In response to the Office for Budget Responsibility's first Fiscal Risk report, which found that ageing and technology cost pressures make health spending the biggest risk to fiscal sustainability, Sally-Marie Bamford, Director of Strategy and Research at the International Longevity Centre - UK (ILC-UK), the UK's leading think tank focusing on longevity, ageing and population change said:
“Today’s OBR Fiscal Risks report shows that the ageing of our population is the greatest single risk to government spending by driving up health costs over the long run. As our recent SOS2020 report showed, we will need transformative change in the health sector in order to ensure long run sustainability, which in particular will mean getting smarter with innovation.
Within the NHS, too many funding mechanisms still do not reward or encourage innovation, with payments too often based on output and not outcome, and Clinical Commissioning Group funding regulations discouraging the bold moves needed to create long-term cost savings, whilst still maintaining high levels of quality.
As one of the largest components of age-related public spending, healthcare is at the forefront of the challenge of ageing and delivering long run productivity growth in healthcare is likely to be one, if not the, most important element in ensuring a sustainable older society.”
In the SOS2020 report we modelled future health spending scenarios and found:
Health spending as a proportion of GDP
- In the “transformative change” scenario, health spending rises from around 6% of GDP in 2019-20 to 8% by 2064-65.
- In the “gradual convergence” scenario, health spending rises from around 6% of GDP in 2019-20 to 11.4% by 2064-65.
- In the “no policy change scenario”, health spending rises from around 6% of GDP in 2019-20 to 16.4% by 2064-65.
The primary balance – the difference between non interest receipts and expenditure
- In the “transformative change scenario”, the primary balance falls from a surplus of around 2% of GDP to a deficit of 1.9%.
- In the “gradual convergence scenario”, the primary balance falls from a surplus of around 2% of GDP to a deficit of 5.3%.
- In the “no policy change scenario”, the primary balance falls from a surplus of around 2% of GDP to a deficit of 10.3%.
Download the report, 'Towards affordable healthcare: Why effective innovation is key' at http://www.ilcuk.org.uk/index.php/publications/publication_details/towards_affordable_healthcare_why_effective_innovation_is_key
Dave Eaton (email@example.com) or 020 7340 0440.
The Office for Budget Responsibility's first Fiscal Risk report can be downloaded from http://budgetresponsibility.org.uk/frr/fiscal-risk-report-july-2017/
SOS 2020 was established by ILC-UK with the aim to raise awareness of the need to adapt our economy and society to the big strategic challenges posed by an ageing population, and will outline the specific policy measures needed to achieve this goal. It will illuminate the issues that face us and develop fully considered and costed solutions that will act as a “call to action” to policy-makers and politicians.
This second report in the SOS health series draws on the learning and some of the innovations from the last report. We explore the potential for innovation application and diffusion in health care within the UK and critically how the ‘right type’ of innovation could make health care better and cheaper, essentially doing ‘more with less’.
The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.
Much of our work is directed at the highest levels of Government and the civil service, both in London and Brussels. We have a reputation as a respected think tank which works, often with key partners, to inform important decision-making processes.
Our policy remit is broad, and covers everything from pensions and financial planning, to health and social care, housing design, and age discrimination. We work primarily with central government, but also actively build relationships with local government, the private sector and relevant professional and academic associations.
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