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NHS is heading for the "perfect storm"

Hamish Meldrum, head of the BMA, says Andrew Lansley is forcing unworkable, unprecedented “efficienc

The tall, slim career GP with a clipped grey beard and smoothly parted hair who greets me in his spacious offices scarcely resembles the union baron of popular imagination. He is urbane rather than confrontational, he speaks in measured sentences and seeks to emolliate not agitate. But Dr Hamish Meldrum, who spent much of his career at a medical practice in East Yorkshire and is now resident in Edinburgh, is the head of what has been called the most powerful union in Britain - the British Medical Association (BMA) - and his assessment of the coalition government's reform programme is devastating, all the more effective for being delivered with the calm of a doctor seeking to reassure a particularly anxious patient.

Meldrum knows that - unlike politicians and indeed journalists - doctors, his members, largely retain the respect and admiration of the public. He would agree with Nigel Lawson that "the NHS is the closest thing we have to a national religion in this country". And he knows that BMA members, denounced by many ideologues on the right as reactionary and unwilling to embrace necessary market reforms, are more powerful than any other interest group when they choose to mobilise against what they consider to be unnecessary and dogmatic interference by politicians.

Mission impossible

He is anxious that the principles of "universality" and "comprehensives", on which the NHS was founded, are imperilled by the fantasy of the Health and Social Care Bill and the creation of a utopian marketplace in which private providers compete with state care. "We are facing a perfect storm, or should that be an imperfect storm," Meldrum says as he sits perfectly still in a stiff-backed chair in his dimly lit office at the BMA's headquarters in Tavistock Square, central London. The "perfect storm", as he outlines it, is this - "impossible efficiency savings being forced on the service", the biggest reorganisation in the NHS's history, "rising medical unemployment", "pay cuts for doctors", "increased waiting lists" and the fear that the strain on the service will lead to more disasters such as the one at Mid Staffordshire NHS Trust.

“The health-care system is being asked to make £20bn of efficiency savings," he says gravely. "In real terms that's savings of 4 per cent year on year, which has never been done in one year before, far less four years in a row. And you've now added into the mix a major structural reorganisation, with lots of people either losing or changing their jobs; or their minds being focused on the reorganisation rather than on making the savings. We are facing various levels of impossibility."

He says even Andrew Lansley has conceded that "the substance of what he wanted to do could have been done without legislation. But in choosing to have legislation, and such permissive legislation - this was to be the legislation to end all legislation - he set a huge number of hares running, some intentionally, some unintentionally, and those who were most against his reforms were given a field day . . . They were able to say that he wanted a market red in tooth and claw, to let competition run rife, to bring private providers in from all over the place . . . ."

Should the Health Secretary resign or be reshuffled out of the cabinet? Even Lansley's supporters believe that he could have been smarter, more pragmatic. His "big bang" reorganisation need not have been so permissive; he could have acted as Michael Gove has done with education. After all, the free schools and academies reform programme is merely a continuation of what was started under New Labour: evolution rather than revolution, with Gove recast as a more zealous (and Scottish) version of Andrew Adonis.

“The policies have to change," says Meldrum of the hapless Lansley, self-styled all-knowing impresario of NHS politics. "Even if the only way the policies change means the current incumbent goes - they have to change."

The good doctor continues: "The Lansley reforms are a folly in terms of health-care issues but politically they are a huge folly as well . . . Leaving aside the reforms, because of the present economic and budgetary pressures, there's no doubt by the time of the next election, if not before, there will be increased waiting lists, [for which] everybody will blame the reforms."

Fewer young people are applying to study medicine at university, perhaps because of the introduction of higher tuition fees. "Will it lead to a shortage?" Meldrum asks. "We are educating and training more doctors than we used to, but can we afford to employ them? In the UK we have below-average numbers of doctors per head of population compared to Germany, France and others. On average every GP looks after about 2,000 patients. As people live longer, have more complex and long-term conditions . . . I think that ratio is wrong. Do we need more doctors? Yes. Can we afford more? Much more difficult."

Overworked, understaffed

Meldrum worries about the "potential for medical unemployment. In the past, we have scandalously relied on doctors from overseas, often from countries that can least afford to give them to us, to back up the gaps . . . We are already seeing [the impact of not having enough doctors] - consultants taking on more of the work that junior doctors used to do; that in some places the time available for continuing education and continued training is being limited and that can only be bad, not only for doctors but for patients.

“Also you get trusts that try to stretch rotas or stretch the staffing of wards too thinly - well, then accidents will happen and people will fall through the gaps and you may see the sort of things that happened in Mid Staffs, where part of the problem was the failure to attract enough doctors and nurses to cope with the work that was being asked of them."

What is most worrying for Meldrum and the medical profession he represents is that the Lansley reforms have made it much easier for opponents of the NHS to say that "it's the system that's bust rather than the funding of it, [and we will] see increasing pressure for co-payment or top-up payments, for limiting the scope and comprehensiveness of the health care provided by the NHS, and . . . it will be done on the wrong premise".

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

This article first appeared in the 23 January 2012 issue of the New Statesman, Has the Arab Spring been hijacked?

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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 a non-compulsory aspiration of campaigners) 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.