Ring-fenced tax to fund NHS ‘a bad thing’, says Treasury minister

A RING-FENCED tax to pay solely for the NHS would be a “bad thing”, a Cabinet minister says today.

Liz Truss, the number two in the Treasury, said health spending should be paid for from general taxation like other public services. Her comments threaten a Cabinet split with Jeremy Hunt, the Health Secretary, who has spoken up for a special “hypothecated” tax to cover increased NHS spending. There is speculation No 10 is pushing for the Treasury to release up to £4 billion more to coincide with the health service’s 70th anniversary in July.

Last month Theresa May, the Prime Minister, suggested she backs a 10-year plan for the NHS and is expected to announce new funding in a few months.

Sir Simon Stevens, the head of the NHS, warned last month that government cuts over the past five years have left a £27billion hole in NHS accounts.

Mr Hunt has said that a ring-fenced tax would have the support of the public. But in an interview with The Daily Telegraph’s Chopper’s Brexit Podcast today, Ms Truss said: “They are a bad thing. If you had a hypothecated tax going into the NHS in the late 2000s, and we got the economic downturn and National Insurance receipts went down, that would have meant less money for the NHS. I believe in a taxfunded NHS that is funded from general taxation – that makes sense.”

The Chief Secretary to the Treasury added: “We have already put extra money into the NHS – we put £6.3billion in at the Budget. We have allocated extra money for nurses’ pay and other employees across the NHS because we are achieving contract reform and productivity improvement.

“But what is incredibly important is that we don’t spend money that we don’t have. That is the way this country got into trouble in 2010.

“We have had a big effort to get the deficit down over the last eight years – we don’t want to throw that away as it is important we get economic growth first before we spend more public money. Otherwise we would end up raising taxes and that would be bad news for an economy which is growing and there are growing opportunities.”

Asked if pensioners who work should pay National Insurance to fund the NHS, she added: “This is not a policy the Government has at all. Those people contributed throughout their lives and it is a good thing people work beyond the current retirement age.”

Mark Littlewood, director-general of the Institute for Economic Affairs, said: “Whether hypothecated, or specific, taxes don’t work for the NHS. In theory, the UK already has a hypothecated tax in the form of National Insurance with a percentage of this earmarked for the health service.

“But in reality, there is no relationship whatsoever between the amount raised in National Insurance and spending on the NHS. Spending on a particular service should not be driven by how much a particular tax rises.”

♦ Chopper’s Brexit Podcast is available on The Telegraph’s website and itunes from 6am today.