The NHS crisis that none of the parties will discuss: how to pay for it

With a £30bn funding gap, all parties need to decide whether they would raise taxes, cut spending elsewhere, or impose patient charges. But don't expect them to tell us.

If there's one NHS issue that none of the parties are prepared to confront, it's that of funding. The common view is that the health service has been shielded from austerity by having its budget ring-fenced, but in reality the reverse is the case. Owing to the above-average rate of inflation in the service, the NHS requires real-terms rises just to stand still. As a recent Social Market Foundation paper noted, "A ‘flat real’ settlement for the NHS is mot 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%.

If they wish to avoid a significant fall in the quality and quantity of services, this government and future ones are left with three choices: to raise taxes, to cut spending elsewhere, or to impose patient charges. The third of these is proposed by the think-tank Reform today, which calls for a £10 charge for GP consultations, £10 fines for missed appointments, the introduction of a means-tested system for end of life care and an increase in prescription charges from £7.85 to £10 (with exemptions for those on low-incomes). It estimates that these measures would raise around £3bn a year, with research director Thomas Cawston commenting: "Few will want to debate higher NHS charges but the funding outlook for the service makes it unavoidable. Prescription charges are the easiest route to new revenue, with exemptions for people on low incomes built in." 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 now been abolished in Scotland, Wales and Northern Ireland).

But perhaps unsurprisingly, the Department of Health has responded by dismissing the idea out of hand. A spokesman said: "We have been absolutely clear that the NHS should be free at the point of use, with access based on need. That is why we have increased health spending in real terms alongside £20bn of efficiency savings to make sure the NHS continues to provide excellent care."

Labour, meanwhile, spying an opportunity to cause political mischief, has commented: "Patients will be alarmed that friends of Number 10 want to see charges for GP appointments and hospital care.

"Labour froze prescription charges before the election, but they have increased year on year under David Cameron. They are now creeping towards £10, as these plans want, and are adding to the cost of living crisis.

"The Government must come clean on any plans to charge for NHS care. They have already lost people’s trust over the crisis in A&E and thousands of axed nursing jobs – this will only add to it."

But this merely defers the question of how we will ultimately pay for a health service of the standard the public both expect and deserve. Will any party grasp this nettle before 2015? Don't count on it. 

Jeremy Hunt delivers a speech during his visit with David Cameron to the Evelina London Children's Hospital on July 5, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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A year on from the Brexit vote it’s striking how little we know about where it will lead

So many questions, so few answers.

One year one. Anyone who hoped we’d know what Brexit might look like or even, heaven, forbid, that we’d be inhabiting a post-EU UK by now, must be thoroughly disappointed. Even those with more modest expectations are feeling slightly uncomfortable. Because, a year on, we don’t know that much more about what Brexit means  than we did on 23 June last year (well, we know it means Brexit, I suppose).  

We do know some things. First, that divorce talks are preceding trade talks, as the EU insisted – and David Davies denied – all along. Second what the European Union wants in the initial negotiations is crystal clear and indeed on their website, if you’re interested.

Third, the government, for the moment, remains committed to the kind of hard Brexit it has laid out since the Conservative Party conference. Nothing that has been said or done since the election indicates a softening of that position.

That’s it. That’s essentially all we have to show for the last year. This isn’t to say that stuff hasn’t been done. Both the European Commission and the British civil service have been beavering away on the Brexit issue. Papers have been written, careful, detailed analysis carried out. In fact Brexit has dominated the work of Whitehall since the fateful vote.

But for all this work, it’s striking how little we know about where this process will lead. The government’s commitment to a hard Brexit might not survive. Whether it does so or not will depend on what happens with the things we don’t know. The known unknowns, to coin (well, quote) a phrase.

First, we don’t know how long the prime minister will remain in post. This is obviously important, not least given Theresa May herself has seemingly singlehandedly been defining the kind of Brexit Britain should seek. Yet there is more to it than that. A leadership election would take time, and eat up yet more of the two years stipulated by the EU for the Article 50 process. It would also open the rift within the Conservative party over Brexit. Always a good spectator sport. Never a recipe for effective government.

Second, we don’t know how parliament will behave. Much has been made of the "soft Brexit majority" in the Palace of Westminster. But remember last June? When the significant majority of pro-remain MPs were expected to kick up a fight over Brexit? The same MPs who nodded the triggering of article 50 through with hardly a glance? We just do not know yet how MPs will behave.

And their behaviour will be shaped by both inter and intra-party dynamics. Both the large parties are internally divided over Brexit. The Labour leadership seems happy to leave the single market. Many Labour MPs, in contrast, are fundamentally, and publicly, opposed to the idea. Whether loyalty (not least given the prospect of another election) triumphs over opinions on the EU remains to be seen.

As it does for the Tories. I imagine the phrase "do you really want to risk a Corbyn government" will soon trip off the tongue of every government whip. Whether this threat will prove effective is anyone’s guess. Tory Remainers certainly seemed to rein in their criticism of the prime minister following the "chocolate trousers" affair. Maybe this was simply a case of keeping their powder dry until the legislation needed to make Brexit work hits parliament in the autumn. We’re about to find out. And it will matter much more now the Tories have lost their majority.  Indeed, I think this, more than anything else, is why the prime minister called the election in the first place.

One crucial determinant of how MPs behave will be what public opinion does. Regular polling by YouGov since the referendum has, until recently, shown virtually no movement in attitudes towards Brexit. Around 52 per cent think it was a good idea, and around 48 per cent a bad one. Sound familiar? There has in recent weeks been what could best be described as a slight wobble. What we don’t know is what will happen in the weeks to come. Should the polls show a swing away from Brexit, might politicians swing with it, increasing the pressure on the PM to modify and soften her stance?

Turning from Westminster to Whitehall, will a government with no majority adopt a different style to a government with a small one? This matters, particularly when it comes to business. The May Government before the election was notable for the way it put politics above economics, focusing on the need to ‘take back control’ even if this meant the potential for real economic damage. A number of business leaders report getting short shrift when they visited ministers to voice their concerns.

But can a weak government be so dismissive? We know what most businesses want – certainly the kinds of business that get to knock on ministerial doors. They want single market and customs union membership. They want, in other words, a soft Brexit. Chancellor Philip Hammond, it would seem, has been listening to them from the start. Will his colleagues now start to do so too?

And if government policy does start to shift, this in turn will open up a whole host of new unknowns. Most importantly, might the EU be open to some sort of deal whereby we limit free movement but get some kind of single market membership? That discussion has simply not happened, because of the way in which Theresa May closed it off by stipulating a hard Brexit.

Most EU observers think a compromise is unlikely in the extreme. Yet while the EU won’t be more generous to a non-member state than to a member state, there is no reason a non-member state should buy into all of core EU principles entirely, so there might be some room for compromise. Again, we don’t know. And we won’t unless we decide to ask.

So many questions, so few answers. That is the story of Brexit to date. One year on, and those answers are about to get clearer.

Anand Menon is the director of The UK in a Changing Europe. Read their report: EU referendum: one year on to find out more.

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