UK Health Decline: £57bn Economic Output Loss, £72bn Public Finance Gain if Reversed

Restoring the deteriorating health of the UK’s population to the level of 2014 would boost GDP by 2% and generate a £72bn dividend for the public finances, research suggests.

A paper by the Health Foundation thinktank, published on Sunday, argues the nation’s health should be valued by policymakers as an economic asset.

“Good health enables people to live well for longer and contribute to their communities, helping to build a stronger society. A healthy labour force is also the engine that powers our economy – it determines whether people can participate in employment, how effectively they work and how long they remain in the labour market,” the authors say.

They calculate that healthy life expectancy actually fell by two years in the decade to 2022-24 – with the UK one of only five of the world’s 21 richest countries to see a deterioration.

Over the same period, the number of working-age people with a long-term health condition in the UK increased from 11.7 million to 15.7 million.

The report also points to stark inequalities, with people living in the richest 10% of areas likely to see as many as 20 more years of living in good health, compared with the poorest 10%.

Rising ill health adds to NHS spending and the cost for disability benefits, but the Health Foundation points out that the costs also include the tax revenue and economic output lost when sickness prevents people from working.

Its modelling suggests that reducing ill health to the levels seen in 2014 could increase economic output by £57bn, or 2% of GDP.

David Finch, the interim director of health and inequalities at the Health Foundation, said: “Restoring the nation’s working-age health to 2014 levels could unlock £57bn in economic output and provide a £72bn boost to the public finances through stronger tax revenues and reduced spending on social security and the NHS.”

He added: “Improving health is essential to deliver the good growth in every postcode on which the incoming government’s ambitions will depend.”

Labour has put repairing the NHS at the heart of its plans for government, in particular promising to cut waiting lists.

But the Health Foundation argues that treating health as an asset would help to shift policymakers’ focus towards prevention and public health measures, alongside treatment.

“Improving people’s health will not solve every economic challenge, nor is all ill health preventable. But it can play a critical role in strengthening economic performance, improving fiscal sustainability and raising living standards,” it says.

Tackling ill-health and the impact on the labour force will be a pressing issue for the incoming prime minister, Andy Burnham.

He is set to receive two reports in the autumn: from Alan Milburn on the 1 million young people not in education, employment or training, many for health reasons; and from Stephen Timms, on how to reform disability benefits.

Burnham has also put tackling the crisis in social care high on his agenda, potentially bringing forward the deadline for baroness Louise Casey to examine the issue. Casey’s commission is not currently due to report until 2028.

The Health Foundation’s research echoed a recent warning from the Resolution Foundation thinktank that poor health has been as much of a factor driving the UK’s tricky public finances as demographics.

With much of the additional tax revenue raised in Rachel Reeves’s two budgets going to the NHS, the Resolution Foundation pointed out that health-related spending now accounts for £1 in every £4 of government spending, aside from debt interest costs.