Taxing times for the NHS

Posted on Thursday 3rd April 2014
Martin Powell

On his first day as Chief Executive of NHS England, Simon Stevens stated that the National Health Service was facing its biggest challenge to date because of the most sustained ‘budget crunch in its 66-year history’. He argued it was time to ‘chart a new course’ in order to face the really big challenges – dementia, obesity, inequalities, mental health and wellbeing, personalisation, prevention and empowerment. Only by ‘radically transforming services’ would the NHS continue to thrive.

A few days earlier, Lord Warner (a former Labour Health Minister) co-authored a report Solving the NHS care and cash crisis. Comprising  some 130 pages it has seven big messages: co-produce health;  build more effective community-based services and public health; merge health and social care; strengthen specialist hospital care; broaden the tax base; diversify provision;  and reduce centralisation. 

However, newspapers picked on ‘co-payments’ (a polite word for charges) for the ‘hotel costs’ of about £20 a night for some in-patient hospital care (estimated at raising over £1 billion a year) and an ‘NHS Membership fee’ for all non-exempt individuals, gathered with the Council Tax (estimated at raising over £2 billion a year).  Many of the 1,684 comments in Guardian online appeared to focus on these issues.

It is true that the NHS will face increasing problems as it tries to square the circle between increasing demand of ‘technological push’,  ‘demographic pull’ (ageing population) and rising expectations on the one hand  and of problematic supply (austerity; willingness to pay more taxes) on the other hand. Real spending on NHS doubled in the sunny weather of the ten  years prior to the banking crisis, and in the rainy period of austerity they are correct to point to an ‘affordability gap’ of some  £20-30 billion a year in the total health and care budget of about £130 billion a year. 

However, while this may be the biggest or most sustained crisis for the NHS, solutions to previous   ‘crises’ – dating back to within a few years of the service’s establishment - have contained a broad mix of the same elements: increase expenditure (as Tony Blair did in 2000);  rationalise services (eg. closing or downgrading smaller hospitals; changing ‘full’ 24/7 A&E into ‘restricted opening time’minor injuries units); restrict entitlements (eg.  tattoo removal ) and impose charges (eg dental, optical, prescription). If the ‘easy’ option of increasing expenditure is off the menu, then the more difficult options remain. 

Lord Warner wants public debate and a ‘big conversation’ on changes to the NHS. However, while people may agree in abstract terms on prevention, public health and community- based services delivering care closer to home, they will not agree to closing their hospital or to charges. 

Although many MPs recognise the need for change, they do not wish to be ‘Kidderministered’ (where an independent candidate beat a sitting MP on the issue of ‘reconfiguring’ local services). 

The Department of Health and the British Medical Association repeated their support for the founding principle of the NHS being  ‘free at point of use’ and their opposition to charges, conveniently forgetting that the ‘charging horse’ bolted over 60 years ago. In drawing up his plan for the welfare state in the 1940s Sir William Beveridge considered a ‘hotel charge’, and this has been debated at various points during the last 60 years, but it has broadly been agreed that the administration costs and public opposition would outweigh any small revenue gain. 

Lord Warner is correct to remind us of Lord Rutherford’s wartime dictum:  “We’ve run out of money and now we have to think.” However, his proposed charges are the latest in a long line of Baldrick-like ‘cunning plans’ to raise extra money for the NHS since 1948. Solutions must be feasible and politically acceptable.  The favourite online comments of ‘tax avoiders’ such as Starbucks and Google paying for the NHS are unlikely to happen. All governments claim that they will crack down on tax avoidance and waste’- and generally fail. Most opinion polls show that people tend to be fairly relaxed about who delivers care as long as it is of high quality and free at the point of use. The political opposition to ‘membership’ and ‘hotel’ charges is likely to be greater than the recent Coalition reforms to the NHS.  The NHS is not a gym with members or a hotel with paying guests. Difficult choices may have to be made, but these options appear to give much political pain for relatively little financial gain. 

Professor Martin Powell. Professor of Health and Social Policy, Health Services Management Centre, University of Birmingham.