Rising costs of funding the NHS requires tax hikes, says IFS

The NHS needs to increase its spending by £95bn by 2033/34 just to maintain current service levels, the Institute for Fiscal Studies and the Health Foundation said on Thursday, suggesting the best solution would be to raise tax rates.

The UK’s health system will need national income increases of 3.3% a year with a higher taxation for households, who could end up paying an extra £2,000 annually.

To maintain these services levels, the report from the IFS thinktank and health charity believe that the only way is to increase citizens’ tax payments since cuts in spending are unsustainable.

If the NHS wishes to improve its current services the increases in national income would have to be by 4% a year at least, the report warned.

These funding problems come as the UK population grows bigger and older, increasing the costs that are needed to support them. Social care funding will need to increased by 3.9% a year to meet the needs of an ageing population and an increasing number of younger adults living with disabilities.

The public spending on health has seen a slowdown in recent years compared to the rates prior 2009/10. Growth in health spending since 2009/10 has only just been enough to account for a growing and ageing population and not to improve the services.

Niall Dickson, chief executive of the NHS Confederation, said: “This report is a wake-up call. And its message is simple – if we want good, effective and safe services, we will have to find the resources to pay for them.”

“The scale of what we face is not widely understood. Over the next 15 years in the UK, there will be four million more people over 65 and the prospect of a 40% increase in hospital admissions and further large increases in the number of people with numerous long-term conditions.

“It is now undeniable that the current system and funding levels are not sustainable. Without new ways of delivering services and sustained investment, NHS and care services will not cope, and we will face a decade of misery in which the old, the sick and the vulnerable will be let down,” he warned.