Tax-funded NHS needs billions

THE SHEER scale of the extra money needed to transform Britain's ailing health services was spelt out to Prime Minister Tony Blair today. Spending needs to rise from £ 68bn a year to up to £184bn a year within the next two decades, a major report recommends.

The findings by Derek Wanless, former chief executive of NatWest, paved the way for Gordon Brown to push up taxes for the health service by a record amount. But it came with its own warning - that hospital reforms and staff working patterns must change, and that spending such a sum represents a huge management challenge.

Wanless, commissioned by the Chancellor to look into the future, has estimated that by 2022, the NHS will need £154bn to £184bn a year to meet the demands of an increasingly ageing population of post-war 'babyboomers'' The first decade would see a huge growth in spending - 7% in real terms - for a 'catch-up period' as the NHS has fallen so far behind other European countries. The second decade would be the 'keep-up' period, with NHS spending growing by 5% a year, to keep pace with other nations.

Wanless also recommends:

Much better computer technology

More routine care to be delivered at home and out of hospital

An investigation into the older drugs and technologies used in the NHS, to see if they give value for money

Possible charges for non-clinical services, such as hotel accommodation

He also gives Labour a great gift - his strong support for the present system of funding, out of general taxation. He favours the method set out by Nye Bevan in 1948, and closes the door on other forms such as social insurance or a US-style reliance on private medical insurance as penalising the poor and elderly. His previous interim report, published last autumn, estimated that Britain had suffered a cumulative underspend of up to £267m during the Seventies and Eighties. Today's document sets out a number of scenarios giving varying sets of figures, based on estimates of how demand for care may rise, and how quickly thousands of extra doctors and nurses can be brought in.

The Tories accused Labour of deliberately withholding publication until now so that the uncomfortable message would be swamped by Budget coverage. But the report will not be ignored because it sets out the perils facing the NHS.

The question for Gordon Brown is whether pumping £25bn into the health service over the next five years can transform hospitals quickly enough for the public to feel the difference. There is also doubt over the speed with which nurses, doctors, radiotherapists and others can be wooed back to the service fast enough to meet the growing demand. Capacity is the biggest problem. It is not just about training more doctors - any increase in the number of surgeons means more operating theatres, more beds on wards, and more care for patients discharged from hospital. Nurses have been coming back but there is still an enormous reliance on temporary agency nurses, which costs the NHS about £2bn a year.

The Wanless report also highlights other areas of rising costs - heart drugs and other new therapies, staff pay rises, which have been above inflation in the last few years, hi-tech equipment such as CT scanners, and an increasingly litigious public. Many fear the money will disappear into a black hole. Scotland receives 20% more in its health budget than England but has higher death rates for cancer and heart disease.

Ex-banker examines the NHS books