Expert health panel calls for ringfenced health and social care tax to replace National Insurance

A new tax earmarked solely for the NHS and social care is among the recommendations in a report on healthcare funding in England. The report comes from a panel of ten health experts set up by the Liberal Democrats in autumn 2016.

As Norman Lamb said when they previously published their interim findings:

The Government is dragging its heels on offering anything resembling a vision for the future of health and social care in Britain. We are a wealthy country, we have to do right by our sick and elderly. Excuses and promises of fixes tomorrow simply are not good enough.

The panel, which includes former chief executives of NHS England, the Royal College of Nursing, and the Patients Association, concluded that the NHS in England needs a real terms funding increase of £4bn in 2018-19 and further real terms increases of £2.5bn in each of the following two years.

Their report, Health and Social Care: Delivering a Secure Funding Future, can be read in full below. It points out that in the short-term, the NHS funding gap could be bridged by an income tax increase of the sort the Liberal Democrats have been calling for.

Longer-term, the panel recommends, health and care funding should be brought together in a single ringfenced tax to replace National Insurance.

Other recommendations include:

  • Creating an Office for Budget Responsibility for Health
  • Introducing incentives to encourage people to save more towards adult social care
  • Additional revenue for local authorities to invest in public health
  • Reinstating the cap on the costs of adult social care

The panel also argued that consideration should be given to scrapping the total exemption from National Insurance Contributions for people who work beyond the age of 65. Liberal Democrat leader Vince Cable is considering this proposal for higher earners.

Vince Cable said:

This specialist report provides some convincing answers on arguably the greatest domestic crisis facing the country: how to deal with the severe pressures on health and social care services. We must never again be in a position whereby funding is so short that more than 50,000 operations have had to be postponed over the course of a single month.

The health and care budget should be financed by an earmarked tax, which could replace national insurance. Many of those previously strongly opposed now accept that, in the case of the NHS, there is a strong argument for a form of ringfenced tax.

Panel member Professor Clare Gerada, former chair of the Royal College of General Practitioners and a party member since 2016, said:

At a time when the NHS and social care face such immense pressures, policy makers must be willing to look at bold solutions in order to safeguard vital services for generations to come.

Developing this report has been a welcome opportunity to explore ideas including the creation of a dedicated health and social care tax, which could help deliver the long-term funding that services desperately need. I hope policy makers of all parties will consider these recommendations seriously.

Norman Lamb, former health minister and campaigner for a cross-party approach on these issues, added:

This report is an important contribution to the debate on the future of the NHS and social care. I have long argued for a hypothecated tax and that is now gaining support across the political spectrum.

However, it is clearer than ever that we also need to establish a cross-party NHS and Care Convention – a time-limited process that would engage with staff, patients and the public to come up with a plan for securing the long-term sustainability of these treasured services.

Although this report is not formally party policy, its genesis and reception so far makes it pretty clear which way party policy is likely to go on this issue.

The panel’s members are:

  • Sir David Nicholson, former chief executive of NHS England
  • Dr Peter Carter, former chief executive of the Royal College of Nursing
  • Katherine Murphy, former chief executive of the Patients Association
  • Professor Clare Gerada, former chair of the Royal College of General Practitioners
  • Professor Dinesh Bhugara, emeritus professor of mental health and cultural diversity and president of the World Psychiatric Association
  • Sir Stephen Bubb, chief executive of Charity Futures and former chief executive of the Association of Chief Executives of Voluntary Organisations
  • Amna Ahmad, health campaigner and NHS policy expert
  • Professor Paul McCrone, health economist
  • Cllr Richard Kemp, leader of Liverpool Liberal Democrats and deputy chair of the Local Government Association’s Community Wellbeing Board
  • Professor Nick Bosanquet, professor of healthcare policy at Imperial College

One response to “Expert health panel calls for ringfenced health and social care tax to replace National Insurance”

  1. What next? A hypothecated tax for education? One for defence? One for pensions and social security? One for Overseas Aid…?

    How exactly does any of this help?

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