Chapter 6: Taxpayers’ investment will be used to maximum effect
6.1. The new funding settlement announced by the Prime Minister in June 2018 promised NHS England’s revenue funding would grow by an average of 3.4% in real terms a year over the next five years178 delivering a real terms increase of £20.5 billion by 2023/24. This represents a step change on recent years, which have averaged 2%, and moves closer to returning to the NHS long-term average funding trend of 3.7% per year since 1948 .
6.2. This extra spending will need to deal with current pressures and unavoidable demographic change and other costs, as well as new priorities. Over the coming decade, the NHS will inevitably need to look after more people, with greater needs, as a result of our growing and ageing population. For example, the number of people over 85 is projected to increase from 1.3 million to 2 million – an amazing achievement – and they will need proper and increasing support. The growth in average costs with age is projected to increase at a faster rate, due to the growing number of long-term conditions and particularly multiple conditions.
6.3. Putting the NHS back onto a sustainable financial path is a key priority in the Long Term Plan and is essential to allowing the NHS to deliver the service improvements in this Plan. This means:
- the NHS (including providers) will return to financial balance;
- the NHS will achieve cash-releasing productivity growth of at least 1.1% a year, with all savings reinvested in frontline care;
- the NHS will reduce the growth in demand for care through better integration and prevention;
- the NHS will reduce variation across the health system, improving providers’ financial and operational performance;
- the NHS will make better use of capital investment and its existing assets to drive transformation.
6.4. This chapter sets out how the NHS is meeting these five ‘tests’. The commitments in this Plan are stretching but feasible. They flow from a coherent and robust set of costed propositions, grounded in evidence, and based on a comprehensive assessment of future demand, moderated where possible by practical and evidence-based action. To repay the continued investment of taxpayer funding, the NHS will continue to lead the way in driving up productivity, reducing unwarranted variation and eliminating waste.
179. Institute for Fiscal Studies & The Health Foundation (2017) Securing the future: funding health and social care to the 2030s. Available from: https://www.ifs.org.uk/publications/12994