Rowena Crawford: NHS and social care funding: the outlook to 2021-22

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In this slideshow, Rowena Crawford, Senior Research Economist at the Institute for Fiscal Studies, provides the outlook for NHS and social care funding over the next decade and examines the trade-off between English NHS spending and other public service spending during this period.

The slideshow is related to: NHS and social care funding: the outlook to 2021/22 (July 2012 ), an Institute for Fiscal Studies (IFS) report by Rowena Crawford and Carl Emmerson, funded by the Nuffield Trust. More information can be found on our website: www.nuffieldtrust.org.uk.

Rowena presented at the Nuffield Trust and Institute for Fiscal Studies event: NHS and social care funding: the outlook for the next decade.

Published in: Health & Medicine, Business
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Rowena Crawford: NHS and social care funding: the outlook to 2021-22

  1. 1. NHS and social care funding: the outlookto 2021-22Rowena Crawford and Carl EmmersonFunded by the Nuffield Trust as part of the project Buying Time:What is the scale of the financial challenge facing the NHS and howcan it rise to the challenge?
  2. 2. Historical UK NHS spending Tightest 4-year period (last 50 years): 1975-76 to 1979-80 (AARG 1.3%) Tightest 4-year period: 1950-51 to 1954-55 (AARG -2.4%) Average Annual Real Growth: 4.0% 140 14 Percentage of national income real terms AARG: AARG: £ billion, 2012–13 prices 120 3.3% 6.4% 12 % national income 100 10 80 8 60 6 40 4 20 2 0 0 1949−50 1953−54 1957−58 1961−62 1965−66 1969−70 1973−74 1977−78 1981−82 1985−86 1989−90 1993−94 1997−98 2001−02 2005−06 2009−10Source: Figure 1
  3. 3. Scenarios for English NHS spending to 2021-222010-11 to 2014-15• Assume cash spending plans for English NHS spending turn out as Budget 2012 forecast – Essentially a 4-year real freeze in spending – Would be likely to be the tightest 4-year period in the last 50 years2015-16 to 2021-22:• Consider 3 scenarios for English NHS spending: – Real freeze (average 0.0% per year real growth) – Constant as % national income (average 2.4% per year real growth) – Long run average growth (average 4.0% per year real growth)
  4. 4. Scenarios for English NHS spending to 2021-22 145 Outturn (£ billion, 2012–13 prices) SR2010 Plans £10 bn English NHS spending 135 OBR A NHS: Real freeze £4 bn 125 NHS: constant % national income NHS: LR Average £24 bn 115 105 95 85 2006–07 2007–08 2008–09 2009–10 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 2021–22 2010–11 2011–12Source: Figure 2a
  5. 5. Scenarios for English NHS spending to 2021-22 8.0% Outturn SR2010 Plans (percentage of national income) NHS: Real freeze NHS: constant % national income 7.5% English NHS spending NHS: LR Average 7.0% 6.5% 6.0% 5.5% 5.0% 2006–07 2007–08 2008–09 2009–10 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 2021–22 2010–11 2011–12Source: Figure 2b
  6. 6. What is likely to be available for public services? Average annual real change (%) 2010−11 to 2014−15 to 2016−17 to 2014−15 to 2014−15 2016−17 2021−22 2021−22 Total public spending –0.8 –0.9 +2.1 +1.3 Debt interest spending +3.4 +7.0 +1.4 +2.9 Welfare spending +1.0 +0.9 +2.1 +1.8 Public service spending –2.1 –2.9 +2.2 +0.8 With £8.5bn welfare cut by 2016−17: Welfare spending +1.0 –2.6 +2.1 +1.1 Public service spending –2.1 –1.7 +2.2 +1.1 Memo: forecast real growth in national income 3.0 2.1 2.4Source: Table 2
  7. 7. What is likely to be available for public services? Average annual real change (%) 2010−11 to 2014−15 to 2016−17 to 2014−15 to 2014−15 2016−17 2021−22 2021−22 Total public spending –0.8 –0.9 +2.1 +1.3 Debt interest spending +3.4 +7.0 +1.4 +2.9 Welfare spending +1.0 +0.9 +2.1 +1.8 Public service spending –2.1 –2.9 +2.2 +0.8 With £8.5bn welfare cut by 2016−17: Welfare spending +1.0 –2.6 +2.1 +1.1 Public service spending –2.1 –1.7 +2.2 +1.1 Memo: forecast real growth in national income 1.7 3.0 2.1 2.4Source: Table 2
  8. 8. What is likely to be available for public services? Average annual real change (%) 2010−11 to 2014−15 to 2016−17 to 2014−15 to 2014−15 2016−17 2021−22 2021−22 Total public spending –0.8 –0.9 +2.1 +1.3 Debt interest spending +3.4 +7.0 +1.4 +2.9 Welfare spending +1.0 +0.9 +2.1 +1.8 Public service spending –2.1 –2.9 +2.2 +0.8 With £8.5bn welfare cut by 2016−17: Welfare spending +1.0 –2.6 +2.1 +1.1 Public service spending –2.1 –1.7 +2.2 +1.1 Memo: forecast real growth in national income 1.7 3.0 2.1 2.4Source: Table 2
