It was Bismark who first created a safety net in social care in Europe. Not Aneurin Bevan, who was some 50 years later. Letters to the editor, in the Times 24th March 2018, tell us the truth. But our politicians, and therefore the public will not listen, and the dissonance is leading closer and closer to civil unrest. There are few people who know more about social care provision and funding than Mr Frank Field MP, and there are few people who understand the funding and problems facing the health service than Mr John Appleby, formerly of the Kings Fund, and now of the Nuffield Trust. Few people understand the economics more than Kristian Niemietz of the Institute of economic affairs. Despite this the Liberal party is committed to a hypothecated taxation increase…. At it’s best a short term “finger in the dyke” policy, but at worst something which could lead on to an impossible dilemma for a future chancellor. We have to ration honestly and overtly.
Sir, The much-needed reform programme in health and social care must extend beyond the remedy you suggest (“National (Health) Insurance”, leader, Mar 22). Analysis I commissioned from the Commons library indicates that, in 2020, the combined deficit for health and social care in England will reach £9.1 billion.
A fourfold revolution in the national insurance system is required to meet both the immediate and the longer-term funding challenge. First, a penny increase in national insurance contributions would eliminate the short-term deficit. Second, that initial tranche of new funding must herald the creation of a national health and social care mutual that sets future contribution levels, governs the long-term financial framework for those services, and educates contributors on the costs of health and social care.
Third, extending national insurance contributions to people of pensionable age who are still in work would meet part of the funding gap in social care. Finally, the system should become more progressive. Those earning less than £11,000 a year should gain exemption from national insurance, with a starting rate of 10 per cent for middle earners and higher rates further up the scale.
Frank Field, MP
House of Commons
Sir, It is true, as your leading article says, that the NHS needs more money than the present plans offer. By 2021, NHS spending will have fallen by around 0.5 percentage points of GDP compared with ten years earlier. Hospitals are in deficit, services are being rationed, and there is still a shortage of NHS staff.
However, creating a ring-fenced NHS tax would put the spend-tax decision back to front. It might appeal to politicians faced with the tough sell of persuading voters to accept tax rises but pegging NHS funding to a dedicated tax would mean that NHS spending would fall when the tax take fell. The hard truth is that if we want to fund the NHS properly we first need to decide what we want to spend, and then how we raise the tax in a fair and efficient way. A ring-fenced tax provides an illusory technical escape from this spending choice, nothing more.
Professor John Appleby
Chief economist and director of research, Nuffield Trust
Sir, The idea of a national health insurance contribution — ie, a hypothecated NHS tax — sounds superficially attractive. We may disagree on the right level of public spending, and on how that money should be spent, but there is near-unanimous support for higher spending on the NHS. Hence, why not link a tax to a popular cause? The problem is that hypothecation has been tried many times and is mostly a book-keeping illusion. A pound of tax revenue is a pound of tax revenue — it does not matter where it comes from. There is no way to ensure that revenue from a “health tax” really is spent on healthcare.
A health tax would be a clumsy and unreliable way to achieve what continental European social health insurance systems achieve effortlessly and reliably. In those systems, your contributions go directly to the health insurer of your choice, not to the government. Those systems work. Why not go the whole hog and replace the NHS with a system of that kind?
Dr Kristian Niemietz
Head of health and welfare, Institute of Economic Affairs