Steve Beasant

Liberal Democrat Prospective Parliamentary Candidate for Great Grimsby and Councillor for the East Marsh Learn more

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Expert health panel calls for ringfenced health & care tax to replace National Insurance

by Steve Beasant on 5 February, 2018

A new tax earmarked solely for the NHS and social care is among the recommendations from a panel of 10 experts in a report on healthcare reform commissioned by the Liberal Democrats.

This heavyweight report, Health and Social Care: Delivering a Secure Funding Future, will form the blueprint of the Lib Dems’ ongoing healthcare policy.

The panel, which includes former chief executives of NHS England, the Royal College of Nursing, and the Patients Association, concluded that the NHS in England needs a real terms funding increase of £4bn in 2018-19 and further real terms increases of £2.5bn in each of the following two years.

In the short-term, the NHS funding gap could be bridged by an income tax increase. The Lib Dems have been calling for a penny on the pound in income tax to help fund the NHS. Longer-term, health and care funding should be brought together in a single ring-fenced tax to replace National Insurance, the report argues. The Lib Dems have previously campaigned for a dedicated health and care tax and a related review of National Insurance.

Other recommendations include:

  • Creating an Office for Budget Responsibility for Health
  • Introducing incentives to encourage people to save more towards adult social care
  • Additional revenue for local authorities to invest in public health
  • Reinstating the cap on the costs of adult social care

The panel also argued that consideration should be given to scrapping the total exemption from National Insurance Contributions for people who work beyond the age of 65. Liberal Democrat leader Vince Cable is considering this proposal for higher earners.

Lib Dem leader Vince Cable said:

“This specialist report provides some convincing answers on arguably the greatest domestic crisis facing the country: how to deal with the severe pressures on health and social care services. We must never again be in a position whereby funding is so short that more than 50,000 operations have had to be postponed over the course of a single month.

“The health and care budget should be financed by an earmarked tax, which could replace national insurance. Many of those previously strongly opposed now accept that, in the case of the NHS, there is a strong argument for a form of ringfenced tax.”

Professor Clare Gerada, former chair of the Royal College of General Practitioners, said:

“At a time when the NHS and social care face such immense pressures, policymakers must be willing to look at bold solutions in order to safeguard vital services for generations to come.

“Developing this report has been a welcome opportunity to explore ideas including the creation of a dedicated health and social care tax, which could help deliver the long-term funding that services desperately need. I hope policymakers of all parties will consider these recommendations seriously.”

Download the report here

Lib Dem health spokesperson Judith Jolly said:

“We will all rely on our NHS and social care to treat and support us at one time or another.  These services, and the hard-working staff who run them, deserve more than to be left to struggle through another crisis, barely able to make ends meet.

“The introduction of an ‘OBR for Health’ would mean independent, reliable and long-term forecasting of exactly what resource is needed to carry on providing the high-quality care we all have the right to expect. I wholeheartedly welcome this recommendation”.

Norman Lamb, Lib Dem and former health minister, said:

“This report is an important contribution to the debate on the future of the NHS and social care. I have long argued for a hypothecated tax and that is now gaining support across the political spectrum.

“However, it is clearer than ever that we also need to establish a cross-party NHS and Care Convention – a time-limited process that would engage with staff, patients and the public to come up with a plan for securing the long-term sustainability of these treasured services.”

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