Lansley's bill has killed debate about the future of the NHS

There is a whole lot of politics and very little policy in the war over the government's health refo

Does any of the three main parties actually have a policy for the NHS? It may sound like a peculiar question given that huge stores of energy are currently being spent debating the future of the health service in parliament, but having a big argument in Westminster is not the same as having a coherent agenda.

The Health and Social Care Bill returns to the House of Lords this week and Liberal Democrat peers have some amendments covering the controversial section of the reforms dealing with increased competition between different providers. Crudely, speaking the vital question is how widely market forces will be allowed to operate when, under the new structures created by Andrew Lansley's reforms, GPs are given control over budgets and instructed to purchase the best value care for patients.

Lib Dems in the Lords want to rewrite parts of the Bill that would give the Competition Commission regulatory authority over healthcare. That, it is feared, would amount to a legal mandate for breaking up NHS "monopolies" and, if enough private providers complained about being shut out of contracts, forcing GPs to curtail their use of state services. In terms of the underlying principles of the Lansley project, this argument is pivotal; it is the big one. It is clear from the way the original bill was designed that the Health Secretary wants a radical acceleration of competition to be the main driver of change in the service. The logical extension of the reforms - as initially conceived - is for the NHS label to be, effectively, a kite mark, signalling that care has been paid for by the state and is being carried out by a licensed provider. It should, in theory, be irrelevant whether the people actually doing the caring are public or private sector employees.

It is also clear that the government is too scared to tell the public that this is what Lansley had in mind when he drafted the bill. It sounds and looks a little bit too much like privatisation, which is not a word the Tories want attached to their ambitions for the NHS. That makes it very hard for the government to fight the forthcoming battle in the Lords.

Number 10 is saying it is relaxed about amendments that might "clarify" this crucial section of the bill, but would be unhappy with substantial changes. Does that mean the Prime Minister insists on a level of competition from private providers that forcefully dismantles state monopolies? Or would he be satisfied with a watered down competition clause that amounts, in essence, to an extension of the "internal market" that existed under Labour? Another way of phrasing the question: does Cameron actually want to implement Lansley's vision or is he only pressing ahead with the bill to avoid the humiliation of abandoning a high-profile project in which he has already invested a lot of political capital?

The Lib Dem amendments have been sanctioned by Nick Clegg, largely, it seems, because he is aware of deep dissatisfaction in his party and fearful of being presented, come the next election, as an accomplice in Tory sabotage of a cherished national institution. But does he think a dramatic increase in competition from the private sector - policed by an anti-monopolies regulator - would be a driver of greater efficiency and quality of care in the health service? If the answer is "yes", why is he allowing his peers to sabotage the bill? If the answer is "no", why is he voting for any of this legislation?

As for Ed Miliband, his position is clear enough for an opposition leader. He has written in the Times today calling (again) for the bill to be scrapped. The issue of competition is addressed in passing:

Nor is the cause of integration helped by the Bill's aim to turn the whole NHS into a commercial market explicitly modelled on the privatisation of the utilities in the 1980s. Introducing a free-market model throughout the healthcare system -- quite different from the limited competition currently in place -- will have a chilling effect on the behaviour of those trying to co-ordinate and co-operate.

Another way of putting this might be that market forces are tolerable when Labour allows them to operate in a carefully controlled environment, but destructive and corrosive when unleashed by Tories and Lib Dems. Fair enough, I suppose, but it is a very queasy way of making peace with the Blairite legacy of public service reform. Nowhere else has Miliband dealt explicitly with the question of whether or not he thinks competition is a healthy or a pernicious mechanism for getting value for money in the public sector.

Which brings us back to that initial question. What is the three main parties' health policy? As far as I can make out it is as follows:

Conservatives: secure any version of Lansley's reforms, regardless of what the outcome will actually be for the NHS.

Labour: make sure every problem in the NHS is seen as a consequence of Lansley's reforms; avoid being drawn on alternative plans.

Liberal Democrats: look conspicuously worried about Lansley's reforms; in the event that they are enacted, hide.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.