The National Insurance Act of 1911 had two strands –
provision of medical benefits and provision of a time limited Unemployment
benefit. It followed on from the Old Age Pensions Act of 1908 which provided a
small non contributory pension for the over 70’s. The principles behind these
two Acts formed part of the great Social Welfare Reforms of the pre World War
One Liberal Government that have stood the test of time. The next inevitable
step was the creation of the National Health Service and the post World War two
Welfare reforms following the Beverage Report.
The concept that National Insurance contributions formed the
basis of a savings pot for a basic state pension and also was to fund
health care provision was a concept that clearly was embraced by the British
public. This is why that National Health Service is such an important issue
today. People care about it and want to see it protected & properly funded.
It is no secret that successive Governments have dipped into
the pension element of our “pension pots” that have been built up from our
National Insurance Contributions. It is the real tangible implication of
Government borrowing. The new pension regime that the Labour Government under
Gordon Brown introduced which the Coalition Government carried forward to
implementation is testament to that. It ensures that contributions into the “National
Employee Savings Trust” (NEST) or into funds provided by Personal Pension
providers are protected from future Governments and they will no longer be able
to borrow from our pension savings. This means that the pressures on our
National Insurance Savings pots are reduced.
However there is no
transparent link between the cost of all elements of health care and the
National Insurance Contributions that we pay. Given that we now have
sophisticated Computer Accounting Software that makes it far easier and quicker
to collate the costs of providing a service, I think it is time to completely
overhaul the way our National Health Service is funded so that it can be
transparent as to how much our health care costs are and that it is equally clear how
they are funded from specific forms of taxation raised by the Government. Any reduction in funding would then be clearly seen.
Not just rhetoric about ring fencing the NHS budget but actually doing
so in a way that it can be seen that it is ring fenced. In short, taking health care out of the political agenda
Firstly I think we need to look at how much the NHS together
with all aspects of health care both physical & mental elements regardless
of whether that is provided by the NHS, local authority or the voluntary sector
and link that cost with specific taxes. The following list of taxes should
automatically go to the health care budget.
- All forms of taxes paid by tobacco & alcohol companies as well as VAT & other duties collected at the point of sale.
- An element of road taxation and fuel duties to account for the cost of accidents.
- An element of taxation collected on the sale of unhealthy foods (high fat & high sugar). Perhaps even a small targeted increase in VAT to encourage companies to really look at the content of processed foods.
- All taxes paid by the pharmaceutical sector and on the sale of medicines.
- All taxes paid by private health insurance companies.
This would still leave a big hole. Whilst we have National
Insurance, the concept of a direct link which was first conceived by Lloyd
George's 1911 National Insurance Act has all but been broken. Not only that
with the medical breakthroughs that there have been, the actual cost of
treatments available are way beyond that envisaged during the Edwardian era. We
need to modernise the concept of the 1911 Act.
- Employer's National Insurance Contributions should be abolished - they are seen as & are a tax on jobs. This also removes a tax on the NHS and other health care service providers to provide health workers.
- Abolition of NHS prescription charges. They are a punitive tax on being ill.
- Instead there should be a specific flat rate “Health Care Insurance” tax chargeable to all individuals (over a certain threshold) & Companies. The rate should be specifically linked to the cost of health care not covered by other taxes already highlighted thereby ensuring that if the cost of health care increased, the cost of that increase was automatically met by an adjustment to the tax rates covering health care.
- The part that private health care has to play must be recognised. If a specific tax was paid by employers, they should be able to offset the cost of health care insurance provided to employees against that tax. For the employee, the current status of private health care as a taxable benefit should be removed. How can health care insurance ever be considered a taxable benefit? It should be routine for employers to provide health care insurance to their employees.
- All Local authorities to receive so much a head of population to cover their element of health care services, with the amount being made publicly available. It would then be for the local authority to demonstrate what they have spent that money on and for councillors to defend their record on the decisions made.
This would then leave National Insurance. Whilst there would
remain a need for National Insurance to cover entitlement to state benefits the
actual rate payable should be reduced for all to account for the health care
element being transparently funded. In addition the thresholds for paying
contributions should be increased and should be set at the same threshold as
the specific “Health Care” Insurance to keep it simple.
The overall tax totals raised may of course be higher than
it is now because of the clear need to cover more areas than the NHS currently
covers, but surely if people could actually see what they were paying for it
would be a price that they would be happier to pay.
