Why the Tories will have to consider NHS charges after 2015

With George Osborne determined to avoid further tax rises, patient charges will be the only way to solve the health funding crisis.

Another Spending Review has been settled with the NHS again protected from cuts. But the longer austerity continues, the harder it will be for the government to justify special treatment for some departments. As last week's Resolution Foundation report showed, if the current ring-fences around health, international development and schools are maintained, some departments will have had their budgets more than halved by 2018, with a 64% cut to the Foreign Office, a 46% cut to the Home Office and a 36% cut to defence. Something will have to give. And with the Tories reportedly planning to rule out further tax rises, it will be even harder for any area to escape Osborne's axe (should he still be in the Treasury after May 2015). 

There is a strong case for making an exception for the NHS. Polls show that it is the most popular spending area with voters and the above-average rate of inflation in the health service means it requires real-terms rises just to stand still. As today's SMF paper on the Spending Review notes, "A ‘flat real’ settlement for the NHS is therefore not what it sounds like since it is defined with reference to an irrelevant price index. To keep up with rising input costs, growing demand, and the public’s expectations for an adequate healthcare system, growth in spending on health has historically outstripped GDP growth." 

By historic standards, the NHS is undergoing austerity. Since 1950, health spending has grown at an average annual rate of 4%, but over the current Spending Review it will rise by an average of just 0.5%. As a result, in the words of the SMF, there has been "an effective cut of £16bn from the health budget in terms of what patients expect the NHS to deliver". Should the NHS receive flat real settlements for the three years from 2015-16 (as seems probable), this cut will increase to £34bn or 23%.

Without further tax rises, the inevitable result will be a significant fall in the quality and quantity of services. But with the Tories seemingly determined to avoid these, another option rears its head: patient charges. At today's British Medical Association conference, that it is precisely what doctors will propose. Gordon Matthews, a member of the BMA consultants’ committee, will say: "A publicly funded and free-at-the-point-of- delivery NHS cannot afford all available diagnostics and treatments." Outlining the funding crisis that I've just described, he will add: "Everyone recognises that we’re in times of austerity, there isn’t a lot of money around, while public expectations have gone up and up, medical treatments have become more expensive and there isn’t an easy way to square the circle."

Matthew will propose drawing up a list of core services that will be provided for free, with charges introduced for others. If this seems heretical, it's worth remembering that our "free" health service hasn't been truly free since Labour chancellor Hugh Gaitskell introduced prescription charges for glasses and dentures in his 1951 Budget (although they have been abolished in Scotland, Wales and Northern Ireland). Morally speaking, there is no difference between these fees and co-payments. There is also growing public recognition that a high-quality NHS will need to be paid for. A recent Ipsos MORI poll for The King's Fund found that there is support for introducing charges for treatments that are not perceived as "clinically necessary" (such as cosmetic surgery and elective caesarean sections), for people thought to "misuse services" (e.g. missing appointments or arriving drunk at A&E), for patients requiring treatment as a result of "lifestyle choices" (e.g. smoking and obesity) and for 'top-ups' to non-clinical aspects of care (e.g. private rooms and other 'hotel' services). 

For now, the Tories insist that they will not go down this road. After Malcolm Grant, the chair of the NHS Commissioning Board warned last month that the next government would have to consider introducing "new charging systems" unless "the economy has picked up sufficiently", Jeremy Hunt told MPs: "Professor Malcolm Grant did not say that. What he actually said was that if the NHS considered charging, he would oppose it. I agree with him; I would oppose it, too." But just as pensioner benefits, once considered untouchable, are now being targeted by all parties for cuts, it seems increasingly unlikely that a "free NHS" will survive the age of austerity. 

Consultant Gynaecologist Ertan Saridogan gives Health Secretary Jeremy Hunt a demonstration of a laparoscopy system during a tour of University College Hospital. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Britain has built a national myth on winning the Second World War, but it’s distorting our politics

The impending humiliation of Brexit is going to have a lot more in common with Suez.

The Crown, Peter Morgan’s epic drama covering the reign of Elizabeth II, ended its first series with a nemesis waiting just off-stage to shake up its court politics. In the final episode, Egyptian president Gamal Nasser gives a rip-roaringly anti-imperialist – and anti-British – speech. The scene is set for the Suez Crisis to be a big plot point in Season 2.

