It’s almost 20 years since Gordon Brown raised National Insurance contributions by a penny in the pound, to fund a major injection of cash into the NHS in the face of long waiting times, staffing shortages and widespread concerns about the quality of care.
Just as now, raising National Insurance to fund the NHS wasn’t universally welcomed by the media or politicians. Although at the time, opinion polling showed it was very popular with the public, and the labour government went on to win the next general election with a healthy majority of 66 seats. Nick Macpherson, the former permanent secretary to the Treasury, once described the Brown increase as “the only serious, non-forced, discretionary tax rise since at least 1979—and one that proved electorally appealing.”
Boris Johnson and his advisers have almost certainly studied the Brown tax rise and are hoping history will repeat itself and they will be rewarded at the next election. Both Brown and Johnson sought to sell the tax rise by claiming the increase will be ring-fenced for the NHS and not just go into general government coffers; although in practice this ring-fencing is notional. Increasing the headline rate of tax is undoubtedly a significant political gamble, but the NHS is of huge political salience. As Gordon Brown notes of the NHS in his biography, “Any government which neglects or ignores it pays a heavy price.”
But Johnson is breaking from history in one important respect, this time round by raising National Insurance not just for the NHS but also for social care, hoping that 20 years on the public also prioritises fixing the care system. Will Johnson’s big gamble pay off politically, fix the social care system and put the NHS firmly on the road to post-pandemic recovery?
The 2002 funding injection delivered the goods in terms of tangible NHS improvements. Staff numbers increased by a third, outcomes for a whole range of health conditions improved and waiting times tumbled. With those improvements, public satisfaction with the NHS increased.
The key question is therefore just how much improvement Johnson’s extra money delivers before the next election? The risk is much greater than in the 2000s, as the gap between the amount of money raised and the pressures facing social care is high and expectations have been raised which may provide very hard to fulfil. The new Levy for the NHS and social care will raise around £36bn over the next three years. Around £6bn will go to the devolved administrations and from the rest, £15.8bn is earmarked for frontline NHS services, £5.4bn for social care and the rest for the wider health budget, covering important areas of spending such as public health and workforce training and development.
The extra funding for the NHS means spending on the health service will grow by an average of 3.9 per cent a year above inflation between 2018-2019 and 2024-2025. While significant, it’s considerably less than the 6.1 per cent a year average increases in the five years following the Brown national insurance increase, and should be seen in the context of an average of 3.7 per cent annual growth in funding over the NHS’s first 70 years. But ultimately what matters is not how this stacks up in the league table of previous government funding increases, but rather how it compares to the current pressures facing the NHS.
Through the pandemic the waiting list has increased to over 5.5m people, with a third waiting more than 18 weeks and 300,000 people waiting for over a year. As part of the new settlement, the government has set aside £10bn to deal with the backlog of planned care. That isn’t enough, and so waiting lists are likely to be higher in 2024-2025 than today—significantly longer than the 18-week waiting time standard.
That’s a big challenge, but it masks an even bigger problem—lots of people didn’t make it onto the waiting list at all through Covid, either because they were concerned about using services or because services were suspended. The estimates are that there are up to eight million missing patients. No one can say for sure how many will come back onto the waiting list needing care, but if it’s around 75 per cent, then meeting the 18-week standard would require around £17bn of dedicated funding up to 2024-25.
For social care, the government deserves much credit for trying to fix the glaring injustice that means people who face very high social care costs get no help from the state if their assets are above £23,250. A cap of £86,000 on the amount anyone will have to spend to pay for their care—although higher than Andrew Dilnot recommended in his report back in 2011— does provide a limit on people’s exposure to catastrophic care costs. But this is only one of the problems facing social care. Despite care needs rising—as people live longer and more people need care because of disabilities—real spending per person has fallen over the past decade. It’s likely that the burden on families and friends who provide unpaid care has also grown.
The £5.4bn extra for social care over the next three years isn’t enough to properly fix its problems. The promised funding will not ensure services are available to more of those who need them, it won’t keep up with population ageing, support improvements to the quality of care, or ensure social care workers’ pay, terms and conditions can improve. The Health Foundation estimates that the core adult social care system would need £9.3bn extra in 2024-2025 than it does today, with the funds for the cap on care costs on top of that. It’s vital to remember that adult social care services aren’t just important to older people; a third of care users are between the ages of 18 and 65. Most of them don’t have housing assets and private pensions to fill the gap left by the state—if the publicly funded system is threadbare, where do they go?
There is a very real risk that come the next general election the public will see the extra National Insurance leaving their wage packet, but they won’t yet see an NHS and social care system which is able to provide what they and their families need. As Gordon Brown observed, history suggests that governments which don’t protect the NHS pay a heavy price. Don’t be surprised if before the election the Johnson administration is having to revisit these spending plans.
