NHS faces 'most significant financial challenge in its history'

The NHS is 'facing the most significant financial challenge in its history', according to an analysis by The King's Fund and Institute for Financial Studies.

The analysis says that over the next spending review period, 2011/12 to 2013/14, all departments, including the NHS, could face 2.3% cuts.

However, other departments could face greater cuts if, as both Labour and the Conservatives have pledged, the NHS is given some protection.

John Appleby, chief economist at the The King's Fund, said: ‘Our analysis shows that the NHS is facing the most significant financial challenge in its history.

'Both the Labour and Conservative parties have pledged to avoid cutting NHS spending in real terms from 2011 but this will come at a big price - whether in departmental cuts elsewhere or tax hikes.

'The NHS has enjoyed unprecedented increases in funding since the turn of the century but those days will soon be over.

'That's why it's crucial that the service does all it can over the next two years to prepare itself for the financial freeze that will take hold over the two coming spending review period.'

The analysis concludes that future funding is likely to fall short of the population's healthcare needs. It says the funding gap could be filled by increasing NHS productivity. This would need to be in the order of up to £8.2bn a year, or 7.7%.

NHS Confederation chief executive Steve Barnett said: ‘Tough decisions will be required in the NHS if services are to be maintained and major cuts are to be avoided.

‘There are significant productivity gains to be made in the NHS, but this will require system-wide solutions, adoption of innovation and courage in decision making. Quality improvements through greater efficiency and redesigning services can provide significant budget savings, but these may well involve taking some tough decisions.'



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