Suez has gone down in history as the great foreign policy debacle of postwar Britain. The 1956 crisis – which saw Israel, France and Britain jointly invade Egypt to take control of the Suez Canal, only to slink off again, nine days later, once it became clear the US wasn’t having any of it – is seen as the point at which it became clear that even the bigger states of Europe were no longer great powers in the world. “President Eisenhower’s humiliation of Britain,” Jack Straw wrote in his 2012 memoir, “had been total.”

This was, though, a fairly limited sort of humiliation. Britain was not invaded or occupied; there was no sudden collapse in living standards, let alone a significant body count. Our greatest national debacle is nothing more than the realisation that Britain could no longer do whatever it wanted without fear of reprisal. As humiliations go, this one’s up there with the loss of status men have faced from the rise of feminism: suddenly, Britain could do what it wanted a mere 80 per cent of the time.

The Crown begins in 1947, when Prince Philip gives up his Greek and Danish royal titles and becomes a British subject, so that he can marry Princess Elizabeth. That year saw another British foreign policy debacle, one on which the show remains oddly silent. In the partition which followed India’s independence from the British Empire, 70 years ago this week, upwards of a million people died; in the decades since, the borders drawn up at that time have been the site of numerous wars, and Kashmir remains a flashpoint.

All this, one might think, might count as a far bigger regret than Suez – yet it doesn’t feature in the national narrative in the same way. Perhaps because partition was about the withdrawal of British forces, rather than their deployment; perhaps it’s simply that it all happened a very long way away. Or perhaps we just care less about a body count than we do about looking bad in front of the Americans.

I think, though, there’s another reason we don’t talk about this stuff: the end of empire is hidden behind a much bigger part of our national myth. In the Second World War, Britain is undeniably one of the good guys; for 12 months, indeed, Britain was the only good guy. Never mind that it still had the largest empire the world had ever seen to fall back on: Britain stood alone.

The centrality of the Second World War to the national myth warps our view of history and our place in the world in all sorts of ways. For starters, it means we’ve never had to take an honest account of the consequences of empire. In a tale about British heroes defeating Nazi villains, British mistakes or British atrocities just don’t fit. (Winston Churchill’s role in the 1943 Bengal famine – death toll: three million – by ordering the export of Indian grain to Britain rarely comes up in biopics.) In this dominant version of the national story, the end of empire is just the price we pay to defeat fascism.

More than that, our obsession with the Second World War creates the bizarre impression that failure is not just heroic, but a necessary precursor to success. Two of the most discussed elements of Britain’s war – the evacuation of Dunkirk, and the Blitz – are not about victory at all, but about survival against the odds. The lesson we take is that, with a touch of British grit and an ability to improvise, we can accomplish anything. It’s hard not to see this reflected in Brexit secretary David Davis’s lack of notes, but it’s nonsense: had the Russians and Americans not arrived to bail us out, Britain would have been stuffed.

Most obviously, being one of the winners of the Second World War infects our attitude to Europe. It’s probably not a coincidence that Britain has always been both one of the most eurosceptic EU countries, and one of the tiny number not to have been trampled by a foreign army at some point in recent history: we don’t instinctively grasp why European unity matters.

Once again, Suez is instructive. The lesson postwar France took from the discovery that the imperial age was over was that it should lead a strong and unified Europe. The lesson Britain took was that, so long as we cosied up to the US – Athens to their Rome, to quote Harold Macmillan – we could still bask in reflected superpower.

Until recently, Britain’s Second World War obsession and national ignorance about empire didn’t really seem to affect contemporary politics. They were embarrassing; but they were also irrelevant, so we could cope. Brexit, though, means that hubris is about to run headlong into nemesis, and the widespread assumption that Britain is a rich, powerful and much-loved country is unlikely to survive contact with reality. India will not offer a trade deal for sentimental reasons; Ireland is not a junior partner that will meekly follow us out of the door or police its borders on our behalf. The discovery that Britain is now a mid-ranking power that – excepting the over-heated south-east of England – isn’t even that rich is likely to mean a loss of status to rival Suez.

Morgan says he has planned six seasons of The Crown. (This looks entertainingly like a bet the Queen will be dead by 2021; if not, like Game of Thrones before it, he might well run out of text to adapt.) It’ll be interesting to see how the show handles Brexit. It began with the royal family facing up to a vertiginous decline in British power. As things stand, it may have to end the same way. 

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear