Before we answer that though, let’s first take a look back at NHS spending across the decades.In 1950, the NHS spent an estimated £460 million. UK NHS spend 2017/18 to 2020/21 (based on planned spending by English NHS scaled up to UK)Since the historic peak of 7.6% in 2009/10, spending has been falling as a percentage of GDP.
The right-hand axis measures NHS spending as a share of national income.The average annual real growth rate over the NHS' history has been 4.0 per cent, with spending rising by 2010/11 to £137.4 billion (at 2012/13 prices). 04/07/2012
Five reasons why the Chancellor must find extra cash for the NHS at the budget
A year later the NHS laid out plans for how it might handle this gap. With the news this week of extra money for NHS staff pay rises , perhaps we are seeing the first signs of a change of direction in funding – one very likely to be welcomed by the public, whose concern about the NHS has grown over the last few years. Subsequent falls in the ratio following recessions are partly the reverse (with GDP growth accelerating), and partly deliberate policy as public spending is squeezed. Funding and sustainability Funding for the NHS in the UK has risen by an average of 3.7% a year in real terms since it was introduced in 1948. 6.3% a year: The highest average increase for the UK NHS over 10 years, between 1999/2000 and 2009/10. Spending on health: how does the UK compare internationally?
04/08/2017
As recognised by the NHS’s Five Year Forward View, by 2020 the NHS will need to find savings of around £22 billion in order to balance it... The rest of the increase is the result of government decisions on priorities across all public spending. The tightest four-year period of NHS funding was during the period 1950/51 to 1954/55 (an average annual real cut of 2.4 per cent). On current projections and NHS spending plans, between 2009/10 and 2020/21 spending will have fallen by around 0.5 percentage points of GDP – to 7.1%.After 11 years of NHS spending falling as a share of GDP, what would it take to reverse this trend?Just getting back to spending of 7.6% of GDP over the next three years would require a real increase in funding of £15.1 billion – £11.4 billion more than current plans – and equivalent to an average annual real increase of 3.3%, rather than the 0.8% currently planned. Although NHS budgets have been relatively protected compared to other areas of public spending, the health service has faced the most prolonged funding squeeze in its history over the last decade.
By 2020 it is likely to spend over 340 times as much – around £158.4 billion. 21/03/2018
Expenditure on the NHS has risen substantially since it was established on 5th July 1948. Note: In real terms, after adjusting for inflation, NHS spending in 2020 is likely to be 10 times as much as in 1950.Around half of this increase in spending was and will be funded by economic growth – by 2020 the UK’s GDP will be around five times larger in real terms than it was in 1950.
Such growth is not out of line with the history of NHS spending – indeed, somewhat below the 4% or so per year long run average. While government revenues from taxes have remained fairly flat at around 36% of GDP since the 1950s (with the absolute revenue growing in real terms as the economy has grown), the UK now spends much less on things like defence, housing, utilities and transport than we once did – leaving more to be spent on the NHS.Economic growth and political decisions about spending priorities mean that, between 1950 and 2020, spending on the NHS across the UK is likely to have doubled as a share of GDP – from 3.5% to around 7.1%.As the chart shows, however, changes from year to year in both NHS spending and GDP mean that the spending path from 1950 to 2020 has been somewhat erratic. The left-hand axis measures real-terms spending (in £ billion).
That is such a huge increase that the original spending is now a mere decimal point.But these figures are cash, and over this period a huge chunk of the increase in spending will have been swallowed up by higher costs.
Some of the sharp increases in spending as a percentage of GDP are arithmetical – when GDP growth is low or falling (as in recessions). With strings attached: taking a closer look at the new NHS money
09/02/2018 NHS and social care funding: the outlook to 2021/22