What are the implications of earmarking taxation for the NHS? Photo: Getty
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Earmarking taxes for the NHS won’t guarantee more money for healthcare

By clearly linking a tax to overall spending on the NHS, it can help reconnect voters with the purpose of taxation, but makes healthcare spending vulnerable to macroeconomic shocks and cycles.

It is no secret that the NHS faces a huge funding shortfall. By 2020/21, the total health budget deficit could approach £30bn, up from £2bn in 2014/15. This has sparked a debate about how the funding gap could be narrowed, and renewed interest in the idea of hypothecating – or earmarking – taxation for the NHS.

Back in 2002, Gordon Brown increased National Insurance rates by 1p, and earmarked the revenues raised for increased NHS spending. Earlier this year, Labour MP Frank Field proposed repeating this policy, estimating that it would raise around £15bn by 2020/21 – or half of the predicted 2020 health budget deficit.

Nick Pearce, director of IPPR, also expressed support for the idea. He argues that an "NHS tax" or an increase in National Insurance could “play a significant – and immediate – role in reducing the funding gap”.

The thinking behind these proposals is that the public would be more likely to support a tax increase if they knew the additional funding was earmarked for the NHS. Indeed, a poll by Guardian/ICM found 48 per cent of respondents were in favour of tax-funded spending increases in the NHS.

But, as CentreForum reveals in a new report, earmarking taxes for the NHS won’t necessarily guarantee more money for healthcare.

In the report, we study the merits of what is known as "strong hypothecation", where a particular tax (and only that tax) funds an entire service, and "weak hypothecation", where revenues are notionally earmarked for an area of government spending. It is the latter that is proposed by Frank Field and IPPR. But we conclude that the former is the more viable of the two.

Whereas strong hypothecation promotes transparency, accountability and trust in government, weak hypothecation has significant disadvantages. Chief among them is that it would not guarantee that an increase in an earmarked tax rate led to higher spending on the NHS.

The government could "borrow" earmarked revenues for other programmes, or it could vary the designated service’s tax funding from other sources, leaving overall spending on the NHS unchanged.

Furthermore, even if the government could show that the tax rise led to increased spending on the health service in the first year, it is unlikely that subsequent spending reviews would treat the earmarked revenue as additional to the NHS budget. As the Barker Commission recently noted, weak hypothecation is “a soft form of the idea, and one that may rapidly become a lie”.

Strong hypothecation, on the other hand, has some merits. By clearly linking a tax to overall spending on a particular service, it can help to reconnect voters with the purpose of taxation, and gives the public a sense of what a particular service costs.

On the flipside, strong hypothecation would make health spending dependent on macroeconomic shocks and cycles, rather than need or demand for services. This risks insufficient funding during economic downturns, and wasteful spending during booms.

During a recession demand for healthcare is likely to increase, just when the money available for the NHS is falling, and so strong hypothecation would offer little wriggle room in providing a health service that meets the public’s expectations.

It is important to note as well that there are conflicting political motives among proponents of hypothecated taxation. While advocates on the left support earmarked tax increases as a means of raising revenue for the NHS, proponents on the right consider it an opportunity for a fundamental rethink on how the NHS should be paid for.

Conservative peer and Times columnist Danny Finkelstein, for example, has emphasised the role that strong hypothecation could play in deciding “how much healthcare we should offer people free at the point of use”, indicating that the right’s solution to the NHS funding gap may well be at odds with the left’s.

Although earmarking taxes is not inherently right or wrong, politicians must be clear about the objectives and implications of hypothecating taxation for the NHS. Or they will very quickly run into political difficulty.

India Keable-Elliott is an economic researcher at CentreForum and author of the CentreForum report "Hypothecated taxation and the NHS"

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MP Michelle Thomson's full speech on rape at 14: "I am a survivor"

The MP was attacked as a teenager. 

On Thursday, the independent MP for Edinburgh West Michelle Thomson used a debate marking the UN’s International Day for the Elimination of Violence against Women to describe her own experience of rape. Thomson, 51, said she wanted to break the taboo among her generation about speaking about the subject.

MPs listening were visibly moved by the speech, and afterwards Thomson tweeted she was "overwhelmed" by the response. 

Here is her speech in full:

I am going to relay an event that happened to me many years ago. I want to give a very personal perspective to help people, both in this place and outside, understand one element of sexual violence against women.

