A brief history of NHS funding over the last ten

years…

Prof John Appleby

Chief Economist

King’s Fund

Bust, boom, bust?

• 1997-2000: Stick to Conservative spending plans

• 1999/2000: Blair announces NHS funding boost

• 2002: Derek Wanless forecasts future funding needs

• 2007 CSR: slow down in NHS funding growth…

UK NHS: Cash and real spending: 1997/8-2010/11

0

20,000

40,000

60,000

80,000

100,000

120,000

140,00019

97-9

8

1998

-99

1999

-200

0

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

£mill

ions

Cash

Real

From £44 billion…

…to £130 billion…

A real increase of 110%

UK NHS spending as percentage of GDP

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

83-8

4

84-8

5

85-8

6

86-8

7

87-8

8

88-8

9

89-9

0

90-9

1

91-9

2

92-9

3

93-9

4

94-9

5

95-9

6

96-9

7

1997

-98

1998

-99

1999

-200

0

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

Per

cen

t

From £1 in 20 in the entire economy spent on the NHS…

…to £1 in 12

Percentage annual change in UK NHS real spending

-2

0

2

4

6

8

10

83-84

84-85

85-86

86-87

87-88

88-89

89-90

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

10-11

Rea

l ch

ang

e: P

er c

ent

Thatcher Thatcher/Major Major Blair

2.0% pa

3.8% pa

3.8% pa

Blair

3.8% pa

Average real increase per year

6.8% pa

Blair

7.6% pa

Brown

4% pa

After years of parsimony…

…political decision to spend more…

…but growth slows (it will feel like a cut)…

Future UK and EU health care spending?

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

Per

cen

t GD

P

EU average Actual UK

Slow uptake Solid progress

Fully engaged 3% real NHS grow th

Linear (EU average) Pow er (EU average)

Historically, UK has lagged behind EU-15 countries…

…but now catching up…

On target for Wanless recommendations?…

The £64 billion question:

Where did the money go?

…higher costs

UK NHS spending increase: 2002/3-2007/8Total cash: £43.2 billion

Inflation absorbed £18+billion….

…leaving around 56% of the cash increase to buy extra things

…higher pay costs

Hospital and community health service pay inflation: 1997-2007

0

20

40

60

80

100

120

140

160

180

200

1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-5 2005-6 2006-7 2007-8

Ind

ex:

1997

=10

0

Pay inflation: up 80% in ten years….

Large pay awards for doctors in particular as a result of new contracts ….

…more staffChange in English NHS staff: 1997 to 2006

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Total

Consultants

GPs

Nursing, midwifery, HV staff

Practice nurses

Ambulance

Allied health professionals

All support staff A quarter of a million new NHS staff over ten years….

But last few years have seen minimal increases as NHS deals with deficits and plans for a tighter financial future

…shorter waiting times

Inpatient waiting list: England

0

200000

400000

600000

800000

1000000

1200000

1400000

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2007

Nu

mb

ers

wai

tin

g

Quarterly data for

2007

…and waiting times reduced massively: virtually no one waiting more then 6 months….

Waiting list now at its lowest since 1974….

…more patientsElective admissions

5,100,000

5,200,000

5,300,000

5,400,000

5,500,000

5,600,000

5,700,000

5,800,000

5,900,000

6,000,000

6,100,000

6,200,000

1998 1999 2000 2001 2002 2003 2004 2005

11% increase in elective admissions….

…more, more, more!

• Virtually all NHS Plan ‘shopping list’ targets met:– 100 new hospitals– Modernising 3,000 GP premises– 75% of all MRI/CT scanners and

linear accelerators now new…– But, problems with ICT investment– …backlog maintenance…single

rooms…

….value for money?

• Higher unit costs

• Lower admissions per consultant and per nurse….

• Official productivity measures show downward trend…

• Poor financial control (deficits…)

…greater satisfaction?

Public (net) satisfaction with NHS services('Net' = very plus quite satisfied minus very plus quite dissatisfied)

-20

-10

0

10

20

30

40

50

60

70

80

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Per

cen

t

NHS overall General Practice Dentistry

Inpatients Outpatients Accident & Emergency

Net satisfaction with NHS overall highest it has been since 1980s….(shame about NHS dentistry…)

www.kingsfund.org.uk