Health and Social Care: Funding

Lord Ashton of Hyde Excerpts

Tuesday 22nd March 2016 Lords Chamber

[Lord Taverne]

To ask Her Majesty’s Government whether they intend to introduce measures to convert National Insurance contributions into a special tax for funding health and social care.

[Lord Ashton of Hyde (Con)]

My Lords, the Government do not have any plans to convert national insurance contributions into a special tax for funding health and social care. As noble Lords will know, a fixed proportion of each class of NIC receipts from employees, the self-employed and employers is already allocated directly to the NHS. This adds up to broadly 20% of NIC receipts. The rest of NHS funding comes from general taxation.

[Lord Taverne (LD)]

My Lords, the National Health Service is facing an existential crisis that is probably as serious as any it has faced. The root cause is well known: namely, that spending on health and social security rises much faster than GDP. At the same time, according to the Office for Budget Responsibility, spending on social care and the health service is set to decline instead of increasing as a proportion of GDP in the next five years. Do the Government not recognise that the answer is a change in funding? NICs are now in effect a regressive and inefficient tax on jobs. Only part of the money goes to the NHS and the rest goes into a general tax pool, as the Minister has conceded. If the Government do not accept this, will the Minister make representations to his colleagues in the Department of Health to meet a small group, representing a larger group of cross-party experts who have come to the conclusion that to save the health service now means a new Beveridge?

[Lord Ashton of Hyde]

My Lords, there is quite a lot in that Question. To start with, according to the OECD figures, the percentage of our GDP in the past three years has been flat at 8.5%. I accept that over time, as our GDP increases, there is a chance that if the expenditure stays the same, the percentage will reduce. As noble Lords know, under the five-year forward view, we will have spent an extra £10 billion a year by the end of the Parliament. As far as having a delegation to talk about a future strategy on funding the NHS is concerned, I would be delighted to commit the Health Minister to meeting the noble Lord, but I cannot really do that. I will certainly make his views known and ask the Minister if he would meet the delegation.

[Lord Davies of Oldham (Lab)]

My Lords, does the Minister accept that the percentage of GDP that the United Kingdom spends on health is much lower than that of comparable countries and that therefore the crisis in the National Health Service needs addressing? Is he aware that, against this crisis background, the Government are asking for a further £22 billion in efficiency savings and yet 53% of hospital trusts say that it will prove impossible to meet the caps on agency staff? We are facing a crisis and the Government are unprepared to face up to it.

[Lord Ashton of Hyde]

My Lords, on the OECD figures, the United Kingdom’s spending is slightly below the OECD average, but it all depends on the denominator and that depends on how high GDP is. However, it is not, as the noble Lord puts it, a lot lower; it is slightly below average for the OECD. On the £22 billion of savings, that was the NHS’s own plan. The Chancellor accepted that and agreed to fund it and in fact produced an extra £2 billion this year as a down payment.

[Baroness Gardner of Parkes (Con)]

My Lords, will the Minister ask the Chancellor, who is always looking for innovative ideas, to consider the possibility of donations to the health service, which could be tax deductible? There might be a lot of people willing to give perhaps even large sums to the National Health Service. It would be a win-win situation.

[Lord Ashton of Hyde]

I am sure that the Chancellor is always looking for good ideas. However, by the end of 2020, we will be spending £120 billion on the NHS, so the donations would have to be pretty big.

[Lord Kinnock (Lab)]

My Lords, health funding is in crisis and expenditure on adult social care has gone down as a proportion of GDP by 19% since 2010, which accounts for part of the crisis in health provision. Would it not be possible to consider that a direct connection between tax contributions and the quantity and quality of health and social care provision would enhance public understanding, improve transparency and probably management, and potentially generate additional buoyancy for funding for these vital services?

[Lord Ashton of Hyde]

I take issue with the noble Lord’s figures. In 2010, the percentage according to OECD figures of GDP was 8.6% and in 2013 it was 8.5%. As far as the hypothecation of taxes is concerned, it is generally an established principle that we do not like doing that because it restricts flexibility. Ultimately, the taxpayer has to pay for the NHS and I agree with the noble Lord that taxpayers are prepared and want to pay for the NHS. They think that it is worth while—we all do. But we do not agree with hypothecating taxes beyond the fact that, as I said in my first Answer, 20% of NIC does go to the NHS.

[Baroness Kramer (LD)]

My Lords, my right honourable colleague, the Member of Parliament for North Norfolk, Norman Lamb, has called for a cross-party commission to take a long-term view on the funding needed both for the National Health Service and for social care. As far as I understand, he has not yet had a response from the Government on his call for that completely cross-party, non-political commission. Will the Government reply on that today?

[Lord Ashton of Hyde]

As far I am aware, the right honourable Norman Lamb has a Private Member’s Bill in the House of Commons, where these issues can be fully debated. Obviously, I cannot give an answer to him today.