IFS - NHS funding boost should be enough to meet pressures over the next two years, but not in the medium term

12 Sep 2021 02:46 PM

Last Tuesday the Prime Minister announced a new funding settlement for health and social care in England. This included an additional £6.6 billion for NHS England in 2022−23 and £3.6 billion in 2023−24, on top of pre-pandemic plans, in the face of ongoing pressures from the COVID-19 pandemic.

This new funding will likely be sufficient to cover COVID-19-related pressures on the NHS over the next two years, 2022−23 and 2023−24. And if the government achieves its objective of boosting NHS capacity by 10%, waiting lists could return to pre-pandemic levels within three or four years.

But the government’s new plans imply next-to-nothing in the way of additional virus-related support after that point, suggesting that the newly announced funding might be insufficient to meet virus-related pressures in the medium term: we estimate a possible shortfall of around £5 billion in 2024−25. The most likely outcome is that future top-ups will be made to meet ongoing pandemic-related cost and demand pressures on the health service.

These are amongst the findings of the first detailed, independent assessment of how the government’s new funding settlement compares with the pressures facing the health service, published as a pre-released chapter of the 2021 IFS Green Budget, funded by the Nuffield Foundation and in partnership with Citi.

The research also finds that:

Max Warner, a Research Economist at IFS and an author of the research, said:

‘The resources that the NHS will need to cope with pandemic-related pressures over the coming years are a huge known unknown. Based on our best estimates the funding announced by the Prime Minister this week should be enough to meet these pressures for the next two years. But the settlement seemingly allows for almost no additional virus-related spending in 2024–25, making it almost inevitable that these initial plans will be topped up down the line.’

Pressures on the NHS