Published: 15/12/2005 Volume 115 No. 5986 Page 8

A study has claimed that the NHS will face a deficit of almost£7bn by 2010 unless more radical steps to create a market are introduced.

The report by right wing think tank Reform said cost pressures on the health service, such as staffing, prescribing and use of the private finance initiative, will demand an extra£18.2bn by 2010, when only£11.4bn is likely to be allocated if the increase in funding drops to 2 per cent in 2008.

Its£18.2bn estimate was based on its figures suggesting the NHS would spend an extra£13.2bn over the period, while additional activity would cost a further£5bn.

Co-author Professor Nick Bosanquet, professor of health policy at Imperial College London, said that the government was facing 'system failure'.

The report calls for investment in greater pluralism, an acceleration of moves towards foundation trusts and practice-based commissioning and for the value of the 18-week target from referral to treatment to be assessed by the National Institute for Health and Clinical Excellence. It says at least£1bn should be spent on developing new providers, in order to secure 'major productivity gains'.

A Department of Health spokesperson said there were 'always siren voices who question the future of the NHS' but said the facts showed waiting lists at a record low, while the NHS was ahead of planned efficiency savings by£200m.