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The Pharmaceutical Journal
Vol 268 No 7194 p521-527
20 April 2002

Related websites
HM Treasury (www.hm-treasury.gov.uk)
Budget 2002 (more)

Chancellor promises over 40 per cent more for the NHS in the next five years

Money is expected to be invested in activities where reforms occur

The Chancellor of the Exchequer (Gordon Brown) has promised to invest 43 per cent more money in the National Health Service over the next five years. By 2007–08, spending on the NHS will rise to £105.6bn.

Over the 10 years between 1997 and 2007, the percentage of gross domestic product (GDP) being spent on health will increase from 6.7 per cent to 9.4 per cent. This increase underpins the Government's continued commitment to a health service funded from general taxation, a move that was supported by Derek Wanless in his report on the long-term funding requirements for the health service published on 17 April (see Panel).

NHS spending could reach £184bn by 2023

Total National Health Service spending in the United Kingdom could rise to between £154bn and £184bn by 2022–23, according to a review of the long-term trends that will affect the health service over the next 20 years. The report, compiled for the Treasury by Derek Wanless, a former chief executive of NatWest Bank, was published on 17 April, the same day that the Chancellor of the Exchequer (Gordon Brown) announced the Budget.

This translates to total health spending in the UK rising to between 10.6 and 12.5 per cent of national income in 20 years' time. The fastest period of growth will be over the next five years with an average rate of between 7.1 and 7.3 per cent, reflecting the need to deliver improvements to the NHS as quickly as possible.

This final report follows an interim report published last November (PJ, 8 December 2001, p810). Copies of both of these documents can be obtained from the Public Enquiry Unit, HM Treasury, Parliament Street, London SW1P 3AG or from the Treasury's website.

"The NHS needs a sound, sustainable stream of funding," the Chancellor said on 17 April during his Budget statement. "This is the best chance for a generation to secure our health service for the long term."

Repeating the mantra of the Secretary of State for Health and the Prime Minister that "money will follow reform", Mr Brown also announced that for the first time in the history of the NHS a system of independent audit will be instated to ensure that the money invested yields returns.

Annual reports on NHS spending will be made to Parliament by the new independent auditor and versions for each local area will also be prepared.

Taking his lead from Mr Wanless's report, the Chancellor said that investment in health care would be increased sharply over the next five years and then taper off. Spending is set to increase by an average of 7.4 per cent a year for the next five years. Large increases are also being made in social services spending.

To pay for these increases, National Insurance contributions for employers, employees and the self-employed will rise by 1 per cent from next April. The tax on cigarettes will also be increased by 6p a packet, which the Chancellor said was for public health reasons.

Further details of the plans for health and social services were due to be announced by the Health Secretary on 18 April, after The Journal went to press.