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22 December 2021

Is a huge NHS tax rise the only way to make lockdowns history?

Without a debate about paying for extra capacity in hospitals, pandemic chaos will continue to threaten the economy.

By Tim Ross

For a second Christmas in a row, Boris Johnson is weighing up imposing lockdown measures to prevent the NHS becoming overwhelmed by a surge in Covid-19 patients admitted to hospital.

That this is a repeat scenario – despite the widespread and successful roll-out of coronavirus vaccines earlier in the year – graphically demonstrates the danger of new variants. And it shows, again, the vulnerability of the National Health Service to unexpected pressures. 

With the pandemic continuing to dominate political and economic debate, is it time policymakers and health service leaders revised their view of what the NHS should be expected to handle?

If we are living in an age of Covid, in which new variants threaten to evade vaccines and overwhelm hospitals once or twice a year, does the government simply need to increase the capacity of the NHS so it can cope with surging demand, without the need for economically ruinous lockdowns?

At first sight, the numbers are clear. To date, the Chancellor Rishi Sunak has committed more than £400bn in emergency pandemic funding, including loan and grant schemes to support businesses and workers through a succession of lockdowns. That’s more than twice the annual budget of the NHS in England.

In theory, such huge spending on mitigating the worst economic damage of lockdowns (financed by vast borrowing) would be unnecessary if it had been redirected to the health service so there were enough doctors, nurses and intensive care beds (as well as drugs and vaccines) to meet pandemic demand. Pubs, restaurants and shops would be able to remain open and operate as normal.

Protecting loved ones from infection would still be an important consideration but families perhaps could meet more freely for Christmas without worrying that they would risk compromising state healthcare.

One reason why the UK is currently at risk of requiring further lockdowns is the fact the hospital system always runs “hot” – close to maximum capacity – especially in winter.

According to Siva Anandaciva, chief analyst at the King’s Fund, a health think tank, this has been a problem every winter for years. Safe bed occupancy rates are regarded as below 85 per cent, he said. But the NHS routinely sees 92 per cent or more hospital beds occupied, he continued, at which point accident and emergency departments can become gridlocked, with ambulances backed up outside hospitals.

“We are not in the state at the moment where we have a resilient service,” Anandaciva said. Overseas visitors who look at the UK rates invariably ask: “Why on earth are you running your health system so close to the red zone so systemically?”

[See also: Exclusive: NHS faces third wave of Omicron mid-January in London]

One reason is that traditionally there has been no political appetite for building in much spare capacity to the health service (the number of NHS beds in England has halved over the last 30 years).

Another fragility is that it remains a struggle to recruit the doctors and nurses the system needs already. “The NHS went into the pandemic with 100,000 vacancies – those are posts we had funding for rather than how many posts we need to deliver the service you’d want,” Anandaciva said.

The government has announced increases in funding for the NHS – including a 1.25-point rise in National Insurance contributions from next April. The aim is to help the service cope with a growing backlog of procedures and to prepare for future increases in demand, as well as to address the pressure on care homes that leaves frail people stuck in hospital beds. “We would want to do everything possible to ensure the NHS does not become overwhelmed,” the Prime Minister’s spokesperson said on 20 December.

Officials in Whitehall are beginning to think about how to increase resilience in a system that has been creaking for years but which in the past decade has suffered a squeeze on resources, combined with rising demand from an ageing population.

According to Simon Stevens, who was chief executive of the NHS from 2014 to 2021, building more capacity into the system, rather than aiming for “the optimum just-in-time efficiency”, is a vital lesson to take from the UK’s experience of the pandemic. “Resilience requires buffer, and buffer can look wasteful until the moment when it is not,” he told the Commons Health and Social Care Select Committee earlier this year.

In a report published in September, the health committee called on the government to make a “more explicit, and monitored, surge capacity” part of “long-term” NHS funding and organisation in future. “Comprehensive analysis should be carried out to assess the safety of running the NHS with the limited latent capacity that it currently has, particularly in Intensive Care Units, critical care units and high dependency units,” the committee said.

How much could such spare capacity cost? “You’d be looking at an enormous increase in spending,” according to Ben Zaranko, from the Institute for Fiscal Studies think tank. “Would it actually be desirable to operate with the degree of spare capacity necessary to fully absorb the shock of a pandemic? That would involve huge amounts of idle resources in normal times. If you did something more modest – say, a 10-15 per cent increase in bed numbers – that would be more affordable, but you may not do much to reduce the chances of a lockdown,” he said. “You might just buy yourself a week or two.”

The Institute for Fiscal Studies’s website published a calculator tool to estimate the level of tax rises that would be needed (or public spending cuts) to fund NHS requirements over the next ten to 15 years.

By the early 2030s, keeping pace with growing demand while making modest improvements in NHS performance and capacity would require spending around an extra 2.5 per cent of national income on health, according to the tool, which was first published in 2018. Paying for that through higher taxes would mean raising an extra £56bn, equivalent to roughly £2,000 extra in tax for the average household each year.

Eyewatering though that amount is, it would still be too small to cope with a surge in Covid hospital admissions of perhaps 10,000 a day, which modelling by Sage has warned is a possible worst-case scenario in the current Omicron variant wave.

“It’s hard to imagine running the NHS with so much spare capacity in normal times,” said Paul Johnson, director of the Institute for Fiscal Studies. But this calculation would have to change if scientists concluded that highly disruptive pandemics were to become a far more regular feature of life, he said.

“If the epidemiologists were saying Covid is such that we are going to get a wave twice a year which is going to overwhelm the NHS in its current state then it would make sense to invest enormously in additional capacity,” said Johnson.

So what do the pandemic experts predict? There have been four influenza pandemics in the past 100 years. According to the government’s most recent National Risk Register, published a year ago, this means there is “a high probability of another flu pandemic occurring, but it is impossible to predict when it might happen, or exactly what it would be like”.

In the past 30 years, more than 30 new or newly recognised diseases have been identified, the document said. Most have been naturally transmissible from animals to humans, such as Covid-19, HIV, Ebola, Sars and the Zika virus.

Even if forecasters could predict with any accuracy when the next pandemic will strike, as the current debate over lockdown restrictions shows, the science may point one way but the politics will ultimately be the decisive factor. Johnson’s traditionally low-tax, low-spend Conservative backbenchers are no more likely to embrace a radical expansion of state healthcare provision than they are tighter lockdown measures.

Many Conservatives instinctively still see the value in a bigger role for the private sector in the NHS. The government recently blocked attempts to change the Health and Care Bill currently passing through parliament to limit the role of private healthcare representatives on regional boards, a move that alarmed some campaigners who fear privatisation.

[See also: Is the Conservative government privatising the NHS by stealth?]

Yet structural reforms have been drawn up in Whitehall without much public debate about the proper role and purpose of the NHS. Since the health service was iconised as a core part of British identity at the opening ceremony of the London Olympics in 2012, neither of the main political parties has wanted to open a fundamental discussion about what some describe as the closest thing the country has to a national religion.

Eventually, if a new mutation of coronavirus – or another devastating disease – changes the environment in which humans seek to thrive, societies and their political leaders will have to adapt too.

“Either you’re limiting your horizon to just getting through the next year or two, or at some point you have to say we need to have a discussion with the public and all the political parties over what type of health service we want,” said Anandaciva. “Unless you do that, you’re always only going to be, at best, just ahead of the curve.”

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