A taxing question for the NHS

There is serious trouble ahead if the Conservatives enact their planned reforms of Britain’s health

Attempts to overhaul the National Health service have descended into an insurgency battle, with the people who make the NHS work, united with policy experts on one side, and the Health Secretary on the other.

The King's Fund released a devastating critique of the coalition's health reforms on Thursday, warning that there's a £1bn black hole in funding for care of vulnerable people. It's the latest in a line of warnings about the reform programme by this influential think tank. There is serious trouble ahead.

Here's the long-shot question. Could this lead to a form of local income tax or local insurance by the back door?

I ask this because there's a good chance that your local council will end up picking up the pieces when the NHS falls apart. And that is a "when", not an "if".

There's been a lot of smoke and noise about the government's health reforms, which are currently going through parliament. The focus has been on GPs taking over the commissioning work of primary care trusts (PCTs).

But this is only one part of the headache that has led to personal interventions by both David Cameron and his policy overlord, Oliver Letwin. Despite claims from No 10 that the problem is communication, neither has been that happy, which might explain the rumours in the Department of Health HQ at Richmond House that Phillip Hammond could be set to take over Health in a post-local election reshuffle in May.

If Hammond gets the gig, it will come with a toxic in-tray of failing hospitals, closing hospitals, collapsing care-home businesses, militant doctors and a budget crisis. But what is really eating at GPs and hospital managers is the fear of what kind of system Lansley is going to leave them.

The King's Fund has warned that there will be more emergency admissions as care for older people collapses. This is because councils are cutting back on social care spending. They are limiting provision to only those rated as having "critical need". At the same time they have frozen care-home fees.

The freeze led to Southern Cross, the country's biggest residential care firm, warning that it is facing deep financial problems.

There are others in a similar position and as interest rates go up, those with severe problems will go to the wall.

No warning lights

And the foundation trusts, set up by Alan Milburn, have warned, hospital closures are inevitable. Hidden within this a deeper problem, that the internal market created by Labour has destroyed relations inside hospitals as departments compete for patients. That's before the hospitals start competing with each other.

Worse still, with the move to "light-touch" regulation, the government has no idea where the system is failing. Nor does it have the capacity to handle its reforms, as there's no "dashboard" with warning lights.

Monitor, the body that inspects management of hospital trusts, has already warned that it cannot guarantee future oversight in its part of the system, for example.

What we'll be left with is a fragmented, cash-starved contraption that barely functions outside the A&E units. And it will be councils that will have to step in as the Health Bill also re-creates public health officers to oversee their communities.

We have already seen what happens when it goes down. Kent County Council stepped in when Maidstone and Tunbridge Wells NHS Trust collapsed in October 2007, after a damning report showed 90 deaths were linked to Clostridium difficile outbreaks in its hospitals at Maidstone, Pembury and Tunbridge Wells.

That was in the good times, when the council had managers with health expertise at the top. The situation hasn't got better there, either.

So as the cash runs out across the system and the poor performers break, the GP consortiums will push down decisions to close services to councils.

Which will create more rows like the one running between Enfield Council and its health partners, over the decision to close an A&E unit at Chase Farm Hospital. The matter has been referred to – you guessed it – Andrew Lansley.

One outcome is that, as the waves come crashing in, the coalition will look to inject emergency cash quickly into the NHS. Councils will by then have oversight and some of the budget, and so will demand more. One option would be to allow council-tax increases, which Labour would use to tear the Tories apart.

Someone in the Lib Dems will remember a dusty pledge to hypothecate and localise taxes with a form of local income tax. You just create a localised version of NI to pay for care, linked to the survival of your local hospital.

Imagine the press release: "Nick Clegg saves NHS with NI for 21st century". I'd put money on it – and pray that the coming winter is a mild one.

Chris Smith is a former lobby correspondent.

Photo: Getty
Show Hide image

Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.