Health budget underspent by £5.5 billion, says report

Health budget underspent by £5.5 billion, says IFS

New analysis by the Institute of Fiscal Studies (IFS) suggests that the government has spent £5.5 billion less on health than it pledged five years ago.

In 2019, the Conservative Party indicated that the health budget would increase by 3.3% annually throughout this parliamentary term. However an IFS report estimated the annual increase to be averagely 2.7%. This forms a deficit of £5.5 billion from planned spending in the last five years.

IFS said: ‘Despite a pandemic, record waiting lists and growing rates of ill health, real-terms health spending has risen less quickly than was planned five years ago.’

The institute also highlighted that this was the only parliamentary term to see slower growth than planned. It said: ‘This breaks the habit of a lifetime. Over the past 40 years, the NHS budget has almost always grown more quickly than originally planned. This parliament is the exception.’

‘The next government will have to confront this reality – and fast’

Max Warner is a research economist at IFS and author of the report. He said: ‘Whichever party takes office after the next election won’t have long to set out departmental budgets for the next fiscal year, and the choice of how much to give to the Department of Health and Social Care – which now represents more than 40% of total day-to-day departmental spending – will effectively dominate everything else.

‘Spending on the health service will – absent a big reduction in the role of the NHS, or further deterioration in quality – have to rise in real terms to meet the pressures the service faces and deliver the workforce plan which both the main UK parties have signed up to.

‘But the sheer size of the health budget means that delivering funding increases at anything like the historical average would require cuts elsewhere, even before accounting for recent promises on defence spending. Neither the Conservative Party nor Labour Party have been keen to set out spending plans. But the next government will have to confront this reality – and fast.’

Underspends in dentistry

Government funding for NHS dentistry forms part of the health spending analysed by IFS. In February, analysis revealed that one third of local dental budgets were going unspent in some areas of England. Integrated care boards in Lincolnshire and Hampshire were on track to underspend by 30%, with Norfolk and Waveney heading for 27% underspends.

The British Dental Association said the underspends do not reflect any lack of demand for NHS dentistry but are the result of practices struggling to reach targets.

Further research by the Financial Times suggested that almost £150 million of funding was returned by NHS dentists who were unable to meet UDA targets. In Somerset, 17% of all funding was returned – three times higher than the national average of 5.5%.

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