The NHS needs radical new thinking
The country, the Government announced, faces a “fundamental choice” over the NHS. Substantially more money is required; but it will be need to be accompanied by improved hospital performance, greater staff efficiency, reform of elderly care and a crack-down on waste. This was not Theresa May outlining her administration’s latest plans but Gordon Brown in 2002 announcing in his Budget a nine per cent annual increase in health spending paid for by a one per cent rise in National Insurance contributions. The announcement broke a Labour manifesto pledge not to put up taxes.
At the time the economy was booming and the government judged that people would not mind paying more to finance healthcare. Now, 16 years later and after a financial crash that caused a recession and pushed up national debt to almost £2 trillion, another government is asking the country to dig deep in its pockets for healthcare.
Since it is the most important aspect of our lives, few people would demur when asked to contribute more, though many of the people who use the NHS most do not pay into the system at all. But when taxpayers consider that even bigger increases in the past have still failed to avert a funding crisis today they are entitled to question whether simply carrying on as before is sensible.
It is at least arguable that the way in which the NHS is structured and paid for is part of the reason why it always runs into the financial buffers. It is why, for instance, few people in the system think of paying outrageous sums of money for basic items like toilet rolls. An assumption that the taxpayer is always there to pick up the tab engenders a culture of wastefulness that has been impossible to shake off over the years.
Perhaps Mrs May in her speech today will address these more fundamental issues about how we deliver healthcare in Britain; but the indications over the weekend suggest otherwise.
The average planned real terms increase of 3.4 per cent over five years, which is less than the 40-year trend rise of 3.7 per cent, is being placed in the context of Brexit. What is not immediately clear is whether Mrs May intends that this should be a trade off with the Brexiteers, who will now be expected to go along with any compromises being planned to secure a deal with the EU.
Interviewed by Andrew Marr yesterday the Prime Minister was eager to point out that the amount proposed was more than the £350m per week famously emblazoned on the side of the Brexiteers’ battle-bus during the referendum campaign. But just a small part of the money will come from the so-called “Brexit dividend” and then only when we stop paying into the EU, which does not happen not until the end of 2020, or maybe later. The rest must be taken from higher taxes or borrowing and Mrs May conceded that the country will have to “contribute a bit more in a fair and balanced way”.
The detail of what that means will have to await tax announcements from Philip Hammond in his Budget; but it is already apparent that the bulk of this money will be raised by freezing higher rate tax allowances from 2020 onwards. Once again, the better-off will be dragged into higher tax brackets to fund increases in social spending.
Furthermore, nothing that has been proposed so far will impact on social care. As one minister graphically put it recently, pouring more money into the NHS without addressing elderly care was like trying to fill a bath with the plug out. Joining these together is desperately important, and urgent, yet we have yet to see even the promised green paper on the subject. When Mr Brown made his announcement in 2002, it led to an explosion of PFI contracts to build new hospitals, so the extra money, which amounted to some 40 per cent over five years, did not even pay for the buildings. We are still funding those to this day – to the tune of £2bn this year – and will continue to do so for the next 15 years. Labour also proposed big structural changes which never materialised, including a greater role for the private sector and profitmaking clinics. Money and reform must go together if health and social care is not to lurch from one crisis to another. With the 70th anniversary of the NHS approaching now is the time for radical new thinking. If not now, when?