Surgeon and former health minister Lord Ara Darzi has warned that the Department for Health and Social Care could be faced with an annual funding gap of up to £60bn by 2030 because of a combination of demographic pressures and historic under-spending.
Darzi’s warning – made in a report for the Institute for Public Policy Research – comes at a time when prime minister Theresa May appears to be warming towards agreeing a long-term funding settlement for the National Health Service, something health secretary Jeremy Hunt favours.
Interim findings of the IPPR report projected that the NHS would need £200bn in today’s prices to fund its operations by 2030 without changes to the way that the service works. But the report said that if NHS funding only increased by the rate of real gross domestic product growth over that period it would have an annual budget of £151bn.
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Darzi served as parliamentary undersecretary of state for health in the last Labour government, between June 2007 and July 2009. His most generous estimate of NHS funding growth from the £120bn annual figure given for 2016-17 was real GDP growth plus 1.5% over the next 12 years – reflecting the rate of NHS funding growth between 1960 and 2015. But even that would fall £27bn short of the £200bn annual requirement by 2030.
The report said an even bigger challenge for the government would be social care funding, which it said would need an additional £10bn a year by 2030 just to maintain the existing system provision, which Darzi noted was “inadequate and needs reform which will likely require even more resources”. The health and the social care estimates combine to provide his £60bn ballpark figure.
Darzi said factors that had exerted significant pressure on the health and care system over the past decade would continue over the next, driven by changing demographics, the rise of chronic disease and growing patient expectations accompanied by scientific and technological progress.
“Even if we were to put the NHS back on its long-run funding trajectory and fill the social care funding gap we would still need radical reform in the way the system works to drive productivity in the NHS up to 1.1% per anum, around one-and-a-half times its long-run trend of 0.8 per cent,” he said.
Darzi added that the questions of financing and reform – in which the £60bn shortfall would be met through tax contributions – needed to be approached “with honesty and realism” but could not be used as an argument for ending the free-at-the-point-of-delivery ethos of the NHS.
He cautioned, however, that the health service’s main methods of increased productivity were “running out of road” and the system’s ability to find other sources of revenue funding were “increasingly limited”.
At a meeting of parliament’s Liaison Committee – which brings together select committee chars – Theresa May last month hinted that the NHS could get a long-term financial settlement ahead of the government’s next Spending Review, expected in 2019.
Health secretary Jeremy Hunt has previously voiced support for a 10-year funding deal to tackle the “rather crazy way that we have been funding the NHS over the last 20 years, which has basically been feast or famine”.
Darzi’s report makes reference to the feast or famine cycles Hunt described, but also identifies other issues affecting progress and stability within the NHS.
It identifies Lord Andrew Lansley’s coalition era structural changes to the way the NHS is organised as having “significantly increased complexity in the health and care system” and fragmenting leadership functions at a national level.
Darzi said that the fallout from the Health and Social Care Act 2012 was one reason for slow progress with health and social care integration, which is often cited by ministers as a key solution for dealing with some of the financial pressures faced by the NHS.
The report added that in addition to recruitment challenges related to healthcare professionals, there was also a notable issue with senior leadership at NHS trusts, with recent research indicating that around one-sixth have no chief executive in post.
Darzi said the skills gaps and churn in top-level leadership had been driven by a number of factors, including a policy agenda that emphasised “bureaucracy, targets, regulation and incentives over people as the drivers of quality” and the complexity of the government reform agenda.
He is due to publish detailed recommendations for addressing the issues the report raises later in the year.