Calls for specific NHS tax almost welcome for Brexit-focused May

Janan Ganesh: Absence of politics paints NHS as benevolent spirit not costly system

The NHS is underfunded by rich-world standards. It also contains inefficiencies that would be quaint if the cost was not human life. Photograph: Will Oliver

The NHS is underfunded by rich-world standards. It also contains inefficiencies that would be quaint if the cost was not human life. Photograph: Will Oliver

 

In the end, British prime ministers embrace foreign affairs as an escape from the pettifogging chore of domestic politics. The glamour and decorum offers relief from their rough treatment at home.

Theresa May’s premiership inverts the rule. It is foreign affairs, in the shape of Brexit, that constitute the stress. Domestic politics supplies the escapism. She might be the one person in the land who can find solace in the opening news stories of 2018: the old reliables of rail ticket inflation and strains in the National Health Service. The year could be 2004 or 1995 or 1988.

The trouble is that familiarity has not bred progress. Even as NHS crises come around like comets, the ritual is the same each time. Producer interests want more money. Ministers want structural reform. The difference is split and the NHS creaks arthritically on. (The third option, of rationing some services, namely the expensive treatment of people with not long to live, is too dark to entertain.)

If anything feels different this time, it is the momentum behind the idea of a dedicated NHS tax. May was asked about it in a television interview on Sunday. She was doubtful but some Conservatives, such as the former cabinet member Oliver Letwin, like the idea. Other admirers include the London School of Economics professor Richard Layard, who sits as a Labour peer in the House of Lords, and Nicholas Macpherson, once permanent secretary of the sceptical treasury.

Health expenditure

None of them pretend that “hypothecation” is a technical solution. It does not retard the ageing of the population or the constant manufacture of brilliant but costly treatments. These realities test healthcare systems throughout the rich world, including America, where health expenditure nears a fifth of gross domestic product.

What a separate tax might change is the politics. At the moment, words are cheap. Voters can tell surveys that more should be spent on healthcare, but hope the money comes from general government expenditure or borrowing. The NHS itself can nod along to the idea of reform, knowing the public will not apply much pressure. A tax would force voters to decide exactly how much they are willing to pay. By confronting them with the cost of a service they now pretend is “free”, it might also encourage them to insist on value and reform.

Producers and reformers are both right. The NHS is underfunded by rich-world standards. It also contains inefficiencies that would be quaint if the cost was not human life. A dedicated tax would advance both causes. It would also force candour on politicians. At campaign time, those who pledge more money for the NHS would be pledging a tax rise. Those who wanted a freeze, cut or slower rise in the tax would have to explain how the NHS would withstand the shortfall.

And both would have to reckon with the views of different voting blocs. The British sometimes think of the NHS like the Nato security umbrella, as something that benefits all citizens equally. A dedicated tax would bring out the distributional vagaries that exist in practice. A young single person can go years without any interaction with a doctor. Others – the old, parents of young children – are in and out of hospitals all the time.

Hard-headed thought

If this sounds like the politicisation of the NHS, that is not a fatal argument. It is the absence of politics that allows us to mysticise the NHS as a benevolent spirit, rather than as a system with inputs, outputs, trade-offs, relative winners, relative losers and, above all, a huge bill. There is nothing like putting a number on it to encourage hard-headed thought.

The treasury is generally right to mistrust hypothecation for its inelegance and its denial of ministerial discretion. Its spread to other areas would paralyse government. Even the advocates disagree on whether a specific tax should fund the whole service or be supplemented by general government revenue. The only consensus is on a five-year funding cycle.

All the same, curiosity about the idea has grown since the previous winter crisis. Healthcare is a unique case. Voters consistently rate it above other issues, give or take immigration. It becomes more expensive all the time in a way that education, say, does not. There is also a recent precedent for hypothecation: in 2002, the then Labour government levied an extra penny on national insurance to fund the NHS.

Even with a special NHS tax, a winter crisis will happen again. But in place of generalised angst, the debate would have shape: how much more should we pay over the next five years, in return for what kind of change. Like adults, we would make our choices and live with them. – Copyright The Financial Times Limited 2018

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