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EXCLUSIVE: NHS ‘faces £60bn funding gap by 2025’

The health service faces an “eye-watering” funding gap of £60bn by 2025, NHS England has disclosed to HSJ.

The health service faces an “eye-watering” funding gap of £60bn by 2025, NHS England has disclosed to HSJ.

The figure is based on an NHS England forecast that underpins a major report published on Thursday. The £30bn funding deficit by 2020, projected in this document, was revealed by HSJ last Friday.

NHS England director of strategy Robert Harris told HSJ this week that the predicted deficit doubled when the timeframe is extended to 2025.

The revelation comes as Monitor chief executive David Bennett issued a bleak assessment of the service’s viability, concluding that even if the NHS made all the savings the regulator could conceive of, it would still have a minimum funding gap of £2.5bn in eight years’ time.

Professor Harris said: “Between 2013-14 and 2020-21 the gap between resources available and what we need to spend is about £30bn. If we go a bit further ahead to 2024-25, that gap will be around £60bn.

“They are pretty eye-watering numbers.”

The projected deficit assumes health service funding remains flat in real terms until 2025 and takes into account rising demand for services resulting from demographic pressures.

The report, The NHS belongs to the people: a call to action, was expected to say the health service will become unsustainable without a fundamental rethink of service provision. It calls for a national debate to help shape a new 10-year strategy.

Professor Harris said “everything was on the table” under the terms of the review − except cutting “fundamental” services or charging for them. The status quo was not an option.

“We don’t believe we will cut or charge for fundamental services,” he said. “We firmly believe reducing the scope of services that the NHS offers is unconstitutional and more charges, or co-payments, are inconsistent with NHS principles.”

He added: “We are not consulting on anything right now. We do not have any predetermined solutions or options. We need to be bold and creative in our thinking but there are some things that we are not considering.”

The development of the strategy will take place in three phases. First, NHS England will consult patients and interested parties over the summer.

Feedback will be used by NHS England to draw up potential options that will be subject to further consultation before a final report is published by March 2014.  

Plans for the review were first revealed by Sir David Nicholson in an HSJ interview last month.

The NHS England chief executive said it was time to question whether “the straightforward commissioner-provider split” was the best way to organise care for some communities.  

A spokeswoman for NHS England said it was “not ruling out” proposing legislative changes to the Department of Health.

Commons health committee chair Stephen Dorrell told HSJ he thought the forecast sounded “roughly” right but said “the last thing the health service needed” was another “disorganisation” resulting from fresh legislation.

Mr Dorrell said the service faced the “challenge” of using its “budget more efficiently year on year” and did not necessarily “need to cut anything” to fill the gap. He stressed it was crucial that service improvements were delivered at the same time as cost savings.

John Appleby, chief economist at the King’s Fund, said assuming no real term funding increases until after 2025 was a “bold assumption” and that the calculations were “overly pessimistic”.

The economy was tough at present but this was unlikely to last until 2025 and there would be “public demand to return to increases in real spending quite soon”, he said.

Professor Appleby added some parties would use the figure to refresh calls for charging for services but this would be “less efficient” than funding through taxation.

An NHS England spokeswoman said the £60bn was a “straight line forecast” of the £30bn figure could “roughly double” in the space of five years.

“This is why we need to think now about how we shall transform the NHS, think about new models of care, and think about where and how we access health and care services,” she said.

Readers' comments (10)

  • I'm waiting for the next headline which will be a 90bn funding gap by 2030.

    The wider point is this:

    People either want their families to die earlier from preventable causes, or we need to find a way to pay for the alternative.

    At a system level more can be done to get efficiencies in treatment, but unlikely to halve the costs per treatment in real terms, so efficiency isn't the whole answer.

    The only thing missing from this public discourse is the contribution of prevention and engagement. Wanless did it so well.

    Surely time for our national leaders in public health to make their case for something more bold and radical. I cannot believe languishing in the obscurity of councils making cuts is the answer - but who will provide the real voice, and the data to back it up?

    Mr Appleby, the stage is set.

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  • Cancel HS2 and Trident refit , no funding gap.

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  • Do we really need repeated statements from highly paid officers at NHS England to tell us that if we freeze public spending on health for a period of 10 to 15 years there's going to be a bit of a funding gap? I'd kind of worked that out for myself, which is why I'm not in favour of doing it.

