NHS faces £7billion deficit by 2010

Last updated at 08:42 12 December 2005

The NHS faces a deficit of nearly £7billion by 2010 unless a "productivity miracle" is achieved, according to a new study.

Think-tank Reform warned that cost pressures such as extra staffing, large building programmes and more expensive drugs would produce a funding gap.

Researchers said that an extra £18.2billion of funding would be needed, but only £11.4billion was available - a shortfall of £6.8billion.

Radical reform or rationing

Report author Professor Nick Bosanquet, of Imperial College London, concluded: "The NHS has two options; either radical reform to improve productivity or local rationing, rising waiting lists and failing staff morale."

Among the reforms recommended were greater private sector involvement in health care and better financial management. Hospitals should also be given greater autonomy so patients could have more choice.

The think-tank said building projects for the NHS which used private money were costing far more than planned and should be stopped if they were in the early stages.

Doctor unemployment 'inevitable'

It also called for a review of medical training with the number of trainees increasing much faster than the rate of retiring doctors.

Medical unemployment was "all but inevitable in a very tight financial environment".

Last year Prof Bosanquet and Reform published a study which warned the NHS would barely be able to cover its costs by the end of the decade.

His new report, The NHS in 2010 - reform or bust, co-authored with Henry de Zoete and Emily Beuhler, of Reform, claimed the situation had worsened.

The report said the costs of existing programmes had increased and new costly programmes have been launched despite Chancellor Gordon Brown's announcement that NHS spending increases will slow after 2008.

The predicted £6.8billion funding gap was a "minimum estimate", the researchers added.

"The Department of Health is digging a deeper hole by announcing numerous policy initiatives," they said.

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