The Long-term Sustainability of the NHS and Adult Social Care

Lord Warner Excerpts

Thursday 26th April 2018 Lords Chamber

[Lord Warner (CB)]

My Lords, finally we have a chance to debate a report that the Select Committee, of which I was a member, produced over a year ago under what I might call the benign and able chairmanship of my noble friend Lord Patel. The bland response from the Government could have been written, I would suggest, within a week or so of our report’s publication and hardly seems worth discussing—so I will not. Its complacency contrasts dramatically with my noble friend Lord Patel’s introduction and the leadership that he has shown. It is true that the Department of Health has become the Department of Health and Social Care, as the Select Committee recommended, but the hole in the funding of adult social care continues to grow, dragging more local authorities—many Conservative run—towards insolvency.

Our report raised many important issues, but I shall focus on just one: the key topic of funding. In today’s world, a tax-funded, pooled-risk healthcare system such as the NHS, which is free at the point of clinical need, requires a more generous and reliable funding system than we currently provide or seem to be contemplating. We need to stop our feast or famine approach to NHS funding and relying so heavily on local authority funding for social care. We should face up to capping individual liability for social care costs, retain its means-tested basis, but find a more reliable national system for funding long-term care from taxation or social insurance, as they do in Germany and Japan.

Facing up to these rather inconvenient truths will be tough for everybody—politicians and public alike. It is much more comfortable to believe that everything will be okay if we just get a bit more efficient, use more technology, integrate health and social care and employ more doctors and nurses. Of course, we may well need to do these things. The updated NHS England Five Year Forward View and related initiatives are important steps in the right direction. We need to reduce the huge variation in the cost and quality of care around the country. Narrowing this variation would save somewhere in the region of £3 billion to £5 billion a year, as the noble Lord, Lord Carter, has demonstrated. But all these changes take time for a hard-pressed NHS to absorb and all require investment, both capital and revenue.

Improving efficiency and patient outcomes are important, but they are not a financial panacea for the tsunami of rising demand. That demand probably has an annual cost of at least a 2.5% to 3% increase in real terms year after year. This is considerably more than the less than 1% annual increase that has been provided to the NHS since 2010 and the 25% cut in real terms in adult social care budgets over the same period.

So, what to do? As our report showed, the funding of health and care has zigzagged all over the place over the past 25 years—I commend the graph on this, which is set out in the report. It has been inconsistent between health and social care, despite these services dealing with the same levels of demand. Periods of generous increases are followed by periods of great scarcity, irrespective of service demand. Lots of short-term handouts are provided, when what is needed is much more consistent funding allocated for longer periods ahead, so that people can plan better and make better use of the resources that are available.

This approach would not of course crack the issues of the level and method of funding, which are essentially matters that come down to political choice. What is clear is that, if the NHS is to be mainly funded from taxation, Governments need to be a lot more creative about how we raise the money. I am a great fan of the 1960s American radical, Abbie Hoffman, who memorably said in 1968:

“Sacred cows make the best hamburgers”.


Why can we not ask the group who use the services most to pay more? They do not all need winter fuel allowances, free travel passes, free TV licences and suchlike. Why should older workers not pay national insurance? Why are there so many ways of avoiding paying inheritance tax? Why can we not collect more care costs from estates? Why can we not levy more tax on the sales revenues of the Amazons, Googles and Apples, and so on, rather than from their absurdly low declared profits? If it is politically easier to collect taxes for health and care by hypothecating the revenue for those purposes, as many have suggested, why can we not just overrule the Treasury’s objections?

I know that the cry will go up that this is all pie in the sky and politically impossible. That is possibly true. But let us consider the alternative to more radical taxation action. Winter pressures become all-year pressures. Access to care deteriorates further and faster. Premature death rates among both young and old rise. We slide further down the international league tables in terms of healthcare performance. The trajectory towards care and treatment mediocrity continues and gains greater momentum. More staff leave the NHS and young people stop going into the UK health professions because the pressures, work conditions and pay get increasingly worse. EU health professionals stop working in the UK post Brexit, and the so-called Brexit financial dividend proves a mirage.

These things are already happening and will get worse. Our elected politicians need to get out of their trenches and lead a grown-up conversation about realistic funding for the NHS and social care. If they want to outsource the job to a time-limited independent commission, they should at least give an advance, approved parliamentary guarantee that its recommendations will be acted upon within a single Parliament. They would be helped if they set up an independent office for health and care sustainability, answerable to Parliament, as the Select Committee recommended, to oversee change and keep people focused on the longer term.