Polly Toynbee (26 July) and several letters since have stressed the dire state of the NHS. What has not been mentioned is that it is unlikely to survive without a fundamental change in the way it is financed.
NHS costs rise inexorably much faster than GDP because of an ageing population, new expensive lifesaving drugs, the needs of mental health patients and many other urgent demands. Yet, according to the Office for Budget Responsibility, the share of GDP allotted to the NHS will decline from 6.1% in 2014-15 to 5.4% in 2020-21, the lowest of any comparably wealthy country in the European Union. Moreover, social care, which also desperately needs more money as the Barker commission showed, faces draconian cuts. Yet social care and healthcare cannot be separated. How else can the problem of bed-blocking, for instance, ever be solved?
The government claims that efficiency savings will keep the NHS afloat, but even a miraculous leap in efficiency greater than anything experienced to date cannot close the huge gap between health and social care needs and what the government is prepared to spend. The Conservative manifesto committed the government not to increase income tax, corporation tax, VAT or national insurance contributions. So where can the money for health and social care be found? There is only one source left: a new, reformed national insurance system, financed by contributions earmarked specifically and exclusively for health and social care.
The Treasury strongly dislikes hypothecated taxes, for some good reasons. They reduce government flexibility and the ability to allocate tax receipts according to spending priorities and best value for money. But there is one overwhelming argument for a system of especial health and social care contributions: people seem far more willing to pay for the NHS, which is still regarded as a national treasure, than taxes in general. Indeed, in 2002, when Gordon Brown, with some trepidation, increased NICs by a penny to finance extra spending on the NHS, he was surprised to find that imposing the extra penny was popular. However, what the public did not realise was that less than half the proceeds went to their declared purpose. Most were swallowed up in the general tax pool. Indeed NICs, as they are, no longer make sense. They were originally designed to finance the NHS and pensions – people believe they still do – but most of the proceeds go into the general pool of tax receipts. Only some 20% goes to the NHS; 80% of the NHS is financed from general taxation. Likewise, the basic state pension is now almost entirely unrelated to contributions, and is also financed from general taxation. The public are unaware of what they are paying for when they pay NICs, contrary to every principle of a good tax system.
Norman Lamb and Frank Field have advocated setting up a commission to consider the future of the NHS, which the government should give serious consideration. The case for a new system of hypothecated contributions is part of their proposal. Because of its urgency this reform should be a top priority.
Dick Taverne
House of Lords
• I agree with Polly Toynbee that it is unlikely that Jeremy Hunt fully revealed the problems of the NHS to Theresa May because there is no evidence he understands them himself.
There are four problems with the business model of the NHS and until these are tackled good health outcomes will be ever more beyond affordability. First, if waiting times go down, demand goes up and people will seek medical attention when they have conditions that will heal themselves. Cheap local triage should be the first point of entry.
Second, politicians equate more doctors and nurses with better outcomes when in any other field they would be measured by their productivity. There is no published evidence that efficiency rather than mere existence is seen as important.
Third, causation is never considered, so if a person falls in the street and breaks their hip nobody phones the local authority to tell them where they need to fix the pavement.
Finally, once a GP commissions a piece of work from a consultant they have no further control of the cost of intervention. Consultants can therefore fill their clinics with patients they are keeping an eye on rather than being told by the commissioner that they only want £X spent before requesting further funding. The GP might choose to keep an eye on the patient themselves for instance.
The hierarchy of the health service prevents a real examination of its business model, and as long as politicians think that doctors rather than able and fully in-control managers are better at running this complex system, we are doomed to pump ever more money into it.
Dr John Beer
Farnham, Surrey
• Join the debate – email guardian.letters@theguardian.com
Contributions change could save the NHS | Letters
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