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Accountants predict potential ‘£16bn’ a year NHS black hole by 2020

The Government should consider linking the growth of NHS funding to GDP, as new financial analysis shows NHS England financial predictions are already out of date, an accountancy institute has said.

The Chartered Institute of Public Finance and Accountancy (CIPFA) said that since NHS England published the NHS Five Year Forward View in 2014, the predicted shortfall by 2020 has grown amid pressures on the NHS.

It concludes there will be a £5bn-16bn annual shortfall despite efficiency savings and extra funding provided by the Treasury,

NHS England had estimated a £30bn shortfall by 2020, which it said it could plug with £22bn efficiency savings and £8bn in increased funding.

But the CIPFA report says: ’CIPFA believes there will be a shortfall in the NHS budget of at least £5bn, quite likely £10bn, and in the worst case as much as £16bn by 2020. In the light of further analysis and events since the election, we estimate that the pressures on health services are now in the range £35bn-£40bn and the savings achieved will be in the range £16bn-£22bn.’

In response to the findings, it recommends that the Government sets up a commission to look into how the NHS should be funded.

It suggests the commission should look at whether there should be a ‘golden ratio’ for NHS funding compared with GDP, ’for example setting it at 10%’, and also exploring co-payments or NHS providers raising funds via ’capital receipts, bonds or prudential borrowing’.

The report says: ’CIPFA calls on the Government to set up an independent commission which starts from the consensus that fundamental questions need to be asked of how the NHS can be adequately funded in the long term, and seriously examines the alternative options.’

The institute says that ’it will be necessary either to add further to the NHS budget, charge users more, or reduce services’, and that to ’choose none of those is not a realistic option’.



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