures discovered by the IFS.

“Real UK health spending increased by 1.3% per year between 2009/10 and 2015/16. This is the lowest rate of increase over any similar period since the mid 1950s, since when the long-run average annual growth rate has been 4.1%.”

Stoye noted that government policy will effectively be insufficient to address the problems in the healthcare system.

“Current government plans are consistent with David Cameron’s pledge at the 2015 election to increase NHS spending by £8 billion. But they would leave health spending in 2019/20 below the amount needed simply to keep pace with the growth and ageing of the population seen since 2009/10, let alone the amount required to account for multiple other pressures on the health budget.”

Finally, Stoye called on the authorities to forge a plan in order to address the coming demographic difficulties.

“Population ageing and increased demand for health will push up spending pressures by tens of billions of pounds over coming decades. We need credible strategies for dealing with this.”

GP leaders have warned that despite pledges of additional funding for general practice through the GP Forward View, the profession remains billions of pounds short of the funding it needs.

 
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