Health and Social Care: Funding

Lord Taverne Excerpts

Tuesday 22nd March 2016 Lords Chamber

Asked by

[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.