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We need the NHS more than ever – but will we pay for it?

July 6th 2020

On the anniversary of the NHS, Victoria Winckler, Director of the Bevan Foundation, looks at what it will take to maintain the institution that we love in the next decade.

Yesterday marked the 72nd anniversary of the NHS.  As befits these Covid-19 times, it prompted another round of clapping on our doorsteps.

But the NHS needs more than just gratitude.

Grateful though everybody should be for the NHS, it does not run on warm sentiments.  The NHS, like all public services, needs the basics of any activity: people, equipment and money. And on all three counts, the NHS needs more if it is to continue to prevent and treat the myriad of diseases and conditions that can afflict us.

Yet even in the pandemic, in all our gratefulness for the NHS, there has been a striking reluctance to discuss how it is paid for.  The truth is that seeing the GP of our choice, being referred and treated in weeks not months or accessing the latest medication costs money.

We all pay for the NHS not only through our income taxes but also through VAT and taxes on corporations. Over the last ten years, the NHS has been squeezed hard by a combination of increased demand as society’s health needs get more complex and static resources.

Several years ago, the Health Foundation estimated that Wales’ health services needed significant extra funding to meet future needs. They forecast that Wales’ NHS needs to make major efficiency savings AND a steady real-terms increase in funding of 2.2% a year from 2019/20 to 2030/31.

This is big money.

The NHS already accounts for around half of the Welsh Government’s budget, and another 2.2% a year means another £192 million (and rising) needs to be found.  With a ceiling on spending set by the UK Government’s Barnett-based allocation, the Welsh Government can only find this additional funding by cutting somewhere else.  The Welsh Government will continue to be tied to the UK Government’s public spending plans unless something changes.

Which brings us to the one way of raising funding that the Welsh Government has at its disposal. Taxes.

On income tax, the Welsh Government can vary the rate of income tax by up to 10p in the pound, but not the different tax thresholds. A handy tool on the Senedd website shows that increase of 1p on each band would generate around £223 million, comfortably covering the increase the NHS needs.

It can also raise new taxes, although the process of securing agreement with the UK Government complicated. The Bevan Foundation has previously called for the Senedd to use its taxation powers in the Wales Act 2014, primarily to change the behaviour of people and organisations rather than to raise revenue. We suggested options including a tourist tax, a sugar tax, a polystyrene packaging tax and a land value tax.

The time may have come to focus on taxes that raise revenue.  Will our politicians be bold enough? We shall see. But now, when the public both loves the NHS and is likely to need it more than ever, might be the best time ever.

Victoria Winckler is Director of the Bevan Foundation

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