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Tax could rise to historic levels to pay for NHS – report

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Taxes will need to rise to pay for a modernised health service, experts have said.

Funding increases of 4% a year would be required over the next 15 years, the report says (PA)

Tax may need to rise to historically high levels in order to give the NHS the money it needs to cope with an ageing population, a new report suggests.

A new analysis on what the NHS needs to cope with future demand shows that UK spending on healthcare will have to rise by an average 3.3% a year over the next 15 years just to maintain NHS provision at current levels.

Health spending by UK government 1997-2017 (PA Graphics)
(PA Graphics)

The authors conclude that in the past, Britain has effectively paid for increased government spending on health by cutting spending in other areas.

“The implication is clear: in the medium term, if we want even to maintain health and social care provision at current levels, taxes will have to rise,” the authors wrote.

The document states that relying solely on taxation to pay for a “modernised NHS” would increase the UK tax burden as a share of GDP to “historically high levels”.

Funding these projected increases in health spending through the tax system would require taxes to rise by between 1.6 and 2.6% of GDP – the equivalent of between £1,200 and £2,000 per household, the experts said.

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The analysis found that by 2033/34, there will be 4.4 million more people in the UK aged 65 and over.

UK public spending on health, per head (PA Graphics)
(PA Graphics)

The analysis comes as the Government mulls over its long-term plan for the NHS, promised by Theresa May earlier this year.

Paul Johnson, director of IFS and an author of the report, said: “We are finally coming face to face with one of the biggest choices in a generation.

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“If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years. This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more in tax.

“But it is a choice: higher taxes and a health and social care system which meets our expectations and improves over time, or taxes at current levels and a more constrained health service delivering less than we have become accustomed to.”

She added: “Of course we go into that period not currently meeting any of our waiting time targets and already struggling with emergency pressure in the winter.

“If we want to get back to a service that can cope in the winter and give people rapid access to hospital care, we will need extra funding.

“The amount of funding we need to allow that and to address some of the problems we have, we need to spend an extra 4% a year over the next 15 years above inflation.

“It is likely over the next 15 years that if we do want an NHS that is able to treat older people with chronic disease well that there will need to be some phased increases in tax – not overnight, but phased.”

Niall Dickson, chief executive of the NHS Confederation, added: “This objective and independent report makes clear that the next 15 years are going to be even more challenging than the last.

“Unless we tackle the funding issue, and build up the workforce, we will see further strain on NHS finances and services.

“Yes, there are more efficiencies to be made and our services need to be much better at supporting people in the community, but if we want a high quality NHS and care system we will have to pay for it”.

Meanwhile, separate analysis from the IPPR think tank says the Government should raise National Insurance contributions by 1p in the pound from 2019 to secure the NHS and social care in this parliament.

The plan would deliver more than £350m a week extra for the NHS by the time Brexit is complete, according to estimates by the IPPR, former Labour health minister Professor Lord Darzi and former Conservative health minister Lord Prior.

A Department for Health and Social Care spokesman said: “The Prime Minister and Health and Social Care Secretary have committed to a long term plan with a sustainable multi-year settlement for the NHS to help it manage growing patient demand, which will be agreed with NHS leaders, clinicians, and health experts.”

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