NHS Finance

06.06.18

May ‘in a bind’ as NHS funding options to raise taxes or borrow more defy Tory fiscal stance

 Conservative MPs are being asked whether they would support a tax rise to fund the NHS, after reports claimed households would need to pay an extra £850 a year to fund the service by 2022.

Yesterday, the Institute for Fiscal Studies said the government cannot feasibly maintain the current standard of public services by cutting budgets further, and so the funds can only be sourced by additional borrowing or raising taxes.

Households would need to pay an extra £850 a year by 2022 to supply the extra 4% (increasing spending power by £21bn in total) needed to improve health services — or the government would need to cut day-to-day departmental spending elsewhere by £26bn, the think tank said.

Even a more “modest” annual increase of 2%, well below what the NHS needs to maintain the current standard of services, would require a real-terms cut of £15bn to non-health expenditure.

“The government is in a bind,” the IFS said. “It is extremely doubtful that large additional cuts to spending on other public services are either feasible politically or consistent with maintaining quality.

“So unless it is able and willing to implement tax rises or further cuts to the social security budget over the rest of this parliament, it is hard to see how a significant injection of additional cash into the NHS would be consistent with the government’s stated fiscal objective.”

Last month, NHE reported on “tatty” and broken-down equipment still in use by the NHS due to a lack of funding. The Health Foundation’s Jennifer Dixon criticised the NHS’s performance due to its “bleedin’ obvious” lack of funding in May.

A Daily Mirror ‘ComRes’ survey revealed that a massive 82% of the public would be willing to pay 1p more in National Insurance contributions if the money went directly to the health service, which is in line with previous findings from other organisations. Last month, another poll also foundthat mental health and emergency services should be a top priority for any extra funding of departments in the UK.

The news comes as chancellor Philip Hammond is put under a squeeze from Tory frontbenchers and Jeremy Hunt clamoring for further funding of the NHS after Theresa May announced plans for a comprehensive health service funding settlement in March. Party whips have now approached backbenchers to gauge the popularity of the plans.

In its research, the IFS went on to say that the economic uncertainty created by Brexit will mean the Treasury will be “even more reluctant than usual” to commit to increases in NHS spending for it’s 70th birthday this year.

“Either public services will face more years of substantial cuts, or taxes will rise or social security benefits will be cut further, or yet another set of fiscal rules will, in effect, be abandoned,” the thinktank concluded.

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