The NHS budget is set to rise significantly over the next few years after the Treasury review of longterm trends in healthcare, chaired by former National Westminster Bank group chief executive Derek Wanless, showed that major increases in funding were needed to keep pace with an ageing population and advances in technology.

The preliminary findings of the Wanless review have shown, as expected, that health spending will need to rise significantly if the British health system is to match that of other developed countries.

Its aim is to identify the key factors which will determine the financial and other resources required to ensure that the NHS can provide a publicly funded, comprehensive, highquality service available on the basis of clinical need and not ability to pay.

He said: 'The key conclusion for my review is that the current method by which healthcare is financed through general taxation is both a fair and efficient one.'

The review confirmed that the proportion of GDP needed to provide the sort of health service the public expect should be 8-10 per cent. The current figure is around 6.8 per cent.

The final report of the review will be given to chancellor Gordon Brown by April 2002. Although it will not give a specific figure for the level of funding needed, the findings will be used to support the allocation of billions of extra pounds to the NHS over the next few years. Between now and the final report, health professionals and members of the public will be invited to provide feedback at nationwide events.

In his pre-budget report, the chancellor announced an extra£1bn for the NHS next year and confirmed the government's commitment to a publicly funded NHS.

Details of how the money will be allocated have yet to be revealed, although a Department of Health spokesperson said it would be spent 'at the frontline'.

The chancellor's announcement was broadly welcomed by health organisations, but the NHS Confederation called for 'a parallel honest debate about the time it will take for improvements'.

Acting chief executive Nigel Edwards said: 'A debate about the financing approach risks missing the point in the short term and causing increasing frustration.We need more doctors, nurses and beds, and - put simply - these are not grown on trees.We need around 65,000 doctors and 70,000 nurses to get to French levels of service and even more to get to German levels.

This will take time and we need to find a way to understand and live with this reality.'

The King's Fund also warned that increases in NHS funding 'take many years to bear fruit'. It also insisted that any rises in health service spending should be matched proportionately in social care.

Institute of Healthcare Management chief executive Stuart Marples said the increase in health spending would be welcomed by managers across the service 'if it proves to be really new money'.

He said: 'The new money and the intent to distribute 75 per cent via primary care should be used as an opportunity to show a restored faith in local managers. . .

'At the moment, politicians are not only setting the strategic direction and determining the levels of national funding, they are trying to manage detail at the sharp end as well.'