The man who laid the ground for the massive spending boost to the NHS has warned that the service could be up to £15.2bn short again in three years.
Revisiting his seminal report for the Treasury in 2002, Sir Derek Wanless has warned that unless major leaps are made in productivity and public health, the NHS will be at least£7.2bn short by 2010. This could rise to£15.2bn - around a sixth of the NHS budget - without major progress.
Investment in the NHS was raised to record levels after the recommendations in the 2002 Treasury-commissioned report by the former NatWest Group chief executive.
But in a fresh report for the King's Fund that updates the original, Sir Derek has warned that if improvements are not made then 'even higher levels of funding will be needed over the next two decades to deliver the high-quality services' envisaged in his 2002 study.
He lays much of the blame at the door of the government. While the current set of policies is right for the future, he says 'pressure to produce quick results has led to some policies and initiatives being introduced without adequate preparation'.
The government has also failed to take into account the impact of the policies as a whole, the report says. This was central to the deficits crisis of 2004-05 and acute trusts struggling to balance the books with the move of services from secondary to primary care.
Structural change had been financially costly but also led to the loss of experienced staff and changes in working relationships.
The government must strengthen its capacity for analysis so that it can monitor the effectiveness of policies - and be prepared to change direction if it is shown they are not working, Sir Derek says.
Five years ago Sir Derek set out three models of how the NHS could spend the money - slow uptake, solid progress, and fully engaged. He urged the service to achieve the third - but says performance now falls between the first two models.
If the NHS funding growth slows to an expected 3 per cent by 2011, the gap will be£15.2bn,£9.2bn and£7.2bn for the three scenarios.
The report, commissioned and co-authored by the King's Fund, also calls for detailed research into ice reconfigurations.
Sir Derek says there was a question mark over the potential for service reconfigurations to increase quality and reduce costs.
On public health he says that the overall health of the nation has improved, with particular progress on smoking.
But obesity levels have risen to a 'much worse level than even the slow uptake scenario'.
Policy to tackle public health had been 'piecemeal, often modest initiatives' the report says.
And although the Department of Health's pledge to increase the number of NHS staff has been exceeded there 'is very little robust evidence so far to demonstrate significant benefits' through new pay deals.
More staff will be needed from as early as next year.
How the report has been received
Stephen Thornton, chief executive, Health Foundation
The recommendations are all very good and all very worthy but are about what government should do to the health service. They are not asking how you bring about the culture change to get clinicians thinking about how they can improve the quality and safety of care and at the same time save money.
Peter Carter, general secretary, Royal College of Nursing
We should not underestimate the improvements in some areas. But it seems we are at a crossroads. The NHS now needs policies to ensure organisational stability and a comprehensive spending review that delivers sustained funding.
Nigel Edwards, policy director, NHS Confederation
The interesting question is, where do we go next? It is clear there is quite a lot to do on getting back on a trajectory of engaging people in managing their own health. We are pleased the report recognises that health policy is moving
in the right direction.
Dr Jonathan Fielden, chairman, British Medical Association consultants committee
In the last few years the government has been so determined to balance the books and bring down NHS debt that doctors have been prevented from introducing innovative practices to improve productivity. Hospital go-slow policies have meant that patients have had to wait longer for their operations despite the fact that doctors and their professional colleagues have been willing to carry them out.
NHS Alliance chief executive Michael Sobanja
Clinicians and managers working together through practice-based commissioning are producing real benefits for patients and for tax payers. They show that it is possible to squeeze the maximum value out of every pound spent at the same time as providing better patient care.
Andrew Haldenby, director, Reform
The problems of the NHS are due to the decision to spend rather than reform earlier in this decade. The current state of play demands a dramatic acceleration in reform, far beyond what today's report proposes.
Department of Health statement
We agree that more has to be done to improve NHS productivity and to tackle some lifestyle issues like obesity. We also agree that spending on healthcare will need to continue to grow above inflation if we are to meet patients' growing expectations.