Funding Boost for U.K. Health Service Enough for Two Years Only

(Bloomberg) -- Prime Minister Boris Johnson’s cash boost for U.K. health care is insufficient to meet the medium-term costs of dealing with the coronavirus pandemic, according to the Institute for Fiscal Studies.
 
The analysis published Friday raises the possibility that further tax increases or spending cuts will be required to fund the National Health Service from the middle of the decade. 

Johnson’s government this week announced an extra 16 billion pounds ($22 billion) for NHS England over the next two fiscal years, paying for the increase with a tax hike on workers and companies that is set to take taxation as a share of the economy to its highest sustained level in at least 70 years.

 The IFS said that’s enough to fund the immediate demands on the health service, which came close to breaking point at the height of the pandemic and now faces a soaring backlog of treatments.
 
But Max Warner, an IFS economist who co-authored the research, said the new settlement makes almost no allowance for additional virus-related spending in the third year, making it “almost inevitable” that NHS funds will have be topped up.
 
The direct pressures include the cost of treating patients with Covid-19 and long Covid, test and trace, and vaccinations among other things, the IFS said.
 
While these cost are expected to fade, indirect pressures could prove greater and more persistent, the analysis claimed. They include treating people who missed out on care, increased demand for mental health services and boosting pay rates for NHS staff after years of restraint.
 
 

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