By 2014-15, spending on the NHS will account for nearly 30% of all public service expenditures compared to 20% in the early 1990s, says the Institute for Fiscal Studies (IFS).

Health, long-term care and social security together now account for half of all public spending, up from a third in 1978-79, and expenditures on health, pensions and long-term care will reach half of the total spend over the next 50 year unless there is major reform or total spending is significantly increased, according to the think tank.

This dramatic increase in the share of health and social welfare spending has been made possible by substantial reductions in the proportion of expenditures going to defence, housing and support for business and industry, says the IFS in a new study, which goes on to suggest: "we perhaps underestimate the extent to which the shape of the state has already changed to accommodate much greater spending" in the areas of health, long-term care and social security.

The shape of the state today is very different from that of 30 years ago, with  health's share of public spending having almost doubled during that time, from 10% to 18%. In contrast, defence spending, which accounted for 10% of the total in the late 1970s, has now fallen to 6%, while other areas which were important at that time, such as housing and various forms of industrial support, "barely register" today, notes the IFS.

The report sees the spending cuts which are planned up to 2014-15 as being largely consistent with this longer-run pattern. Health spending has been "protected" and so will rise further as a proportion, while other areas such as housing and defence will again fall back dramatically.

The Office of Budget Responsibility (OBR) is projecting that expenditures on health, pensioner benefits and long-term care will rise from 37% of the total at present to 47% in 50 years' time, simply as a result of changing demographics. 

"Even small additional cost increases in health, which we might reasonably expect, push this total to well over half of spending," says the IFS.

"Going forward, pressures on health and pensions spending are severe," adds Paul Johnson, Institute director and one of the authors of the report. "Governments have three choices - increase total spending to accommodate these changes, reform health and pension spending dramatically to cap future costs, or cut back elsewhere," he says.