19. July 2012 14:23
Spending on healthcare is set to soar over the next 50 years despite NHS efficiency measures, a new report predicts.
The Office of Budget Responsibility’s Fiscal Sustainability Report forecasts increased costs will result in a 5.2% rise in public spending on healthcare – the equivalent of £80bn in today’s terms.
A hike in the proportion of the population aged 65 and over is highlighted in the report, as are additional costs required to cover social care and pensions.
Report authors say the findings should not result in “a bigger tightening” of NHS purse strings but ministers should “think carefully” about long-term consequences resulting from short-term policies.
Health spending will rise from 17% today to 26% in 2061, the report found. As a consequence, the government will need to increase tax rates to generate £17bn in funds or make major spending cuts to reverse levels of debt, the report said.
The report also forecast an improvement in the efficiency of the NHS. Spending will rise from 6.8% of gross domestic product (GDP) in 2016-17 to 9.1% over the next half century. The report bases this on NHS productivity increasing by 2.2% annually. However, if healthcare productivity grows less quickly at 0.8%, as certain experts predict, spending levels may increase to around 16.5% and see a steep rise in public sector debt.