• Spending overview
• Policy overview
• Diseases overview

Spending overview

Spending on healthcare in the UK has increased sharply since the late 1990s, both in absolute terms and relative to GDP. Healthcare spending, which totalled £60bn (US$100bn) in 1998, rose to an estimated £142bn in 2009. With the rate of expansion exceeding the growth in nominal GDP (particularly in 2009 when the UK economy contracted sharply), health spending's share of GDP has risen from 6.9% in 1998 to an estimated 10.1% in 2009. This primarily reflects the Labour government's drive to deliver improvements to public services and close the previous gap between the level of UK spending on healthcare and the EU average (about 9% of GDP).

Nominal expenditure is expected to continue to rise over the forecast period, but the outlook for real-term growth is far bleaker. Real spending is forecast to rise in 2009-11, but at a far slower pace compared with that in 2000-08. With the UK facing severe budgetary constraints, real-term healthcare expenditure is then expected to decline from 2012 onwards, possibly at around 2-3% per year, although much deeper cuts are also feasible. Demand for healthcare services, in contrast, is forecast to continue to increase over the full five-year period, driven by an expanding and ageing (and increasingly well-informed) population, new medical advances and a further rise in chronic disease incidence, particularly in obesity-related illness.

Policy overview

Until recently, the NHS had suffered decades of underfunding compared with the public health services in many other OECD countries, and the UK still has fewer doctors, nurses, hospital beds and items of diagnostic equipment per head of population than the EU average. That said, improving healthcare has been one of the main policy priorities of the Labour Party government since it entered office in 1997. The rise in public spending has funded the construction of new hospitals and the modernisation of existing ones, as well as the recruitment of more doctors and nurses. More negatively, a considerable proportion of these increases has inevitably been swallowed up by higher salaries and rising staff levels in the NHS. On a purchasing power parity (PPP) basis, nurses and general practitioners (GPs) in the UK are now the second-highest paid in the world after those in the US.

Recent major reforms have been designed to improve efficiency and introduce a dose of competition to the health system. Under the current structure, a patient's first point of contact with the NHS is usually through a GP, a doctor who provides primary health services to a particular neighbourhood. GP practices have been organised into larger groups known as "primary-care trusts", with greater responsibility for commissioning community and hospital care than in the past. NHS hospitals, for their part, are organised as trusts. However, the current government is seeking to increase competition and consumer choice by allowing NHS patients to be treated by new bodies called foundation hospitals, which have the freedom to raise money on the open market and to negotiate local pay deals to attract staff.

Diseases overview

The outbreak of influenza A(H1N1), also known as swine flu, in Mexico in March 2009 focused attention on the continuing threat from acute and communicable diseases. Along with the US and Mexico, the UK was initially one of the worst affected countries. By mid-November 2009 a total of 154 deaths related to swine flu had been recorded, with one-fifth having no underlying health problems. But in late 2009 the chief medical officer said this upward trend was a cause for concern but stressed there was no indication the virus had mutated.
Aside from the renewed focus on communicable diseases, the bulk of research and resources will continue to focus on two areas: oncology and obesity-related illness. Growth in the former will be as much supply- as demand-driven, whereas the latter will largely be more demand-driven.

Although the government has initiated prevention campaigns to curb growth in obesity, their timing has been too late to prevent the likely epidemic in obesity-related disease over the forecast period. Sedentary lifestyles, poor eating habits and alcohol consumption have all contributed to soaring obesity rates in recent decades. In the UK the most recent official data indicated that adult obesity rates almost quadrupled in the 25 years to 2004, with the number of obese children tripling in 20 years. There has been little evidence of this trend reversing, which carries severe cost implications.