Lib Dems poised to back dedicated tax to help rescue NHS

The Liberal Democrats are poised to become the first major political party to back a dedicated new tax to help rescue the NHS from its deep financial problems.

The party is about to start examining the wisdom and practicalities of introducing a ringfenced tax which would involve a one pence increase in either income tax or National Insurance.

The party has recruited a panel of senior doctors and NHS experts to advise it on how what it calls “a dedicated NHS and care tax” would help ease the health service’s decade-long financial squeeze.

Norman Lamb, the Lib Dem health spokesman, will on Saturday tell party activists gathered at its annual conference in Brighton that there is a very strong case for embracing the move, despite the political risk inherent in a tax rise.

“The uncomfortable truth is that we are falling further behind other European countries in how much we spend on health and care. So let’s look at the case for a dedicated health and care tax, shown on your pay packet,” Lamb will say.

“We must be honest with the British people. If we believe that more money is needed, if we conclude that we all need to pay perhaps an extra penny in the pound, then we must be prepared to say it. We must give this [idea] proper consideration,” he will add.

The Treasury has estimated that a 1p rise in income tax would raise £3.9bn this year, rising to £4.5bn next year and then £4.6bn in 2018-19. Without major reforms to how care is provided, the NHS in England is facing a £22bn gap in its finances by 2020-21.

The party’s “new Beveridge group” of advisers will include Dr Clare Gerada, the outspoken ex-chair of the Royal College of GPs, who recently defected to the Lib Dems from Labour; Prof Dinesh Bhugra, an ex-president of the Royal College of Psychiatrists; and Prof Nick Bosanquet, an expert in health economics at Imperial College London who has also worked with Reform, the right-of-centre thinktank that works on public sector reform.

Prof Chris Ham, chief executive of the King’s Fund thinktank, welcomed the Lib Dems’ consideration of the move as a sign of realism at Westminster that the NHS in England cannot survive intact without receiving more money than the £10bn extra it is due by 2020-21.

“It is not possible for the NHS to continue to meet rising demand for services and maintain current standards of care without additional funding,” said Ham. “Increasing funding for health and social care is affordable if hard choices are made about how to find the additional resources needed.

“As the party conference season begins, it is essential that all the parties face up to the need for an honest debate about how to provide adequate funding to meet future needs for health and social care,” he added.

Lamb will tell delegates that health and social care need special treatment in government spending because, unlike other public services, the costs involved are rising relentlessly by about 4% a year, due to the ageing and growing population and rise of lifestyle-related conditions such as obesity and lung diseases.

Government sources indicated that ministers were unlikely to embrace an NHS-specific tax rise any time soon.

A spokesperson for the Department of Health said: “On the back of a strong economy, we are giving the NHS the £10bn it asked for to fund its own plan for the future, including almost £4bn this year to transform services and improve standards of care.

“We know the NHS is under pressure because of our ageing population, but we rightly expect hospitals to have a grip on their finances and continue to ensure patients get treated quickly.”

Lib Dems poised to back dedicated tax to help rescue NHS