IFS: Ageing population will lead to squeeze on NHS

David Kingman comments on a new projection from the IFS that NHS funding per person is set to fall dramatically as the population agesHealthcare costs

The National Health Service could be facing a funding squeeze which will see the amount of money spent per person fall by 9% over the next four years, according to a new projection from the Institute for Fiscal Studies (IFS).

The decline in spending, which would be unprecedented in the history of the NHS, is likely to come about because of the pressure created by an ageing population and the general squeeze on government expenditure as more of the Coalition’s public spending cuts come into force. This could have a damaging impact on the health service’s ability to provide high-quality care to its patients, and should lead to a broader debate about how we are going to meet the costs of our ageing population, especially during an era of austerity.

Spending to fall by 9% per person

The IFS unveiled this projection as part of their 2014 Green Budget, which included a comprehensive set of projections for how the UK economy is likely to perform over the coming years. A summary of their main findings is available here:


One of the projections for public spending which they drew particular attention to was as follows (p.2):

“…a growing and ageing population will increase pressures [on public spending]. The ONS projects that the overall population will grow by about 3.5 million between 2010 and 2018, with the population aged 65 and over growing by 2.0 million. One implication of this is that, even if NHS spending were ‘protected’ and frozen in real terms between 2010–11 and 2018–19, real age-adjusted per capita spending on the NHS would be 9.1% lower in 2018–19 than in 2010–11.”

The Coalition government has often talked about how spending on healthcare has been “ring-fenced” from the cuts that have fallen on other departments as part of their public spending austerity programme. However, as the IFS projection shows, this is not really as straightforward as it sounds. In reality, spending on the NHS has been frozen, rather than being cut in the way it has been for most other departments, but as demand on the service has been increasing the net result is that fewer resources are still being divided between more and more patients.

Funding challenge prompts fears over quality

Concerns over the potential impacts of the funding squeeze anticipated by the IFS have also recently been heightened by a separate report from the Nuffield Trust which showed that many NHS trusts are struggling to improve the quality of patient care because of current cash-flow problems.

Launched to coincide with the one-year anniversary of the public enquiry into the failings at the Mid-Staffordshire NHS Foundation Trust, this report (based on a survey of NHS hospital staff and the senior management of a large number of hospital trusts) showed that improving the quality of patient care has become a key goal for many trusts in the wake of the scandal, but there are serious doubts about whether they will be able to deliver on their ambitions in this area because of the funding constraints which they face.

Nearly a third of English NHS trusts are already forecasting that they will end the current year with a financial deficit, a finding which raises fresh doubts about the sustainability of the current NHS financial model.

Of course, everyone would prefer it if the NHS could deliver better and better care with fewer and fewer resources. In the real world, however, given that so many hospitals appear to be struggling to cope under the present set-up and the IFS is predicting that an even tighter squeeze lies ahead, these are worrying times for the NHS.

Can Britain still afford so many health services to be delivered for free at the point of use –- particularly for the large numbers of elderly patients who will be placing ever-increasing demands on the system in the near future? Or do we need to start thinking seriously about finding a new method of funding some of our health services? Such pressing questions will need to be addressed if a worrying situation is not to become a crisis in the next few years.