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NHS in Wales faces £2.5bn funding gap NHS in Wales faces £2.5bn funding gap
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The NHS in Wales could have a £2.5bn funding gap within a decade, research commissioned by the Welsh government has revealed.The NHS in Wales could have a £2.5bn funding gap within a decade, research commissioned by the Welsh government has revealed.
According to the thinktank the Nuffield Trust, a combination of rising costs and tight public finances could lead to the huge shortfall, the equivalent of two-fifths of the service's current annual budget.According to the thinktank the Nuffield Trust, a combination of rising costs and tight public finances could lead to the huge shortfall, the equivalent of two-fifths of the service's current annual budget.
It warns that an ageing population, rising hospital admissions for people with chronic diseases and increases in the cost of providing healthcare are causing costs to shoot up and concludes that tough decisions about priorities will have to be made. It warns that an ageing population, rising hospital admissions for people with chronic diseases and increases in the cost of providing healthcare are causing costs to shoot up, and concludes that tough decisions about priorities will have to be made.
The report will cause concern within the Labour-run government, which in recent months has come under sustained attack over its health record from the Westminster coalition.The report will cause concern within the Labour-run government, which in recent months has come under sustained attack over its health record from the Westminster coalition.
Adam Roberts, lead author of the research entitled A Decade of Austerity in Wales?, said: "Our analysis reveals, for the first time, the scale of the task ahead regarding the Welsh NHS's finances. Money for the service is already tight – NHS funding is likely to be 3.6% lower in real terms at the end of the next financial year than it was in 2010-11 – but the big unknown is what will happen after the 2015 spending review. Adam Roberts, lead author of the report entitled A Decade of Austerity in Wales?, said: "Our analysis reveals, for the first time, the scale of the task ahead regarding the Welsh NHS's finances. Money for the service is already tight – NHS funding is likely to be 3.6% lower in real terms at the end of the next financial year than it was in 2010-11 – but the big unknown is what will happen after the 2015 spending review.
"Our models show that, on the central scenario – maintaining NHS funding levels in real terms from 2015-16 – the NHS in Wales is looking at a shortfall worth over two-fifths of its annual budget by 2025-26.""Our models show that, on the central scenario – maintaining NHS funding levels in real terms from 2015-16 – the NHS in Wales is looking at a shortfall worth over two-fifths of its annual budget by 2025-26."
A key challenge flagged up in the report is the ageing population. The population of Wales is predicted to grow by 5% between 2012 and 2025. A key challenge flagged up in the report is the ageing population. The population of Wales is predicted to grow by 5% between 2012 and 2025. However, the age profile will become much older, with the number of people aged 65 and over growing by 26%.
However, the age profile will become much older, with the number of people aged 65 and over growing by 26%.
Nigel Edwards, chief executive at the Nuffield Trust, said: "If the NHS in Wales is not going to eat up an ever bigger share of the public sector pie, the question of how to meet demand for the NHS within scarce public finances needs to be resolved. Helping people stay healthier for longer and managing chronic conditions better will be a vital part of this, especially in areas of the country where pressures on the NHS are highest.Nigel Edwards, chief executive at the Nuffield Trust, said: "If the NHS in Wales is not going to eat up an ever bigger share of the public sector pie, the question of how to meet demand for the NHS within scarce public finances needs to be resolved. Helping people stay healthier for longer and managing chronic conditions better will be a vital part of this, especially in areas of the country where pressures on the NHS are highest.
"But these measures alone won't close a £2.5bn gap. The Welsh government – like all others across the UK – will have some difficult decisions to make about NHS funding and services immediately after the 2015 general election. "But these measures alone won't close a £2.5bn gap. The Welsh government – like all others across the UK – will have some difficult decisions to make about NHS funding and services immediately after the 2015 general election. It will be important to have an honest and open debate with the public about what this means both for the Welsh NHS and for other public services."
"It will be important to have an honest and open debate with the public about what this means both for the Welsh NHS and for other public services." The £2.5bn shortfall, caused by the combination of rising costs and tight public finances, would occur if funding rises in line with inflation beyond 2015-16, even after accounting for the efficiency savings currently being made in the Welsh NHS. To close the gap without additional funding, the Welsh NHS would have to improve productivity at a record rate and sustain this for a period not seen either in the history of the NHS or in other countries' health systems.
The £2.5bn shortfall, caused by the combination of rising costs and tight public finances, would occur if funding rises in line with inflation beyond 2015-16, even after accounting for the efficiency savings currently being made in the Welsh NHS. To close the gap without additional funding, the Welsh NHS would have to improve productivity at a record rate and sustain this for a period not seen either in the history of the NHS or other countries' health systems. Exploring different scenarios, the researchers showed that if funding for the NHS in Wales rises in line with national income beyond 2015-16, the funding gap would be reduced to £1.1bn. While still a sizeable shortfall, this gap could largely be closed through sustained productivity gains and improved treatment for chronic conditions.
Exploring different scenarios, researchers show that if funding for the NHS in Wales rises in line with national income beyond 2015-16, the funding gap would be reduced to £1.1bn. While still a sizeable shortfall, this gap could be largely closed through sustained productivity gains and improved treatment for chronic conditions. By contrast, if spending on the NHS in Wales is not increased either in line with inflation or national income but is instead held steady in cash terms after 2015-16 (a real-terms cut), the gap could be as large as £3.6bn by 2025-26.
By contrast, if spending on the NHS in Wales is not increased either in line with inflation or national income but is instead held steady in cash terms after 2015-16 (a real terms cut), the gap could be as large as £3.6bn by 2025-26.
The research replicates modelling used to calculate the shortfall facing the NHS in England. In 2012 the Nuffield Trust published A Decade of Austerity?, which modelled the shortfall facing the NHS in England. Under Nuffield Trust calculations, the much larger English NHS could face a funding gap of around £30bn.The research replicates modelling used to calculate the shortfall facing the NHS in England. In 2012 the Nuffield Trust published A Decade of Austerity?, which modelled the shortfall facing the NHS in England. Under Nuffield Trust calculations, the much larger English NHS could face a funding gap of around £30bn.
The Welsh health minister, Mark Drakeford, claimed that as well as highlighting the challenges ahead, the report showed that the government in Cardiff had responded well to cuts from Westminster.
He said: "This report recognises NHS Wales is facing challenges into the future, including rising costs, increasing demand, an ageing population, and a growth in the number of people experiencing chronic conditions – the same challenges every healthcare system in the world faces in this age of austerity.
"But it also shows NHS Wales has responded to these through a range of measures including improvements in efficiency and productivity, reductions in length of stay in hospital and hospital admissions. And it shows that despite the huge cuts in public expenditure forced on Wales by Westminster the NHS in Wales continues to be affordable thanks to actions taken by the Welsh government."