£15b Shortfall

The NHS is facing the biggest financial challenge in its history, with a report forecasting a £15 billion funding black hole in the next decade.

The NHS Confederation, which represents 90 per cent of NHS organisations, predicts the next two years will be "tough but manageable" but warns "the position beyond 2010/11 is very different and extremely challenging".

Doctors' groups have voiced concern at the findings of the report, entitled Dealing with the Downturn: The Greatest Ever Leadership Challenge for the NHS?

It claims the service should prepare for a funding shortfall of £15 billion in real terms due to the recession, soaring costs and the lack of any planned funding rise from 2011 onwards.

"With little or no cash increase, from 2011/12 the NHS will need to plan for real terms funding to fall by 2.5 to 3 per cent per annum," the study said.

"This is equivalent to a cut of between £8 billion and £10 billion over the next Comprehensive Spending Review and up to £15 billion over five years."

Dr Hamish Meldrum, chairman of the BMA, said: "The imminent funding crisis could be very dangerous for the NHS, and has the potential to seriously threaten patient services."

He added: "We believe that one of the most effective ways to reduce the adverse impact on NHS funding would be to reverse the policy of encouraging a market in healthcare in the English NHS.

"Too much money that could have been spent on frontline patient care has been wasted on poor value deals with commercial providers and the bureaucratic costs of administering the market in the NHS."

The report calls for immediate action if the service is to keep to its founding principle of providing free care to everyone at the point of need.

It warns against diluting the quality of patient care, slashing training budgets and extending waiting lists, as has happened in the past.

The NHS Confederation's policy director Nigel Edwards, who wrote the report, said: "It is really important that the significant improvements that have been made in the NHS are not lost through short-term cuts and crude approaches to cost control.

"Quality improvements through greater efficiency and redesigning services can provide the budget savings necessary to navigate this crisis."

According to the Department of Health, the NHS budget for 2009/10 stands at £102.7 billion - a 7.5 per cent real terms increase on the previous year.

Next year, the budget will be £105.8 billion, which the department claims represents a 1.6 per cent increase in real terms.