NHS facing £10 billion black hole by 2020 says new report

The long-term financial plan for the NHS is already "outdated" and the health service is facing a £10 billion black hole by 2020, according to a new report.

Analysis by the Chartered Institute of Public Finance and Accountancy (Cipfa) suggests the NHS will exceed its budget by £10 billion a year in four years' time as it struggles to make £22 billion in planned efficiency savings.

The quality of care could suffer and costs would be higher if the funding gap is not filled, the professional body's chief executive Rob Whiteman said.

New charges or rationing of care will have to be introduced or else the Government would have to raise taxes to make up for the shortfall, Cipfa warned.

Its report said the health service was facing new pressures since the Five Year Forward View was devised by NHS England in 2014 and the additional £8.4 billion in funding announced by the Government last year was being "used to plug short-term gaps".

Cipfa called for a "golden ratio" on health spending tied to Britain's gross domestic product (GDP), adding the UK health budget is expected to be at 7% of GDP by 2020 compared with 11% in Germany and France and 18% in the US.

Mr Whiteman said: "The NHS faces a shortfall of £2.45bn this year and that's likely to grow to £10bn by 2020. The Five Year Forward View, an attempt to bring long-term planning to the NHS, has floundered after just one year.

"Failure of long-term financial planning will degrade services and cost more in the end. We're seeing a worrying trend toward centralised control and a health service falling into a desperate scramble from one year to the next.

"The UK spends among the lowest of any developed nation on health, it is not enough. To protect the NHS, and the considerable value for money it offers, the Government must show leadership.

"Today, I'm calling for an independent commission, to set a golden ratio of GDP spend on healthcare free from short-term political priorities."

The report follows similar warnings from other bodies including a health research charity that earlier this month said the NHS is "off target" with its efficiency plan.

The Health Foundation said an NHS England briefing note showed the NHS delivered savings of just £1 billion last year.

The Government said a total of £10 billion would have been invested in the health service in real terms by 2020/21, while NHS Improvement figures showed £300 million less than planned had been spent on employing agency staff since last October.

A Department of Health spokesman said: "We know finances are challenging, but we are committed to the NHS which is why we're investing £10 billion to fund its own plan for the future - including nearly £4 billion this year.

"Our clampdown on expensive agency staff and management consultants is starting to have an impact in helping trusts, but hospital leaders must continue to show grip to ensure finances are placed on the same footing as quality of care and so every penny possible goes to the frontline."

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