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How to cure the NHS? A Universal Health Tax


The 70th anniversary of the creation of the NHS is upon us, and there has been a church service to mark this. So was Mrs May’s birthday present of an extra £20billion a religious gesture or pragmatic government policy?

One one level it was sound political policy. Policy on the NHS is driven not by pragmatism, but by sentiment. Extra cash for the NHS attracts or retains votes. The NHS is Labour’s life-support system. They weaponise the NHS at every election by conjuring up plots for its privatisation which can be averted only by a Labour government. An example of this is Tony Blair’s infamous ’24 hours to save the NHS’ warning in the 2001 campaign.

Labour have found a way to oppose the £20billion of extra funding, complaining that it is not enough, and that the government will not be able to afford to spend this extra money as they will be unable to raise it or borrow it.

Labour are probably right. But then they do not have any reasonable answers themselves about how to get more money into the NHS without crippling the economy or imposing punitive confiscations of wealth on a moneyed minority who have the wherewithal to move that wealth and themselves to other tax jurisdictions very quickly.

Already the government are casting around for where they might have to make cuts or where they will have to raise taxes to pay for this gesture. There is talk of increasing duties on petrol and alcohol. There is no talk of increasing income tax.

The UK spends less on public health as a percentage of GDP than equivalent European countries. The current tax system does not work in redirecting national income into health. Beyond certain levels, tax rises generate less cash as it becomes cost-effective to alter economic activity, legally or illegally.

There is, however, one sure-fire method of channelling more money into the NHS: a Universal Health Tax.

In addition to paying income tax and national insurance, there would be a new tax based on income whose revenue would go directly to the NHS. The term for this is ‘hypothecation’.

At present, most Government spending comes from what is known as the Consolidated Fund. Most taxes go into this fund. Departments compete with each other to obtain cash from this fund. To govern is to choose, and it is the spending choices that make or break a government. Thus the revenue from vehicle excise duty does not all go on road maintenance. It is put into the large cash bucket and the various tiers of government choose how much is to be used to repair potholes, if any at all.

A Universal Health Tax, raised from the income of the entirety of the working population, would have its own fund from which all health spending would come. Since the NHS is held in such high esteem, why has this not been done already?

Civil servants and governments hate hypothecation. It creates a direct relationship between the taxpayer and the service, bringing home to everyone the true cost. If taxpayers are contributing hundreds or thousands of pounds to health care, they will have more of an interest in how that money is used, especially if it is not on themselves, and they will begin to demand improvements and efficiencies. This explains why Labour has never created it, preferring to hide the true cost of the NHS in general taxation.

A Universal Health Tax would also be a vital element in the exit strategy for the NHS by a future Conservative government. It would be similar to paying for health insurance, and it is possible that, after moving to a genuine continental-style insurance-based system after the demise of the NHS and the abolition of the Universal Health Tax, most people would find their premiums lower than the tax. This would demolish any objections to the abolition of the NHS by Labour.

The rate of the Universal Health Tax could vary year on year based on the demands on the NHS. Visitors to this country who had not paid into the Health Fund could receive treatment, but they would have to pay for that treatment directly.

It would be impossible for Labour to oppose rationally the raising of a Universal Health Tax.

The slogan of the NHS is ‘universal health care, free at the point of need’. But ‘free’ does not mean ‘available’. The waiting time is a hidden cost of providing care to the patient. It can be calculated by determining how much the patient would have to pay to be treated immediately and thus how much the patient is losing out by having to wait for this supposedly free service.

At present no one really understands where the money comes from for the NHS, and this explains the mystical reverence for it. It is this wilful blindness caused by this mystic aura that prevents any government from imposing any reform that intrudes on it. A Universal Health Tax would allow an adult debate about health care and would help silence the mystics and stop the preaching. At present the people of the UK are governed for the benefit of the NHS and not the reverse. Sensible debate is deflected by this theocracy. The reverence has to stop. A Universal Health Tax would make that happen.

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Paul T Horgan
Paul T Horgan
Paul T Horgan worked in the IT Sector. He lives in Berkshire.

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