    By my "back of an envelope" calculations, if we have a relatively modest recovery over the next period with average GDP growth of 1.5% p.a., and maintain health spending at current levels then we're looking at a fall in our spend on health as a % of GDP to around 6.9%. That'll be the lowest of the G8 nations, probably the lowest in the EU.

    Makes you proud to be British. At least the Daily Mail readers might stop worrying about "health tourists" I suppose.

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  • Wanless knew he was right!!

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  • Sheena Asthana

    I find the assumption that further demographic ageing will inevitably hike up costs really interesting - and, like John Appleby, overly pessimistic.

    At present, the oldest areas (which are grappling with the highest burdens of chronic disease and disability) do NOT receive the highest funding allocations. These actually go to areas with really young (but deprived) populations who would indeed benefit from effective preventative interventions (which probably lie outside the NHS).

    While ageism (and technical flaws in resource allocation) is probably playing a big role in the lower funding in older areas, there are some positive factors at work - e.g. a compression of morbidity, greater compliance (in affluent areas) with treatment and lifestyle regimes and good primary care.

    These should make us question projections that NHS expenditure is going to spiral out of control with the 'burden' of ageing.

    I'd also question whether a one-fit model of larger practices is universally applicable (one encounters excellent smaller practices that manage the health and social care needs of vulnerable older patients in incredibly creative and caring ways).

    That said, if concerns about spiraling costs make us reconsider the cost benefits of maintaining a purchaser provider split (and associated costs), I'd welcome that!

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  • Steven Burnell

    I'm not sure what such extrapolated headlines are meant to achieve - a crisis tipping point to facilitate radical change & provider compliance? a softening up of the public for lower standards / new fees / higher taxes or just hospital & service closures? more money moving to LA councils? or just heat up the debate?

    It would be more constructive to highlight the current economic costs of poor public health such as obesity & diabetes & other long-term conditions & other demographic related issues such as dementia & then propose cost-effective solutions to yield £Bns into the economy.

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  • The "Nicholson challenge", couched as a financial savings target, is upside down.
    It is a missed opportunity to harness the creative power of austerity. Necessity truly is the mother of invention.
    The challenge should not be how we save what we don't have, but how we best invest what we do have.
    This would be true whether we had less, the same or more money.
    The NHS has never been good at aligning investment with objectives and outcomes (note the struggle to get any meaningful programme budgeting off the ground) but that's no reason not to think along those lines now. And we are now better placed than ever to align NHS objectives and investment with those of local authorities and others involved in care.
    Our best hope of getting through this tough period is by getting onto the front foot, adopting a positive attitude, and pooling resources with those who share common purpose.
    We are not alone. We have partners who share our objectives in each local authority area, and we have forums in which to meet, such as the health and wellbeing boards and academic health service networks. Each locality can and should take stock of local needs and assests (and assets are not just the money but things like buildings, skills, personal resilience and social capital).
    No energy should be wasted regretting what we have lost or don't have.
    We should be open with the public about the new "offer" and their part in it. Managing demand begins by managing expectations, and managing expectations requires honesty and engagement.
    The Francis report gave us a new duty of "candour".
    Austerity gives us a new duty of "can do".
    That's the real challenge.

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  • So why are we wasting NHS cash with repeated reorganisations, fat redundancy payoffs for failed directors and the massive transaction costs of the internal market?

    Why aren't we spending more money on public health and real prevention either?

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  • I would be amazed, nay speechless, if public health staff actually achieved anything other than earnest well meaning reports and lots of hand wringing, platitudes and same old same old. They should've gone to academia not local authorities.
    The NHS will be part privatised within 5 years.

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  • EXCLUSIVE: the implications are clear. If we extrapolate to 2085 the NHS funding gap will be £1.9 trillion. As an accredited health economist and responsible user of compound interest calculations, I can reveal that this budget pressure equates to twenty times the NHS budget or three times total government spend. This is not as problematic as it seems. Thanks to the feelgood spirit of the 2012 Olympics, the level of commitment to maintaining a taxpayer funded NHS will extend well into the late 21st century. However the majority of the taxpayers will have to come from what we can designate as "subsidiary" countries. In layman's terms this means closing down all other government funded services in the UK and turning over the entire GDP of four moderately sized European economies to run our health service. By simply shutting down Portugal, Greece, Denmark and Ireland and funnelling this resource into our health services, it would provide ample money to run the NHS for most of the rest of this century. This equates to barely 15% of the EU - a far smaller percentage reduction than the 2000% efficiency challenge being faced by the health service alone over that period. If there is a more elegant solution to the funding gap I would like to hear it.

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