RTTNews - U.K.'s National Health Service must prepare for financial freeze from 2011, the King's Fund and Institute for Fiscal Studies said in a joint report on Monday.

U.K.'s ruling Labor Party and the Opposition Conservative Party have pledged not to cut spending on NHS in real terms.

According to think-tanks, this would inevitably result in cuts in budgets for other departments or may cause further tax-raising measures over the period to 2017.

If the NHS were to receive real increases averaging 2.5% per year for the six years from 2011 to 2017 - then other departments could need budgets cut by an average of around 2.8% a year. This would represent a real reduction on 2010/11 budgets of around 16% over six years.

If the NHS funding were frozen, spending for other departments would need a total reduction of around 8% in real terms by 2016/17.

John Appleby, chief economist at The King's Fund and co-author of the report, said, The NHS is facing the most significant financial challenge in its history.

The report suggests these cuts could be restricted if taxes were increased. Limiting other departmental cuts to 2% a year, while freezing the NHS budget over the next spending review period, would require additional revenue of around GBP 10.6 billion - equivalent to GBP 340 per family.

If the NHS budget were frozen in the next two spending reviews then this would be the tightest six-year settlement in its history, Deputy Director of the IFS and co-author of the report, Carl Emmerson said.

But, if the Treasury's assessment of how much will be available to spend is right, even this historically ungenerous NHS settlement would still require a combination of sizeable cuts to other department's budgets or further tax-raising measures.

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