The health and social care system faces a “decade of misery” without reform and increased investment, according to the chief executive of the NHS Confederation.
A report by the Institute of Fiscal Studies and the Health Foundation, published today, found a cap on life-time social care costs in England and a reformed system of means testing in line with proposals in the Conservative Party’s 2017 manifesto would add £6.7bn to estimated spending pressures in 2033-34.
Under this modelled “modernised scenario”, which would also see frontloaded investment to improve NHS productivity, overall UK public spending would rise by 3% of GDP over the period.
This, the report said, would bring the UK broadly in line with current levels of spending in countries such as Sweden, Germany and the Netherlands and require up to £60bn of additional funding.
It added overall public spending as a fraction of national income is now slightly lower than in 1978-79, but spending on health has risen from 4% of national income to more than 7% over the same period. This has been possible not through rises in taxation but because the UK is spending 6% (£120bn) less on defence, debt interest and housing, the report said.
However, it added “it is extremely hard to see how we could repeat the same trick” as there is “barely any defence or housing budget left to cut” after eight years of austerity.
The report concluded: “If we want even to maintain health and social care provision at current levels, taxes will have to rise.”
It added £5bn a year could be raised by increasing all the main rates of income tax by one penny, about £6bn by putting a penny on VAT, and about £10bn by putting the same amount on national insurance.
The report said this should be considered in the context of assumptions on growth, which would see average household net income rise by around 17% over the next 15 years.
It also said the tax rises are “economically feasible” as the tax burden in the UK remains well below other “economically successful” European countries, such as Germany and France.
The report added there is “some evidence” the rises would also be “politically feasible” as “a plurality” of respondents to the British Social Attitudes Survey said they would prefer higher overall taxes and spending, with a majority regarding health spending as a top priority for extra funding.
It said there are “strong arguments in principle” against a hypothecated tax as “one would never want spending to rise and fall with revenue from a particular tax”.
Niall Dickson, chief executive of the NHS Confederation, which commissioned the report, described the findings as a “wake-up call”.
“It is now undeniable that the current system and funding levels are not sustainable,” he said. “Without new ways of delivering services and sustained investment, NHS and care services will not cope, and we will face a decade of misery in which the old, sick and the vulnerable will be let down.”
Responding to the report, the chair of the Local Government Association’s community wellbeing board Izzi Seccombe (Con) said: “If the NHS is to celebrate its 100th birthday, then it’s imperative that adult social care is not only given parity with the health service, but seen as a vital service in its own right and fully funded to future-proof it for the rising numbers of people who need care.
“Adult social care is facing a sinkhole in funding which is putting at risk provision of care for a growing number of people of all ages with care needs. Without an immediate injection of cash, even more providers will either pull out of contracts or go bust, leading to a lack of available care and a decrease in social care’s ability to help mitigate demand pressures on the NHS.”