Head To Head

Is it time for a dedicated tax to fund the NHS?

BMJ 2017; 356 doi: https://doi.org/10.1136/bmj.j471 (Published 08 February 2017) Cite this as: BMJ 2017;356:j471
  1. Richard Layard, emeritus professor of economics1,
  2. John Appleby, chief economist2
  1. 1London School of Economics, London, UK
  2. 2Nuffield Trust, London, UK
  1. Correspondence to: R Layard R.Layard{at}lse.ac.uk, J Appleby john.appleby{at}nuffieldtrust.org.uk

A dedicated tax is the only way that we can be sure the government is reflecting public wishes, says Richard Layard, but John Appleby argues it would not protect funding from economic uncertainty

Yes—Richard Layard

Taxpayers finance the National Health Service. But how much are they willing to pay for it? No one has any idea. The service is financed from general taxation and there is thus no real way in which the public can express its wish for a better (or worse) funded service. If instead there were a specific funding stream dedicated to health, there could be a real public debate about how much people were willing to pay. And this debate would be particularly intense at the time of general elections, ensuring that our healthcare system in some way reflected the wishes of the population.1

Moving to a hypothecated tax would involve a major upheaval, but it would be worth it. Britain currently spends less on health as a share of gross domestic product (GDP) than other countries at the same income level.2 Nearly half of Britons say they are willing to pay for a better service and almost none want it cut.3 But Whitehall is resistant to the idea that health spending should grow faster than income, even though this has been a worldwide tendency.4 If, as in Germany, there were a dedicated source of funding for the healthcare sector, it would be much easier for public demand to be translated into action.

Steady funding

The alternative to hypothecation is to continue with alternating periods of famine and plenty. Under the present system the Treasury presses down on expenditure until the position becomes untenable, and there is then a brief period of plenty, as there was 10 years ago, followed by another famine, as now. …

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