NHS funding increase needed as financial crisis looms

A significant increase in funding is needed to prevent a financial crisis in the NHS, according to a new report from The King's Fund.

The report finds that there are still significant opportunities to improve efficiency within the health service, for example by improving procurement and changing clinical practice. However, with more than a quarter of trusts already in deficit, the report warns that a financial crisis is now inevitable by 2015/16 and could arrive sooner than this, with damaging consequences for patient care.

The report highlights the progress made in improving efficiency in the face of the unprecedented slowdown in NHS funding since 2010. But it warns that the main ways of reducing costs - holding down salaries, reducing the prices paid to hospitals and cutting management costs - have now almost been exhausted.

Analysis conducted for the report shows that the NHS budget is under huge pressure. This will be exacerbated by the introduction of the Better Care Fund in 2015/16, which will divert a further £1.8 billion in NHS funding to support joint working with social care. In the long term, the report finds that on current projections, NHS spending as a proportion of GDP will fall to 6 per cent by 2021, its lowest level since 2003.

Crucially, the report argues that new funding should not be used to disguise the need for change by propping up unsustainable services. Instead it should be used for two distinct purposes:

  • to establish a health and social care transformation fund to meet the costs of service changes and invest in developing new models of care outside hospitals
  • to make emergency funding available to provide temporary support for otherwise sound NHS organisations experiencing difficulties as a result of the unprecedented pressures on their budgets.

The report, which is partly based on detailed research carried out in six NHS trusts, also identifies four key ways in which efficiency can be increased:

  • a stronger national focus on collating and disseminating good practice in improving efficiency
  • more emphasis on encouraging doctors, nurses and other frontline staff to identify and lead changes in clinical practice
  • stronger leadership at a regional level to plan and implement changes to services across large geographical areas
  • a more sophisticated approach to the way in which hospitals are paid and NHS organisations are incentivised to improve efficiency.

John Appleby, Chief Economist at The King's Fund and lead author of the report, said: ‘There is still scope to improve efficiency in the health service, and efforts to release savings should be re-doubled. However, it is now a question of when, not if, the NHS runs out of money. Without significant additional funding, this will lead to rising waiting times, cuts in staff and deteriorating quality of care. It is essential that politicians from all parties are honest about the scale of the financial pressures facing the NHS and initiate a public debate about the long-term sustainability of the health and social care system before, not after, the general election.'

Notes to editors: 

The NHS productivity challenge: experience from the front line is published by The King’s Fund on 1 May 2014. For further information or to request an interview with a spokesperson, please contact the Press and Public Affairs team on 020 7307 2585 (07584 146035 if calling out of hours).

The King's Fund is an independent charity working to improve health and health care in England. We help to shape policy and practice through research and analysis; develop individuals, teams and organisations; promote understanding of the health and social care system; and bring people together to learn, share knowledge and debate. Our vision is that the best possible care is available to all.