The New Statesman’s rolling politics blog

RSS

Jeremy Hunt to meet Frank Field to discuss NHS funding crisis

Health Secretary agrees to look at Labour MP's plan to raise National Insurance to fund higher spending. 

Health Secretary agrees to look at Labour MP's plan to raise National Insurance to fund higher spending.
Jeremy Hunt delivers a speech during his visit with David Cameron to the Evelina London Children's Hospital on July 5, 2013. Photograph: Getty Images.

Today brings yet more evidence of the NHS funding crisis. As the Nuffield Trust's Into the Red report notes, 66 trusts are now in deficit and require hundreds of millions of emergency funding, and the service is running a total national deficit of £100m compared with a surplus of £383m last year. Of the 78 health leaders surveyed by the group, 47 per cent said it was quite (33 per cent) or very (14 per cent) unlikely that the NHS would remain free at the point of use in a decade's time. 

Without a real-terms increase in spending in the next parliament, the funding gap will stand at £30bn by 2021. Demographic pressures, the rising cost of technology and the growth in chronic conditions all mean that merely ring-fencing the service from cuts will not do. 

In my column in this week's magazine, I look at how Labour is grappling with this issue. The most notable proposal has come from Frank Field, who has argued for a 1 per cent rise in National Insurance, accompanied by the lifting of the floor on contributions and the removal of the ceiling. He told me: "It both deals with the health service and deals with the double Ed problem, which is: does anyone believe them on the fiscal side?"

The plan is partly modelled on Gordon Brown’s 1 per cent increase in NI in his 2002 Budget, a move that proved more popular than almost anyone expected. Miliband, who as a Treasury adviser helped to design the policy, later described this act of social-democratic statecraft as his proudest moment. But, as I write, there is little prospect of a sequel. Shadow cabinet ministers, including Ed Balls, believe that is untenable for the party to speak of a "cost-of-living crisis" and then to argue for a rise in taxation on low- and middle-income earners. "It would be kamikaze politics," one tells me.

If Labour is to promise a real-terms rise in NHS spending, it will need to impose further tax rises on high-earners, or cut even more deeply elsewhere. Miliband will need to speak what Nye Bevan called "the language of priorities" ("the religion of socialism"). 

Meanwhile, as Field looks elsewhere for support, I can reveal that Jeremy Hunt has agreed to meet him to discuss his funding plan. While there might be little prospect of the Tories going into the election advocating an increase in taxation (indeed, David Cameron and George Osborne are determined to make tax one of their main dividing lines with Labour), it is significant that the Health Secretary is prepared to engage with Field, one of the few in Westminster prepared to speak the hard truths about the fiscal challenges that await the next government.