The NHS is ailing. Is a ringfenced tax the best remedy? | Ian Birrell

Doctors and their vociferous unions do like to complain, posing as protectors of the National Health Service while they dig in hard to protect their patch. But that does not mean their views should be discounted. The British Medical Association has claimed the workload of family doctors is endangering patient safety, with too many consultations leading to truncated appointments. They are right to raise the alarm.

General practitioners are the gatekeepers of our health system, sweeping up wider problems such as poor social care and mental health provision. They are seeing fast-rising numbers of patients, many elderly or disabled and with highly complex conditions, yet they are forced to rush consultations when seeing up to 60 sick people a day. A rule saying appointments should last a minimum of 10 minutes was scrapped three years ago; little wonder sessions in their surgeries can feel rather hasty and rudimentary.

Given the pressures on the NHS, both financial and medical, the BMA’s call for a ceiling of 25 consultations a day is unlikely to be heeded. As ever, the NHS is in crisis. Spending is still rising, but ministers want an unrealistic £22bn slashed in efficiency savings. There is room for more competition, better procurement and smarter use of technology, but already most hospitals are running deficits. Junior doctors are in revolt. And Britain needs to spend £5bn a year more to match average medical staff levels in other rich nations.

The NHS survived its busiest June on record, with emergency admissions up 4.7% on last year – partly a reflection of patients unable to see GPs. It remains a remarkably efficient institution. Yet there is a limit to how far it can stretch given an ageing society, growing population and health inflation eating away at extra cash. Ministers proclaim the sixth biggest funding increase in its history – yet this equates to less than one day’s running costs in real terms, according to the King’s Fund thinktank.

Clearly something has to give if there is over-demand from patients and under-supply of services. Since there are restrictions from a free service, reluctance to raise taxes and lack of appetite for more structural reform, the only solutions are rationing or reductions in quality. Already we see waiting lists lengthening – although they are far improved from the day in 2002 when Downing Street declared “the tanker has been turned” with an end to delays lasting more than 15 months. Yet the stresses will only worsen if sticking-plaster solutions are applied.

Although it is never popular to point this out, the NHS performs worse than many competitors in its core task of treating people. Even a study by the Commonwealth Fund often quoted by defenders of the status quo, which found the UK doing best among 11 nations on several indicators, found its main flaw was a poor record in actually keeping people alive. A patched-up, politically muddled service has led to appalling patient safety scandals and comparatively poor results on key indices from cancer survival and stroke death rates through to infant mortality.

Those arguing for higher taxes believe the public would back them if the money was poured into hospitals and care homes

Yet Westminster remains locked in sterile political debate. The Tories, terrified of being seen as hostile to an admired public service, parrot devotion to a creaking institution invented by postwar socialists to treat very different needs. Labour underscores its irrelevance when even the “moderate” candidate in its leadership battle seeks a “100% publicly funded NHS”– a silly suggestion that would cause collapse in many services and is out of step with other European systems. Even Ukip, hostile to all the foreigners working so hard in our health and care services, professes devotion to this sacrosanct system.

Now at last there is a ray of light through the gloom. Dan Poulter, a former health minister who combines parliamentary duties with part-time work as a doctor, has called for a dedicated new tax to ensure there is secure, long-term funding for health and social care (a sort of National Insurance). As he rightly says, an income-based levy would ensure people saw precisely how their money was spent, stripping away any illusions that the NHS is a free service. This would at last promote more sensible discussion about how to fund increasing numbers of sick, obese, elderly and disabled people at a time of astonishing scientific advances.

This is not a new idea. Treasury mandarins hate hypothecated taxes, and George Osborne rapidly ruled out the idea when it was floated a couple of years ago, but there is some support for the proposal in all main parties. Already the nation spends 9.9% of GDP on healthcare. Those arguing for higher taxes believe the public would back them if the money was poured into hospitals and care homes, while those seeking new patient payments or a social insurance system think they could win over an electorate sceptical of handing more cash to the state.

