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IFS says taxes need to hit historic highs to save NHS

Institute of Fiscal Studies suggests UK households will need to pay an extra £2,000 a year to help keep the NHS alive.

IFS says taxes need to hit historic highs to save NHS

A study from the Institute of Fiscal Studies (IFS) said taxes will have to rise to protect the future of the National Health Service. 

The report suggests UK householders will need to pay an extra £2,000 a year in tax, to help the NHS cope with demands of an ageing population amid unprecedented pressures on the health system. 

Both the IFS and fellow thinktank the Health Foundation believe high taxation is the only option to prevent a decline in the NHS, which celebrates its 70-year anniversary on 5 July. 

'UK spending on healthcare will have to rise by an average 3.3% a year over the next 15 years just to maintain NHS provision at current levels, and by at least 4% a year if services are to be improved, the IFS report said.  

NHS Confederation chief executive Niall Dickson described the report as a 'wake-up' call. 

He added: 'Over the next 15 years in the UK, there will be four million more people over 65 and the prospect of a 40% increase in hospital admissions and further large increases in the number of people with numerous long-term conditions.

'It is now undeniable that the current system and funding levels are not sustainable. Without new ways of delivering services and sustained investment, NHS and care services will not cope, and we will face a decade of misery in which the old, the sick and the vulnerable will be let down.'

12 comments so far. Why not have your say?


May 24, 2018 at 16:18

Thatcher said we don't need anymore Doctors .We need managers .SO GEWT RID OF THEM.Then the NHS will be able to do it job. NHS ENGLAND of course .

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May 24, 2018 at 17:02

If it was only the NHS where there was a funding gap, it might be fixable. Unfortunately there are a lot of others, such as adult social care, the state of our roads etc. and the real big one - the unfunded liabilities of our pay-as-you-go state pension.

Assuming that we agree that more taxes are needed, there is then the difficulty of arguing which taxes need to be raised - less than half the population pay any income tax at all, and an even smaller percentage pay NI. Whacking it onto VAT - the other of the three big taxes - would push inflation up, thereby increasing the amount needed to pay pensions and other benefits. It could also finish off more chunks of the High Street.

Whoever wins the next election - if anyone does - taxes will have to rise. The alternatives would have to be big cuts in public services (and only pensions, the NHS and the Education service are big enough now for this purpose), or lots of charges for services which were free.

As you can only tax and charge people with money, I suspect there will be quite a few of the regular commentators on this site who will find they really do have something to complain about.

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May 24, 2018 at 17:25

During the 90s, Labour ploughed money into the NHS, and productivity and efficiency did not improve. Indeed, today, they are worse than ever, despite effectively unlimited funding.

The burden of taxation falls on a relatively small percentage of the population, but a significantly larger percentage of NHS 'customers' don't pay taxes. So, personal taxation cannot be the answer

We keep hearing about the 'drain' on NHS resources by the 'elderly', but I would argue that the big threat in the future is younger people suffering from self-abuse; obesity, diabetes, alcohol and drug abuse, etc... The elderly paid their taxes, and deserve to be cared for. Perhaps, now is the time to seriously consider government funded private healthcare for those e.g. over 55 and [relatively] healthy, to encourage them not to use the NHS. Those who have private healthcare have already saved the NHS significant sums, yet continue to fund it, but the cost soon becomes prohibitive as they get older, forcing them back to the NHS.

There needs to be a fundamental transformation of the NHS, starting with a large dose of commercial reality. The big problem is managers don't treat NHS money as their own; £13,000 for 3 garden lights!!!

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John Griffiths

May 24, 2018 at 18:05

I'm sure the NHS needs more funds but there are three issues that need to be addressed first:

1. By and large the actual medical, nursing and therapy care is very good, it is the admin that lets it down. At present the NHS is a highly fragmented organisation the various central management groups do not eliminate the post code lottery for many services. The management and administration needs slimming down and to be made simpler.

2. The social care aspects are now included under the Minister and the provision of social care at home or residential is a desperate need. Hundreds of beds are occupied by people who should be having social care and if this is sorted - it will greatly help the NHS to function better as there will be less scrambling for beds which will allow a lot of elective surgery to go ahead efficiently.

3. NHS procurement despite being centralised is not seeing the benefit of reduced costs - the opposite happens as Louis (above) mentions.

No increased taxation should happen unless these matters are addressed to make the admin more fit for purpose.

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May 24, 2018 at 20:31

This article is complete and utter dross,symptomatic of the entitlement culture that is the basis of the problem itself.

They need to take a leave out of the most junior of managements play book and reassess your budget when strains appear.

