Health in a cold climate.

British economy is edging out of a severe economic recession, during which the future of international financial systems seemed in doubt. The scale of debt is comparable to that following the Second World War, and national borrowing is predicted to reach 80% of gross domestic product by 2013. We have suffered a permanent loss in national output of 6–7%. The inevitable reduction in funding for public services is already being discussed widely by the political parties. It is timely to consider the possible impacts on the NHS, which has enjoyed real increases in funding of almost 7% per year in England up to 2010/11, overall and on general practice. These challenges have been addressed in an analysis undertaken by the King's Fund and the Institute for Fiscal Studies. How cold will it be? 1 analyses the funding consequences for the NHS over the next 6 years. Three possible funding scenarios are described: 'tepid', with annual real increases of 2–3% over the next 6 years; 'cold', with no change in NHS funding; and 'arctic', with annual reductions of 1–2% in funding up to 2016/17. All three scenarios would lead to significant reductions in funding across non-NHS government spending departments, particularly if NHS funding is protected. The magnitude of the funding gaps is such that if the NHS were to receive even a modest increase in real spending, a permanent increase in tax of over £17 billion would be required by 2016, equivalent to £540 per family and to an increase in value-added tax (VAT) of 4.5%. If NHS funding were frozen, these figures would equate to £6.9 billion, £220 per family, and an increase in VAT of 1.6% respectively. Not only are increased NHS costs related to changing population demography already predicted to be around £1.1–1.4 billion per annum, but also all three of the scenarios fall well short of the recommendations for NHS funding described in the Wanless report. 2 For example, the most optimistic (tepid) scenario combined with Wanless' most optimistic (fully engaged) scenario, would lead to a funding shortfall of £4 billion; but the two less optimistic, and probably more realistic, cold and arctic scenarios, combined with the worst-case scenarios envisaged by Wanless, could lead to funding gaps of between £21–40 billion at today's prices. This represents almost 30% of the current NHS spend in England. It is extremely unlikely that increasing NHS 'productivity' is capable of filling …