As we have seen distressingly often in recent years, healthcare failures fall with often fatal consequences on the most vulnerable patients. We need serious debate over the cost, delivery and funding of a modern health system. If our new prime minister wants to show commitment to progressive social justice, she should pick up Dr Poulter’s prescription. We can keep bandaging up the body, but it would be far better to find a proper cure.

The NHS is ailing. Is a ringfenced tax the best remedy? | Ian Birrell

A ringfenced tax for the NHS? Excellent notion, in theory | Anne Perkins

Former Labour minister Frank Discipline advised that enhanced nationwide insurance contributions could be paid into a sealed fund for overall health and care charges. Photograph: Martin Godwin for the Guardian

The idea that we would be keener to shell out tax if we knew exactly how it was to be invested is one of the most persuasive in modern day politics. No shock then, as the NHS faces up to what many believe is the deepest crisis ever, that the question of consumerising tax is back. The notion of earmarking a portion of nationwide insurance coverage to shell out for the NHS is a beguiling thought, but will it function?

The last time the debate about hypothecation captured consideration was back in the 1990s, when Labour was struggling to assert its economic competence. There had been reports from every self-respecting thinktank about reconnecting taxation to paying. And it’s by no means really gone away as an concept, getting been utilized to justify green taxes, spend for the New Deal for the younger unemployed, and support the large enhance in health paying after 2002. It may possibly make very good politics, but not always good economics.

The fuel duty escalator, an yearly increase of 3% to disincentivise motoring, was actually introduced by a Tory chancellor , but in 1997, Gordon Brown extended it to tobacco, and announced both taxes would rise by at least 5% each 12 months. And for the 1st time, he linked the increased income to mitigating the wider environmental and well being impacts of driving and smoking. Not very a hypothecated tax, much more of a hybrid, but nevertheless a way of making income for specific policy objectives. But inside of months of implementation in 1999, the fuel levy was hounded to oblivion by mass protest.

By some means the idea of an unspecified return in the form of enhanced transport infrastructure was no compensation for a whacking upfront increase in the cost of petrol. One weakness was that it was by no means created clear by how a lot spending on transport would rise, more than and above investing currently planned.

Labour introduced other levies to influence behaviour that at the exact same time would deliver funds for specified objectives: the climate change levy to incentivise the use of renewables, now heading the identical way as the fuel levy landfill tax and an aggregates levy. Some of the income from the aggregates levy went into the aggregates sustainability fund, which – in situation you missed it – fell to the cost-cutting bonfire of 2011. More or less the fate of the Street Fund, set up in 1920 and abandoned in 1936.

The climate adjust levy failed simply because it worked also well. It produced power too costly. But that is not its only weakness. In purchase to be able to declare it would be revenue-neutral – a sort of reverse hypothecation – a .three% minimize in employers’ nationwide insurance coverage contributions was created at the same time. But the climate alter levy raises much less than is foregone by the nationwide insurance reduce. Cross-referencing taxes is a tricky company.

Total-blooded hypothecation would in theory dodge some of these weaknesses. It would straight hyperlink some or all of a certain tax to, say, funding the NHS. Labour is talking about using an boost in national insurance coverage for just that function. It truly is worked before, when a 1p increase in nationwide insurance coverage contributions was used to fund the enormous improve in health investing – from £65bn to £105bn – amongst 2002 and 2007.

But it was sleight of hand. Only a fraction goes to the well being services, which is nevertheless nearly totally funded from general taxation, so it is not as transparent as it appears. And whilst the very good point about national insurance is that it is fairly progressive, the negative factor is that the revenue it raises depends on the amount in function. Often it goes down. Well being investing often goes up. There is a parliamentary briefing that spells out the options with admirable clarity.

So hypothecation can make tax a lot more respectable. But it is symbolic rather than substantive. All the exact same, that does not mean it isn’t really worth undertaking.

A ringfenced tax for the NHS? Excellent notion, in theory | Anne Perkins