NHS will remain free to use and funded by general taxation, government says

The NHS will remain funded from general taxation and free for patients to use, the government has pledged, in a statement that appears to rule out the introduction of charges to access care.

The government was responding to new projections from the Office for Budget Responsibility showing that the health service would need such large sums of money in the coming decades that it would threaten the UK’s public finances.

Growing demand for care and breakthroughs in treatment mean the next government in 2020 will have to end the NHS’s decade-long period of 1% annual budget increases, the OBR’s experts believe.

Analysis of the OBR report on future public spending on healthcare by the Nuffield Trust health thinktank shows that NHS spending UK-wide would have to rise from £139bn now to as much as £234bn by 2030 just to keep it keep working. That is based on its share of GDP going up from 7.4% now to 8.8% by 2030, one of the smaller increases the OBR envisaged.

The OBR said a growing and ageing population and increasing use of technology in healthcare would force ministers to spend more of Britain’s national wealth on the NHS. It set out eight different increases in GDP that could occur by 2065-66.

If older people start to exhibit better health than at present, and some evidence suggests that is already happening, then the NHS’s share of GDP may only have to go up slightly, to 7.9%, according to the OBR’s fiscal sustainability and public spending on health report. Its proportion of national wealth is due to fall to 6.9% by 2020, however, despite the extra £10bn that ministers are giving the service in England during this parliament.

If it become subject to “constant other cost pressures”, it may need to consume as much as 18.5% of GDP in 50 years’ time – more than double the current proportion – just to keep providing good-quality services.

Prof John Appleby, the director of research at the Nuffield Trust, welcomed the OBR’s calculations as proof that “the amount the health service is projected to cost the UK in the long-term continues to be affordable through general taxation”.

With the NHS budget UK-wide hitting £234bn by 2030, Appleby insisted that the 3.5% a year budget increases needed to raise its GDP share to 8.8% by then involved sums that “aren’t astronomical.”

At the moment, the NHS receives £139bn a year of the £1.9tn total value of GDP. If ministers decide to raise its share of GDP to 8.8%, that would see it get £234bn of what is expected to be the £2.7tn of national wealth in 2030.

“The potential increase of £95bn represents an average annual real-terms increase of 3.5%, less than the historical UK average of 4% each year,” Appleby said.

Ministers may decide not to substantially boost NHS funding after a “lost decade” of low funding between 2010 and 2020, Appleby added. Doing that would mean that it would not be able to afford to pay for new treatments, care quality would suffer and waiting times for treatment would rise, he said.

A government spokesperson said: “As the Nuffield Trust analysis makes clear, the way the NHS is currently funded continues to be sustainable and the public can be assured that under this government the NHS will remain free at the point of use.”

In an interview with the Guardian earlier this year Jeremy Hunt, the health secretary, said that whoever was in power after the 2020 general election would have to give the NHS a lot more money.

“The biggest risk to a single payer model when it’s coming through taxation is if the government screws up the economy,” he said. “If you have a strong growing economy, governments always have a choice to put more money into the NHS. It’s what Tony Blair did in the early 2000s. It’s what George Osborne did in the last spending review.

“And as we eliminate the deficit, providing the economy continues to grow, we will have that choice again in the future. I, for one, think we will have to put more money into the NHS, going forward, because of the pressures of an ageing population.”

NHS will remain free to use and funded by general taxation, government says