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November 13, 2018updated 20 Nov 2018 12:48pm

NHS may face £2.3bn no-deal Brexit costs by 2020, say analysts

A no-deal Brexit could lead to the UK National Health Service (NHS) facing up to £2.3bn in extra annual costs by the end of 2019-2020, according to a new analysis by Nuffield Trust.

A no-deal Brexit could lead to the UK National Health Service (NHS) facing up to £2.3bn in extra annual costs by the end of 2019-2020, according to a new analysis by Nuffield Trust.

Mark Dayan, an analyst who led the research, said the cost surge will be due to increase in red tape and trade barriers that may occur in case the UK leaves the European Union (EU) without a formal deal.

Furthermore, Dayan predicts that the extra Brexit costs on the NHS would side-track the funding available for improving patient care over the next two years.

Dayan noted: “These are not just one-offs like costs incurred in stockpiling: they will stay as an additional claim on the NHS budget every year until or unless trading relations change.

“The English health service’s share of £2.3bn in higher bills would use up nearly all the money our calculations suggest will be free for improvements in patient care next year and the year after.”

The analysis estimated rise in prices of medical devices, medicines and other NHS supplies such as food and bedding.

HM Revenue & Customs statistics reveal that the UK imported nearly £3.4bn worth of medical devices from the EU last year. Based on the assumption that 80% of these devices were used by the NHS, nearly £2.9bn would be spent on the EU medical devices next year across the UK.

“The English health service’s share of £2.3bn in higher bills would use up nearly all the money our calculations suggest will be free for improvements in patient care.”

After considering the UK’s estimate that non-tariff barriers will add an equivalent of 6.1% in costs and the impact of the devaluation of sterling, Dayan calculates that the health service could incur additional £470m.

In case of medications, the NHS would have to potentially incur net extra costs of approximately £830m in unbranded medicines and £920m in branded drugs.

Last year, the health service spent about £11.3bn on prescribed medicines across the UK.

A no-deal Brexit could also see around £88m additional costs for other supplies and services that the NHS buys in, such as food, bedding and management consultancy.

If EU migration dried up, gaps in staffing are also set to add millions to the Brexit costs, said the analysts.

Dayan concluded that though all the figures in the analysis are speculative, the size of a cost shock to the NHS would be substantial in case of no-deal Brexit.

“Even a budget as large as the health service’s cannot absorb a ten-figure loss without patients feeling the effect,” said Dayan.

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