Raising taxes to fund the NHS: are we (and the NHS) ready to grasp the nettle?

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By Judith Smith , Professor of Health Policy and Management
Director of Health Services Management Centre
School of Social Policy, University of Birmingham

‘Tax rises needed to prevent NHS misery’. This was the stark warning from the BBC recently, reacting to new analysis by the Health Foundation and Institute for Fiscal Studies that suggests that just to keep providing the level of service it does today, the NHS will need an extra 3.3% of funding for each of the next 15 years. For the NHS to bring about modest improvements in its services, the Health Foundation and IFS argue that 4% annual rises in funding are needed, with 5% increases for a few years to kick-start the process of change.

If much-needed increases are also given to social care funding, the IFS and Health Foundation conclude that together with required additional funding for the NHS, the country will find itself spending 11.4% of national income on health and social care, compared with 8.4% now. The authors of the new analysis conclude that taxes will have to rise to fund this, given the general consensus that the British public will never tolerate having to pay more money directly for some health services in the way that people do in many countries.

Making tough decisions to cut costs

A team from the Health Services Management Centre led by Dr Iestyn Williams has just completed analysis (for the Health Foundation) about the way in which cash-strapped NHS organisations are making tough rationing decisions that include delaying backlog maintenance, and holding back on important capital spending and building schemes. What is clear is that the NHS is running round in ever-decreasing circles and (as with any household facing financial strife) taking money out of savings to fund everyday spending, and holding back on routine repairs or longer term improvements.

New funding deal- will they deliver?

Much hope is being pinned on the expected announcement by the Prime Minister in July of a new funding deal for the NHS to coincide with the NHS’ 70th birthday. We have however been here before. The Comprehensive Spending Review of 2015 was trailed as an important new financial settlement for the NHS to enable it to implement its Five Year Forward View plans, yet our analysis of its less than adequate allocation for health and social care concluded it was a ‘crisis deferred, not averted’.

As a nation we display rather contradictory behaviour towards the NHS, and I am no exception to this. Watching the NHS Heroes programme recently, I lurched from feeling proud and emotional at the stories of exceptional care and service, to being somewhat unsettled by the constant applause at the mention by host Paul O’Grady of the word ‘NHS’, which jarred with what I know of the sometimes mixed experience people have of NHS and social care. I concluded that we have to confront honestly the need for the NHS to change and improve, as well as cleaving to what is good and valuable about it as a universally provided and tax-funded service.

The price we’re willing to pay

It is here that we face the crunch, for there are critical political questions to be answered about how much extra we are all prepared to pay for decent, modern and well integrated health and social care. When the TV applause fades, and we await our pay packet at the end of the month, what will we expect in return for a larger tax or national insurance deduction?

I think the answer here is that we will be much less tolerant of the old-fashioned delivery of some services such as not being able to consult our GP on-line or by phone, receiving hospital appointments via paper letters, sometime phoning multiple times to receive test results, and struggling to coordinate care for our frail elderly relatives in what is a fiendishly complicated and often fragmented care system.

As the old saying goes, to those to whom much is given, of them much will be expected. I think this is going to be the case with the NHS as it prepares to receive a birthday gift in the Autumn Budget. Assuming that taxes rise to fund health care more generously for the next decade, there will be strings attached, ones that will likely mean a shake-up of the NHS. My fervent hope is that this will not be (yet another) organisational restructuring, but rather some serious modernisation of the way in which care is delivered, so that the NHS can truly be fit for a long and healthy future.

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