I am always suspicious when key elements of the Left and the Right come to the same conclusion. Sometimes of course, this is simply because an idea has “come of age” and is so obvious it gets embraced across the political spectrum. But more times than not, it is because the Left has been slightly led down a blind alley by elements of the Right, not realising that what they have found themselves proposing would ultimately work against their agenda and their politics.
A case in point is the proposed “Health Tax”, the essence of which is to take National Insurance, already deducted from all PAYE employees at source, as anyone who has ever had a job in this country will be aware, and rebrand it as the means of fully paying for the NHS alone – a ring-fencing of health spend. The IPPR backed the idea in a report released earlier this year, and Nick Pearce has written about it on the IPPR website. The rationale is that it would be a way of raising taxes in order to pay for the NHS in a way that is transparent, so thus people will feel not too bad about having to pay a little bit more every month in order to save a sacred institution, one that is amongst the most popular in Britain today. This, the argument goes, would be better than simply raising PAYE with the explanation attached that the money will be going to the NHS. Raising income tax is deemed too risky, so this is the fix.
But one need only look at the arguments for the same rebranding of NI from the Right to see how the Left may have walked into a trap on health spending. Paul Kirby, the former policy wonk in Number 10, has written an interesting article touching on the topic. You can see from this, I believe, only the most obvious ways in which such a scheme would allow the NHS to move away from its original ethos, towards a much more privatised system, at least over time.
Once you ring-fence NHS spending under one tax, it is easier for people to understand what they are putting into the NHS themselves, as opposed to the current system where it is simply a portion of overall tax. A household containing two top earners puts in around £740 a month to the NI kitty. That same family could have top of the line private health cover for about £140 a month. If the “Health Tax” was enacted, do you not think this would soon become an issue for right-leaning, top earners? That they would argue they should be able to opt out of the process given how, from their perspective, they are paying way over the odds for something they could get privately for much cheaper? Furthermore, it is these top earners who now, and would be under an NI based regime still, be paying for the bulk of the NHS. If you care about the NHS being available for those who need it the most, why draw attention to the fact that the poor, the disabled, the elderly, are in fact going to be the exact people who will not be paying the “Heath Tax” whatsoever? I think you might risk the whole NHS as a project, not all at once since belief in the institution is much too high as it stands, but over the course of a generation, certainly. It makes it easier for a future Tory government to turn the whole scheme into an optional, social insurance type model, noises towards which have already been made in Conservative circles. This would bankrupt the NHS very quickly, as everyone who currently pays for it would stop doing so.
Truth is, in the grand scheme of things I’m not even that left wing and this whole idea scares me. So while I respect Nick Pearce highly, I do not think he has thought this properly through. I think the Left in this country needs to stop flirting with a potential taxation disaster and simply face up to the idea that income tax might just need to be raised in order to preserve the NHS, something to simply come clean about. It is the thing Labour polls best on, that people trust them with the NHS, and I think people will listen if they say that the NHS needs more money, and that it needs to come from people’s pocket. Better this than trying to come up with a politically motivated solution that may ultimately backfire.