NHS chief says taxes alone cannot fund ailing £160bn-a-year service as he signals it may be time for a ‘private solution’ amid calls for hospitals to get an extra £32bn to to get back on track

The way the NHS is funded requires a radical overhaul because it is now too expensive to rely on taxes alone, the deputy leader of NHS England has said.

Wol Kolade highlighted the massive growth in healthcare expenditure in recent years, warning that taxpayers can no longer afford to finance it at the required pace.

He said budgets have risen from around £110 billion a year when he first joined the board in 2018 to around £165 billion now, adding: ‘Where on earth is it going to end? £250 billion? £300 billion?’

Mr Kolade, who is also a leading private equity figure, said the country needs a “big conversation” about how health care is financed, and suggested that social insurance or “some kind of private solution” could play a role to play.

His comments came as health leaders made another plea for more money and as a new study found the NHS needs an immediate injection of around £8.5 billion a year over the next four years.

Leading experts said the money is needed to plug a £32 billion funding gap in England and would help tackle issues such as high waiting lists, access to GPs and workforce shortages.

In the second report of the BMJ Commission on the Future of the NHS, economist and senior fellow at the Nuffield Trust, John Appleby, along with two colleagues argue that recent spring budget funding commitments are a start, but do not go far . enough.

They said: ‘In the recent Spring Budget, the Government committed a further £2.5 billion for the NHS in England in 2024-25 to maintain day-to-day healthcare funding, with a further £3.4 billion in investment in the period 2024-2025. three years to improve productivity through digital transformation.

‘While these figures are a start, they will certainly not make up for the significant shortfall the NHS now faces.’

Their views were echoed by Matthew Taylor, chief executive of the NHS Confederation, who said: ‘While the commitments in the latest budget are a start, they do not go far enough in closing the gap in healthcare funding.

Unveiled as part of the Budget earlier this month, Chancellor Jeremy Hunt claimed the move will deliver £35 billion in returns in terms of healthcare efficiency.

‘We have been advocating further investments in capital for some time.’

However, in an interview with Private Equity News, Mr Kolade said: “We can no longer, in fact, continue to finance at the pace we need.

“When I joined the board in 2018, it was around £110 billion. This year it will be £160-170 billion.

“This kind of growth rate cannot continue. Where the hell is it going to stop? £250 billion? £300 billion?

‘At what point do you say, do you think about the way we take care of this? Is it a mix of social insurance or some kind of private solution? It’s a big conversation.’

Mr Kolade became non-executive director of the NHS Improvement Board in 2018 and vice-chair of NHS England in 2022.

He is also a managing partner at London-based private equity firm Livingbridge, which has made a number of investments in the UK healthcare sector.

A spokesperson for the Department of Health and Social Care said: ‘The Government is fully committed to the NHS as a public service that is free when it is needed, and that is faster, simpler and fairer.

‘This is regardless of whether care is provided by NHS organisations, which provide the majority of healthcare in Britain, or by the private, voluntary or social enterprise sectors.

‘We announced in the Budget that the NHS in England will receive a daily funding increase of £2.5 billion this year and will invest a further £3.4 billion in the latest technology from 2025.

‘We are providing the NHS with record funding of almost £165 billion a year by the end of this Parliament, an increase of 13% in real terms compared to 2019-20.’