National Health Service

Lord Rennard Excerpts

Thursday 14th January 2016 Lords Chamber

[Lord Rennard (LD)]

My Lords, I draw the attention of the House to my entry in the Register of Lords’ Interests. Last autumn, the Chancellor secured some good headlines by promising an extra £10 billion in real terms for NHS England by 2020, representing an annual increase in NHS spending of 1.75%. But beneath those headlines, NHS cost and demand rises by 3.5% to 4% a year. When trying to explain the problems of the rising cost of pensions and healthcare, I often begin by saying that when I was at school, 40 years ago, male life expectancy was just 67. A man approaching retirement then might well have worked and paid taxes since he was 15. After 50 years of contributions, he would retire at 65 with a pension and the health service would have to provide for him and look after him for just two years. A man who retires this year at 65 will probably live another 20 years. His state pension will have to be paid for from general taxation for 20 years, not two years, and towards the end of his life there will be, on average, a period of eight years when he will be in poor health and in need of greater health and social care support.

In providing for women and men like him, the NHS delivers good value for money compared to healthcare systems in other countries. We achieve a lot by spending just 8.5% of GDP on health compared to the OECD average of 8.9%, but our figure is due to fall to 7.8% by 2020.

If we want a better health service, we have to look at the fact that France, Germany and Holland all spend about 11% of GDP on health. We will certainly never match those levels if the Chancellor is to succeed in his aim, set out in the Autumn Statement, of reducing the overall level of government spending from about 41% of GDP to just 37%. It would, however, be a very brave politician who argued for more than a very modest increase in the basic rate of taxation, even though it is now 15p in the pound lower than in 1975-76, 10p in the pound lower than in 1979-80, 5p in the pound lower than in 1988-89 and 2p in the pound lower than in 2000-01. It may be politically unacceptable to reverse those income tax reductions, made for political advantage, but the time must have come for a hypothecated health and social care tax. I hope that this idea will be considered further by the cross-party commission being launched by Norman Lamb.