Ross Clark
wealthy. But few of us really have any idea of what health and social care cost us. We just expect more and more to be spent so long as the burden falls on someone else.
That is where a dedicated tax or subscription fee would come in. It would be clear, just from looking at our payslip or tax return, just how much health and social care costs us relative to other government spending.
We could then have a proper debate as to how much we are prepared to pay for health and social care. If as a country we decide we want to pay more then we will be happy to accept an increase in the subscription fee – without having to worry that the money will be hived off by a chancellor and spent on something else.
Governments have long been resistant to “hypothecated taxes”: a term which means the revenue is ring-fenced for one specific purpose. True, too many hypothecated taxes could get confusing. We don’t want our payslips to be a yard long, detailing exactly how many pennies we have spent on every roundabout and every warship.
Yet the rules which demand our council tax bills come with a breakdown of spending have given us a very informative list of how much goes to local authorities and the police. Sharp rises in some council tax bills this year have gone down less badly than in the past thanks to councils being allowed a 3 per cent levy for social care – money which is ring-fenced for that purpose.
Health and social care are a special case thanks to the sheer amount of money involved. In 2015/16, calculates the Institute for Fiscal Studies, the UK taxpayer spent a total of £220 billion on health and social care – 28.7 per cent of all public spending.
It is so much that even if we abolished the Armed Forces and spent the money on health and social care instead – as some on the Left seem to think we ought to do – it would increase the health and social care budget by only 15 per cent. There is widespread support for the idea of funding health and social care through some sort of hypothecated tax. A poll by think tank the King’s Fund last year suggested that twothirds of the public would welcome such a system.
THIS is what I propose. Firstly, the social care system should be funded nationally rather than through local councils, as now. Secondly, the Chancellor should abolish national insurance contributions. They are supposed to be a hypothecated tax dedicated to paying pensions and welfare but there is not and never has been a national insurance fund. NI contributions are just another income tax, levied on earned income.
In place of national insurance we should have a health and social care subscription fee. For the low-paid it should be a flat rate of £10 a year. For the higher paid the fee should rise with income. All money raised by this means, as well as that derived from “sin” taxes on alcohol and tobacco, should then be ring-fenced for health and social care.
Would we as a nation choose to spend more on these things than we do now? It is very likely we would. But either way we would all be paying something, all know what we were paying for – and we’d have to stop trying to pretend that healthcare comes for free.
‘Few have any idea what healthcare costs’