Health experts are calling for a ring-fenced tax to help plug the huge gaps in NHS and social care budgets.
In a report on healthcare funding commissioned by the Liberal Democrats, the panel of experts, 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 £4 billion in 2018-19 and further real terms increases of £2.5bn in each of the following two years.
In the first instance, the NHS funding gap could be filled by an income tax increase, but, in the long-term, health and care funding should be brought together in a single ring-fenced tax to replace National Insurance, the report argues.
To further address the pressures facing health and care service, the panel also recommends: setting up an Office for Budget Responsibility for Health; new incentives to encourage people to save more towards adult social care; providing additional revenue for local authorities to invest in public health; and reinstating the cap on the costs of adult social care.
Also, the government should consider removing the total exemption from National Insurance contributions for people who work beyond the age of 65.
“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,” said Liberal Democrat leader Vince Cable.
“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.”
"At a time when the NHS and social care face such immense pressures, policy makers must be willing to look at bold solutions in order to safeguard vital services for generations to come,” added Panel member Professor Clare Gerada, former chair of the Royal College of General Practitioners.
“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.”
Norman Lamb, Liberal Democrat and former health minister, also called for the establishment of a cross-party NHS and Care Convention, “that would engage with staff, patients and the public to come up with a plan for securing the long-term sustainability” of health and care services.
Last year the House of Lords Select Committee recommended that an independent Office for Health and Care Sustainability to be set up to look into health and social care for the next 15 to 20 years to better account for changing need and demographics.
In its report, the Committee concluded that a tax-funded, free-at-the-point-of-use NHS is still the most efficient way of delivering health care and should remain in place now and in the future, but it also stressed that many aspects of the way the NHS delivers healthcare will have to change to sustain the current model, as well as a shift in government priorities or increases in taxation.
Data released in November last year indicated that the public would support tax rises to fund the NHS. In the YouGov poll, 50 percent of adults backed a one percent rise in National Insurance tax to increase public spend on the NHS, while 27 percent were opposed to the move and 15 percent undecided.