David Owen's NHS bill offers a final chance to save our health service

Labour and the Lib Dems must support a bill that restores the right of all citizens to comprehensive care.

David Owen has today published in full a bill in the House of Lords to reinstate the NHS and the secretary of state’s legal duty to provide a national health service throughout England. This duty has been in force since 1948 and is the legal foundation of the NHS and our rights and entitlements to health care, a duty the coalition’s Health and Social Care Act 2012 is abolishing.

Owen’s 'reinstatement' bill puts into reverse the monstrous 473 H&SC Act, which from April this year abolishes the NHS throughout England, reducing it to a stream of taxpayer funds and a brand or logo for the public bodies and private companies which will receive them. The bill does not entail yet more disruptive reorganisation, it simply restores the democratic basis of the NHS and the rights and entitlements of all citizens to comprehensive care; rights which were shredded by the 2012 Act.

As Owen has warned: "the NHS has remained by far and away the most popular public service because people sense rationing and restrictions are inevitable, and resources limited but that they value and recognise the fairness of those decisions being taken not by market forces or quangos but by some overall democratic, open, transparent decision-making."

This bill comes at an important moment. Next week, Health Secretary, Jeremy Hunt will determine the fate of Lewisham hospital and very soon the fate of many more hospitals as cuts and shareholders' profits bite deep into NHS budgets. By putting power into the hands of quangos, the government hopes to protect itself from the full force of public anger at the implementation of a four-year 'efficiency' plan expected to generate £20bn savings by 2014.

The plan, drawn up by US management consultants McKinsey on PowerPoint slides, the electronic equivalent of the back of a cigarette packet, has already led to the sacking of thousands of nurses and loss of services.

David Nicholson, the chief executive of the new NHS Commissioning Board, who appeared before the public accounts committee last week, warned of worse to come: "We are just going into a phase now where quite a lot of fairly contentious service change issues are surfacing." "Fairly contentious" makes a mockery of the scale of proposed losses and closures.

In north west London the government plans to cut 25 per cent of beds, and throughout London at least seven accident and emergency departments will close; 5,600 jobs in North West London will be lost by 2015, 4,000 in Merseyside, and thousands more in Rotherham, Devon and Cornwall, Bolton, and Portsmouth. Hospital closure and downgrading will take place in several major cities. Meanwhile, payments to private contactors continue to escalate, from those to management consultancies that have taken over from public officials, through expensive PFI deals involving payments that are contracted to rise each year, to outsourced services from which shareholders are seeking returns ranging from 15-25 per cent.

And yet the NHS returned over £2bn to the Treasury last year. Hospitals have deficits because the government chooses to load them with these costs, not because they are badly run. The government is manufacturing a financial crisis which is not of hospitals' own making.

The Health and Social Care Act legalises the break-up of the NHS under the efficiency plan. Some services will become the responsibility of local authorities and others will be the responsibility of private, for-profit firms; many services may no longer be provided free. For instance, mental health, immunisation and sexual health are being transferred to local authorities. Services for pregnant or breast-feeding women, for younger and older children, for the prevention of illness, even for the care of persons suffering from illness or needing after-care may no longer be mandatory parts of the free health service. In fact, pretty much everything is up for grabs.

MPs and the public have yet to realise that the Act will abolish the NHS by splitting up services in this way and removing the secretary of state’s control over provision. Unfairness has already been creeping in under existing rules. Two weeks ago the medical director of the NHS, Sir Bruce Keogh, admitted to the public accounts committee that for the last two years he has been "deluged by letters from people saying, 'This PCT isn’t paying for that', or that one PCT takes a different view on (entitlement of patients to) hip surgery or cataracts to another." We are outraged by the unnecessary pain this causes and authorities must be held to account for the denial of care. After April, when the Act is implemented, that will no longer be possible. Instead, a range of bodies not accountable to parliament, including for-profit companies, will decide which services will be freely available and who will receive them. That is no longer a national health service and people must understand that.

The coalition has deceived the public over the NHS. The Health and Social Care Act is not about making the service GP or patient-led, it is about abolishing the national service and transferring public funds and services to the private sector through a process of closure and the manufacture of a financial crisis. Loss of services coupled with new discretionary powers mean that people will be forced to pay out of their own pocket for more of their care. Owen’s bill exposes the truth behind the Act. For sixty years, the public , unlike their US cousins, had no fear of health care bills; this freedom from fear and commitment to the NHS model has stood the test of time. Will Labour and the Liberal Democrats support a Bill that restores the democratic and legal basis of the NHS and the principle of health care for all on the basis of need and not ability to pay?

Allyson Pollock is professor of public health policy and research at Queen Mary, University of London, and the author of NHS PLC

David Price is a senior research fellow at Queen Mary, University of London

Demonstrators protest against the proposed closure of the Accident and Emergency and maternity units at Lewisham hospital. Photograph: Getty Images.


Allyson Pollock is professor of public health policy and research at Queen Mary, University of London, and author of NHS PLC

David Price is a senior research fellow at Queen Mary, University of London


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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.