NHS will run out of newly promised funding in two years

The Institute for Fiscal Studies has warned that newly announced funding for the NHS might be insufficient to meet virus-related pressures in the medium term.

The financial think tanks says that the funding, announced by the Prime Minister on 7 September, will likely be sufficient to cover coronavirus-related pressures on the NHS over the next two years, 2022−23 and 2023−24. Ministers announced an additional £6.6 billion for NHS England in 2022−23 and £3.6 billion in 2023−24, on top of pre-pandemic plans, in the face of ongoing pressures from the pandemic.

However, the IFS says that the government’s new plans imply next-to-nothing in the way of additional virus-related support after that point, suggesting that the newly announced funding might be insufficient to meet virus-related pressures in the medium term. The IFS estimates that a possible shortfall of around £5 billion in 2024−25. The most likely outcome is that future top-ups will be made to meet ongoing pandemic-related cost and demand pressures on the health service.

Research from the organisation also found that the NHS was showing clear signs of strain even before the pandemic began, evident in the way in which waiting lists for elective treatment grew by 50 per cent since 2015, and that, following a decade of big budget increases, between 2009−10 and 2019−20 UK government health spending grew at an average real-terms rate of 1.6 per cent per year – lower than any previous decade in NHS history.

Looking ahead, direct pandemic pressures will include the costs of treating patients with coronavirus and ‘long Covid’, Test and Trace, vaccinations, PPE and other infection control measures. These pressures are substantial but are likely to fall rapidly from their current level. The IFS estimates that the combined cost of meeting these direct pressures could be around £5.2 billion in 2022−23, falling to £2 billion in 2023−24 and £0.9 billion in 2024−25.

Max Warner, a Research Economist at IFS and an author of the research, said: “The resources that the NHS will need to cope with pandemic-related pressures over the coming years are a huge known unknown. 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. But the settlement seemingly allows for almost no additional virus-related spending in 2024–25, making it almost inevitable that these initial plans will be topped up down the line.”