The NHS and social care would be run by a John Lewis-style mutual organisation and funded by higher national insurance contributions, under a radical shakeup proposed by Labour MP Frank Field.
The former welfare minister says a looming financial crisis could be tackled by making the NI system more progressive and earmarking the entire proceeds to pay for the health service and care for the elderly.
“The NHS now has a unique place in the public’s affection,” Field said in a written submission to a House of Lords committee looking into the long-term sustainability of the NHS. “Surveys show that the public not only wish to support the vision they have for the NHS, but that they are up for a change in funding which will deliver them a better health and social care package when they need it.”
Speaking to the Guardian, Field said he was surprised that the chancellor, Philip Hammond, provided no extra funds for the NHS in last month’s autumn statement and predicted a cumulative £60bn black hole in health funding would open up over the next five years.
The Labour MP proposed a percentage point increase in NI contributions for employees and employers to deal with the short-term funding pressures on the NHS, raising an extra £50bn over the next half decade.
Together with efficiency savings, this would be enough to solve the short-term crisis and would be part of the transition to a new funding model. However, Field said this should be the catalyst for an entirely new funding and ownership model.
Pressure for a more integrated health and social care system has been increasing in recent years as a result of Britain’s ageing population. Hospitals have said that they are struggling to cope with elderly patients who should be cared for in the community.
Field said in his submission that only one fifth of the £114bn raised from NI contributions last year was spent on the NHS but said his plan would involve all the money raised being designated for health and social care.
The MP said the mutual organisation that would take over responsibility would have an annual budget of at least £140bn. Last year, spending on the NHS was £116bn.
Field said changes to NI to make the system more progressive should include raising the lower earnings limit – the point at which employees start paying contributions – to the current income tax threshold; removing the upper earnings limit on contributions; and removing the exemption that means employees above the state pension age do not pay contributions, which would raise £6.7bn a year.
He insisted the suggested change should not be used as a cloak for double taxation and said income tax should be reduced as NI contributions rose.
The government has pledged to increase spending on the NHS during the current parliament, but its claim that the health service is getting an additional £10bn a year has been challenged by Conservative MP Sarah Woolaston, chairwoman of the Commons health select committee. Woolaston said the real increase was £6bn.
Field said: “The funding of the NHS for the remainder of this parliament is built upon extremely shaky foundations. It is therefore likely that, at some stage in this parliament, the government will be made by public opinion to increase the NHS budget. It would be a pity if this opportunity was not seized upon.”
When Gordon Brown was chancellor in 2002, he raised NI contributions in order to increase funding for the NHS. Field told the Guardian this was “the most popular thing Brown ever did” but said much of the extra revenue raised was diverted to non-NHS projects.
He said that by hypothecating NI contributions and setting up a mutual model – an organisation owned by its users, like John Lewis which is owned by its employees – public support for the NHS would be cemented. “It would reinforce affection for this one great institution that has survived the dismantling of Attlee’s post-war consensus.
“A John Lewis model would not allow members to overturn the whole system but they would have a decisive say on expenditure levels and the culture of the organisation.”
Larry Elliott, The Guardian