First on the list would be a realignment of every management salary by moving the decimal point one place to the left. The appalling figures paid out to squalid talentless individuals both in terms of salary and compensation, when they are eventually found out, attract wholly inappropriate individuals to these roles.

The NHS finds itself in the position it does today due to the cumulative effect of countless numbers of these individuals. reducing the rewards would attract a completely different set of management. One with a sense of vocation, caring and talent totally missing from the "me,me and only me" brigade that permeate the organisation.

The damage these individuals do permeate down the various levels of staff.

An example of which was a case where my sister who manages a section in an elderly care home had to induct a new member of staff. When the trash eventually turned up for her first shift, the very first words out of her mouth were "How long do I have to do before I can go off sick?" .

Today's entitlement culture makes it almost impossible to get rid of this trash and the fiscal drain they place on the organisation and there are thousands of them.

Why should honest taxpayers subsidise this lax louche management style.

The second action would be to redirect large portions of the foreign aid budget to support the NHS.

Why should our elderly be expected to suffer to subsidise an organisation who feather the nests of so many undeserving individuals worldwide. Fine if you have got the money but when things are tight charity begins at home.

Finally the university budget could be slashed. Do we really need any more hundreds of thousands of illiterate, innumerate donkeys running about with chocolate degrees looking down there noses at any job they are offered.

No, there are many,many more options available before tarring the taxpayer, all you need is a bit of backbone. We could always start with a few of the snowflakes in the IFS and the Health Foundation or closing down the myriads of NGOs being subsidise by the NHS waiting lists.

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Tim D

May 24, 2018 at 20:47

In the past, and still in the developing world, there was/is more of a symmetrical social contract between the generations: the next generation would expect to inherit the family wealth but the next generation -not the state - would also expect to be the ones doing the caring for the elderly. These days people expect the state to do all the caring, but young and old both still want that inheritance to go to the next generation. Something's clearly got to give there... if the next generation want to inherit, they need to do their bit looking after the old folks... otherwise they can't complain when the oldies find they'll have to spend (or be taxed) all their remaining assets for someone else to provide it. Unfortunately rational discussion of inheritance tax reform and "dementia tax" type things are still politically off-limits in this country.

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Law Man

May 24, 2018 at 22:34

I am with others that:

(1) public services could be made more efficient, and

(2) social care etc needs funding as well as the NHS.

However, as a society we have to reflect on what we expect from the state. The NHS is underfunded compared with health costs in other developed countries, so - in my view - it needs more.

Then you have the question who pays, from what taxes. It seems wrong that higher rate income tax payers and the poor pay proportionately more in tax. It needs a non-political commission to evaluate how the tax base should be spread fairly.

Of course this subject affects us all, but not directly as investors.

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May 24, 2018 at 22:51

"Of course this subject affects us all, but not directly as investors."

Not too sure about that when you consider the level of Corporation Tax and the fact that the NHS offer a free maintenance service for a companies workforce.

This debate could encompass many areas that have so far been left out of the argument.

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Law Man

May 25, 2018 at 16:07

Bill: Thanks for the thoughts.

Re your first: I am not trying to interpret your view, but Corporation Tax is a tax which is being reduced significantly; so query if a higher rate of CT should fund the NHS.

Individual citizens may by coincidence be an employee of a company. Does this mean they should be ineligible for NHS care, with the company (perhaps) paying for private care? Surely not.

The only very indirect effect of the above on private investors would be to the extent net profits are reduced; I am not expecting to see my returns increase when CT rates are reduced.

We are agreed that the matters for review are much wider than income tax and IHT.

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May 26, 2018 at 09:43

Some very good observations above but my wife is a nurse and the NHS is very badly run and terribly wasteful. I dont mind paying extra tax if it is managed efficiently but no profit principles as always mean no commitment to efficiency. Well done BUPA for holding it together, Can the left please stop moaning, dreaming and scaremongering about the horrible capitalists who keep them in jobs,

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May 26, 2018 at 11:11

Well said CT. True and succinct!

No-one can sensibly argue for higher taxation without seeing a massive increase in productivity and efficiency, and reduction in unacceptable costs and waste. Unless, of course, you don't pay tax!

In any case, hypothecated taxes don't work!

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Jun 18, 2018 at 10:43

The NHS is a mish-mash of Quango departments, when any company reaches this stage it is beyond hope, the only cure is close the organisation and restart from scratch. This applies throughout life, continual 'improvements' eventually create a monster which must be scrapped and replaced with a simple & efficient product.

Having experienced their care for myself & family over 70 years, I conclude that we would be healthier by far had this organistation not existed.

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