When I was 14, I was raped. As is common, it was by somebody who was known to me. He had offered to walk me home from a youth event. In those days, everybody walked everywhere - it was quite common. It was early evening. It was not dark. I was wearing— I am imagining and guessing—jeans and a sweatshirt. I knew my way around where I lived - I was very comfortable - and we went a slightly differently way, but I did not think anything of it. He told me that he wanted to show me something in a wooded area. At that point, I must admit that I was alarmed. I did have a warning bell, but I overrode that warning bell because I knew him and, therefore, there was a level of trust in place. To be honest, looking back at that point, I do not think I knew what rape was. It was not something that was talked about. My mother never talked to me about it, and I did not hear other girls or women talking about it.

It was mercifully quick and I remember first of all feeling surprise, then fear, then horror as I realised that I quite simply could not escape, because obviously he was stronger than me. There was no sense, even initially, of any sexual desire from him, which, looking back again, I suppose I find odd. My senses were absolutely numbed, and thinking about it now, 37 years later, I cannot remember hearing anything when I replay it in my mind. As a former professional musician who is very auditory, I find that quite telling. I now understand that your subconscious brain—not your conscious brain—decides on your behalf how you should respond: whether you take flight, whether you fight or whether you freeze. And I froze, I must be honest.

Afterwards I walked home alone. I was crying, I was cold and I was shivering. I now realise, of course, that that was the shock response. I did not tell my mother. I did not tell my father. I did not tell my friends. And I did not tell the police. I bottled it all up inside me. I hoped briefly—and appallingly—that I might be pregnant so that that would force a situation to help me control it. Of course, without support, the capacity and resources that I had within me to process it were very limited.

I was very ashamed. I was ashamed that I had “allowed this to happen to me”. I had a whole range of internal conversations: “I should have known. Why did I go that way? Why did I walk home with him? Why didn’t I understand the danger? I deserved it because I was too this, too that.” I felt that I was spoiled and impure, and I really felt revulsion towards myself.

Of course, I detached from the child that I had been up until then. Although in reality, at the age of 14, that was probably the start of my sexual awakening, at that time, remembering back, sex was “something that men did to women”, and perhaps this incident reinforced that early belief.​
I briefly sought favour elsewhere and I now understand that even a brief period of hypersexuality is about trying to make sense of an incident and reframing the most intimate of acts. My oldest friends, with whom I am still friends, must have sensed a change in me, but because I never told them they did not know of the cause. I allowed myself to drift away from them for quite a few years. Indeed, I found myself taking time off school and staying at home on my own, listening to music and reading and so on.

I did have a boyfriend in the later years of school and he was very supportive when I told him about it, but I could not make sense of my response - and it is my response that gives weight to the event. I carried that guilt, anger, fear, sadness and bitterness for years.

When I got married 12 years later, I felt that I had a duty tell my husband. I wanted him to understand why there was this swaddled kernel of extreme emotion at the very heart of me, which I knew he could sense. But for many years I simply could not say the words without crying—I could not say the words. It was only in my mid-40s that I took some steps to go and get help.

It had a huge effect on me and it fundamentally - and fatally - undermined my self-esteem, my confidence and my sense of self-worth. Despite this, I am blessed in my life: I have been happily married for 25 years. But if this was the effect of one small, albeit significant, event in my life stage, how must it be for those women who are carrying it on a day-by-day basis?

I thought carefully about whether I should speak about this today, and it was people’s intake of breath and the comment, “What? You’re going to talk about this?”, that motivated me to do it, because there is still a taboo about sharing this kind of information. Certainly for people of my generation, it is truly shocking to talk in public about this sort of thing.

As has been said, rape does not just affect the woman; it affects the family as well. Before my mother died early of cancer, I really wanted to tell her, but I could not bring myself to do it. I have a daughter and if something happened to her and she could not share it with me, I would be appalled. It was possibly cowardly, but it was an act of love that meant that I protected my mother.

As an adult, of course I now know that rape is not about sex at all - it is all about power and control, and it is a crime of violence. I still pick up on when the myths of rape are perpetuated form a male perspective: “Surely you could have fought him off. Did you scream loudly enough?” And the suggestion by some men that a woman is giving subtle hints or is making it up is outrageous. Those assumptions put the woman at the heart of cause, when she should be at the heart of effect. A rape happens when a man makes a decision to hurt someone he feels he can control. Rapes happen because of the rapist, not because of the victim.

We women in our society have to stand up for each other. We have to be courageous. We have to call things out and say where things are wrong. We have to support and nurture our sisters as we do with our sons. Like many women of my age, I have on occasion encountered other aggressive actions towards me, both in business and in politics. But one thing that I realise now is that I am not scared and he was. I am not scared. I am not a victim. I am a survivor.

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.