• OBR projections suggest UK health services would require a greater proportion of GDP spent on public healthcare
  • Projections assume policy remains unchanged but take account of rising costs and population changes
  • Projection would require an additional £40bn by 2030 to be found through extra taxation or shifting spending from other departments

New economic projections from the Office of Budget Responsibility suggest the NHS requires real terms funding increases of 3.5 per cent a year to 2030.

The OBR’s projections suggest that UK health services would require a greater proportion of GDP to be spent on public healthcare, rising from 7.4 per cent currently to 8.8 per cent over the next 14 years.

John Appleby

John Appleby

John Appleby: ‘The increase in projected spending does not seem out of line with history’

The projections assume policy remains unchanged but take account of rising costs and population changes.

Following the government’s spending review in 2015, health spending in England is set to increase by around 1 per cent each year to 2020, so meeting the projection would require a significant increase in funding.

Analysts at the Nuffield Trust think tank said the new “cost pressures projection” would require an additional £40bn by 2030, or £2.7m a year, found through extra taxation or shifting spending from other departments.

Another £60m would be delivered by an overall projected increase in GDP, bringing a total real terms spending increase of almost £100bn over 15 years.

However, Nuffield Trust chief economist Professor John Appleby warned that all the estimates could be subject to change depending on the full impact of Brexit.

He added: “Looking at the historical trends, an increase to 8.8 per cent of GDP from the current 7.4 per cent over a decade and a half is actually not that high – less than a tenth of 1 per cent of GDP each year.

“The potential increase of £100bn represents an average annual real terms increase of 3.5 per cent, less than the historical UK average of 4 per cent each year. This projected increase in share of GDP of 1.4 per cent over the next 15 years is the same as the increase over just five years between 1999-2000 and 2004-05.

“From this perspective, then, the increase in projected spending does not seem out of line with history – and indeed, is slightly lower than the long term growth in spending.”

Professor Appleby said raising spending to 8.8 per cent of GDP would match the 2015 levels of public spending on health in France, the Netherlands, Denmark, Sweden, Germany and Japan.

Despite the current financial crisis in the NHS, Professor Appleby said the amount the NHS is projected to cost the UK in the long term “continues to be affordable through general taxation”, and therefore the service does not require alternative sources of funding.