  9. 9. What is likely to be available for public services? Average annual real change (%) 2010−11 to 2014−15 to 2016−17 to 2014−15 to 2014−15 2016−17 2021−22 2021−22 Total public spending –0.8 –0.9 +2.1 +1.3 Debt interest spending +3.4 +7.0 +1.4 +2.9 Welfare spending +1.0 +0.9 +2.1 +1.8 Public service spending –2.1 –2.9 +2.2 +0.8 With £8.5bn welfare cut by 2016−17: Welfare spending +1.0 –2.6 +2.1 +1.1 Public service spending –2.1 –1.7 +2.2 +1.1 Memo: forecast real growth in national income 1.7 3.0 2.1 2.4Source: Table 2
  10. 10. Trade-off between English NHS spending and other public services (2015-16 to 2021-22) 3.0 Average annual real growth in other public service spending 2.5 2.0 NHS: real freeze 1.5 ‘Equal pain’ 1.0 1.4% 1.1% NHS: constant % national income 0.5 0.6% NHS: LR average 0.0 0.0% -0.5 -1.0 0.0% 1.1% 2.4% 4.0% -1.5 -1 0 1 2 3 4 5 6 Average annual real growth in English NHS spendingSource: Figure 3
  11. 11. Trade-off between English NHS spending and other public services (2015-16 to 2021-22) 3.0 Average annual real growth in other public service spending 2.5 2.0 NHS: real freeze 1.5 ‘Equal pain’ 1.0 NHS: constant % national income 0.5 NHS: LR average 0.0 -0.5 -1.0 -1.5 -1 0 1 2 3 4 5 6 Average annual real growth in English NHS spendingSource: Figure 3
  12. 12. Trade-off between English NHS spending and other public services (2015-16 to 2021-22) 3.0 Average annual real growth in other public service spending 2.5 2.0 NHS: real freeze 1.5 ‘Equal pain’ 1.0 NHS: constant % national income 0.5 NHS: LR average 0.0 -0.5 -1.0 -1.5 -1 0 1 2 3 4 5 6 Average annual real growth in English NHS spendingSource: Figure 3
  13. 13. Trade-off between English NHS spending and other public services (2015-16 to 2021-22) 3.0 Average annual real growth in other public service spending 2.5 2.0 1.5 ‘Equal pain’ 1.0 NHS: constant % national income 0.5 NHS: LR average 0.0 -0.5 -1.0 -1.5 -1 0 1 2 3 4 5 6 Average annual real growth in English NHS spendingSource: Figure 3
  14. 14. Trade-off between public service spending and tax increases/further welfare cuts 90 NHS: constant % national income… Required tax increases or further 75 welfare spending cuts (£ billion, 60 £44bn 2012−13 terms) 45 30 15 £9bn 0 1.0% 2.4% -15 -30 -45 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Average annual real growth in public service spending (excluding English NHS)Source: Figure 4
  15. 15. Social care funding• Increasing pressures on public social care funding – Demographic changes – Dilnot Commission proposed reforms to funding framework• Projections in the Commission final report for funding 2014-15 to 2021-22: – Current system: 3.3% a year real increase – Proposed system: 5.4% a year real increase• Implementing the proposed system while keeping English NHS spending constant as a share of national income... – Other public services would grow by 0.3% per year – (Compared to 0.5% per year if current social care funding system maintained)
  16. 16. Conclusions• Planned real freeze for 2010-11 to 2014-15 will, if delivered, be the tightest period of funding in the last 50 years of the NHS• The outlook for public service spending over the next decade continues to look tight – Cuts of 1.7% a year in 2015-16 and 2016-17, even with hinted at £8.5 billion welfare cuts – Growth of 2.2% a year in 2017-18 to 2021-22 – Growth of 1.1% a year over whole period 2015-16 to 2021-22• Implications of English NHS spending over 7 years from April 2015: – Real freeze: other public service spending grows by 1.4% pa. – Constant % national income: other public service spending grows 0.6% pa.
  17. 17. Conclusions• Also pressure on public funding of social care – Would further reduce the available funds for other public services• Squeeze on other public services could be ameliorated by tax increases or further welfare cuts• OBR estimates suggest increase in NHS spending in line with national income would not be sufficient to keep pace with costs of ageing population• NHS productivity would need to increase to fill the gap between funding and demand pressures
  18. 18. NHS and social care funding: the outlookto 2021-22Rowena Crawford and Carl EmmersonFunded by the Nuffield Trust as part of the project Buying Time:What is the scale of the financial challenge facing the NHS and howcan it rise to the challenge?

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