Higher NHS spending is necessary and affordable

The King’s Fund suggest that a 3.5% annual real-terms rise in NHS expenditure, combined with the provision of ‘moderate’ and ‘higher’ social care needs free at the point of use, would bring total health and social care expenditure up to between 11 and 12 per cent of UK GDP by 2025. This compares with the 16.9% of GDP spent by the US and the 11% spent by France on healthcare alone in 2015.

If UK economic growth continues at an annual average of 2%, by 2025 GDP at 2013 prices will be around £2.2 trillion compared to £1.8 trillion in 2015, an increase of £400 billion. In 2013 terms an increase in spending on health and social care to 12% of GDP would represent around an additional £60-70 billion annual spend in 2025. Yet even with this increase in health and care expenditure, the nation as a whole would still have over an extra £300 billion to spend on all other goods and services, public and private. The King’s Fund’s recommendation is thus eminently affordable.

Although we can spend a greater share of future national income on health without reducing our ability to enjoy other goods, the necessary transfer of some of that additional purchasing power to the NHS does require an increasing proportion of that income to pass from private hands to the public sector. The King’s Fund Commission come to the conclusion that for the most part introducing new charges for NHS services is unlikely to raise significant amounts and may have detrimental effects on access to healthcare. Their exception to this is the combining of a reduction in prescription charge exemptions with a reduction in the charge itself, perhaps from the £8 of the current charge in England to around £2.50 with a capped annual total payment. They also recommend the targeting of some benefits that are currently available to all pensioners, irrespective of income. More general tax changes suggested are some increases in National Insurance and additional wealth and property taxes. The latter make additional sense in that currently the sicker proportion of the better-off elderly are disproportionately liable for their own care costs. While a wealth tax for this purpose would also target the wealthier, it would at least be shared across all of those in a particular bracket, whether healthy or unhealthy. Whatever choices are ultimately made here, avoiding making them by pretending that current health expenditure plans can produce satisfactory outcomes is socially and politically unsustainable. The general link between public services and slower productivity suggested above means that this also applies to other important services.