The politics of mutualising the NHS and reviving National Insurance offers Labour a big opportunity

In the second of an occasional series of posts, from Uncut contributors, that look at the policies and political positioning needed to win the next election, Jonathan Todd reflects on Frank Field’s case for restructuring how the NHS is funded.  

by Jonathan Todd

In March 1992, 22 per cent of voters thought the Conservatives had the best policies on the NHS. 52 per cent thought Labour did. This didn’t stop the Tories winning the general election two months later. This experience should caution us against seeing the lead that Labour currently enjoys on the NHS as sufficient to secure Labour general election victory. Labour’s trust and popularity on this issue is not a passport to election victory. But it is a political asset that might be deployed to create such a passport.

Some perceptions of Labour strength and weakness that are relevant are:

The support Labour enjoys on the NHS is emblematic of the sense that Labour’s heart is in the right place. No one believes that Labour enjoys seeing nurses being made redundant, whereas there is a lingering suspicion, perhaps unfairly, that Conservatives do. Nonetheless, there is also a widespread recognition that government involves taking tough decisions, as well as a sense that the Conservatives are more prepared to take such decisions than Labour. While there are relatively few doubts about Labour’s heart, there may be more about Labour’s judgment and resolve around difficult decisions.

As popular as the NHS is, there is also a recognition that tough choices need to be made on healthcare. Nearly three-quarters (73 per cent) consider the NHS to be one of the UK’s greatest achievements. Yet more than four in ten believe the NHS will not survive in its current form to the end of the current decade.

Labour’s aim should be to show that the NHS can endure. Because the public know that the NHS faces challenges, they know that survival for the NHS will involve tough choices. Labour needs to make these choices if the party is to be both the founders of the NHS and the creators of a bright future for it.

In taking these choices, Labour should extend the contributory principle from social security to the NHS. This principle was fundamental to the welfare settlement bequeathed by the 1945 government. It has become central to how Labour is proposing to move the social security system on the from the car crash of Iain Duncan Smith’s tenure at the DWP. It should also be applied to how Labour intends to improve the NHS, as well as the social security system.

“Previous contribution is the ideal” means of funding health care, according to the chapter on this topic in the Beveridge report (1942). Labour’s 1945 manifesto committed the party to implementing Beveridge’s recommendations. Seventy years on from Beveridge, Liam Byrne claimed a few years ago, Labour are reclaiming his vision. More recently, Rachel Reeves, Byrne’s successor as Shadow Work and Pensions Secretary, has committed Labour to making sure that work is rewarded over the long term, by reinforcing and renewing the contributory principle in our social security system.

This aligns Labour with the popular morality that says those who have worked hard and played by the rules should have access to taxpayer funded resources that fully reflects these contributions. For example, as Reeves has argued, a higher rate of Jobseekers Allowance should be paid for the first six weeks of unemployment to those who have a record of four or more years of continuous employment. As Reeves explains, this could be a big help in cushioning the immediate financial impact of redundancy and give them a better chance of getting back into work and back on their feet sooner. Past contribution merits this enhanced future opportunity.

Another example of this kind of thinking from Reeves on social security has clear parallels to the NHS. The importance of recognising work and contribution and reinforcing the contributory principle in our social security system, she argues, is why we must do what we can to ensure that those who come to live in Britain from other countries work and contribute to our social security system before taking out of it. There is popular aversion to ‘welfare tourism’ – people moving to the UK to access benefits – and also to ‘health tourism’ – people coming to the UK to access NHS services. The recognition of contribution advocated by Reeves would end ‘welfare tourism’ and extending this logic to the NHS would eliminate ‘health tourism’ too.

Similarly, if we are offended by those with poor employment records having the same entitlement to Jobseekers Allowance as those with stronger records, are we not also offended by A&E services being dominated at certain times of the week by drunks, restricting access to these services by those who have behaved responsibly? Not drinking to such excess that we become a risk to ourselves and others is a form of contribution that we do not currently recognise in how we allocate or finance health services.

But, as Kate Bell and Declan Gaffney have argued, if the contributory principle is to play a serious role in future thinking about social security, we need to move away from the ‘something for nothing’ framing and address the ‘nothing for something’ problem of a system in which the great majority of people contribute but see little visible return for their contribution. The majority of women working part-time, for example, earn less than the living wage in over 50 local authority areas across Britain, according to TUC research. These women do not get nothing for the something of their labour but they do get less than the living wage. Equally, carers contribute much more to society than they receive, whether in terms of access to public services or other terms. Carers save the nation £119bn a year, or almost as much as the entire cost of the NHS, claim Carers UK.

Reviving the contributory principle should both mean recognising all relevant contributions – including, for example, those of carers. And ensuring contributions are properly rewarded – for example, while this principle demands that Jobseekers Allowance be conditional on job search, the contribution of finding and taking employment should be reciprocated with a wage that is sufficient to live on, which in the case of many part-time female workers is too rarely the case.

If we recognise all relevant contributions and properly reward them, then the contributory principle is genuinely inclusive. Not a vehicle for excluding some from public services and resources but a means of uniting all around commonly held goals. Renewing the viability of social security and the NHS by rewarding the virtues of work and healthy living. Reconnecting the personal responsibilities that we have for work and for our health with the shared responsibilities that we hold for maintaining systems of collective insurance. Aligned the incentives facing us as individuals with the goals of these systems.

How could this happen?

Rachel Reeves has explained how Labour would revitalise the contributory principle in social security, while Duncan O’Leary and Claudia Wood of Demos argued in similar terms in an essay in the book published by Labour Uncut in 2013. Frank Field explains in this essay collection how this could also be done to the NHS. He also sets out the scale of the financing challenge facing the NHS in our ageing society.

John McDermott of the FT is right that we have a social insurance model in name only. But building a genuine social insurance model, which would be the consequence of following through on the proposals made by Reeves and Field, can meet the financing challenge of the NHS. And would bring the contributory principle to both the NHS and social security.

This would mean having the NHS wholly financed from national insurance payments and establishing a governance system for national insurance that linked social contribution to access to NHS services. In the first instance, contribution would mean possession of a national insurance number, which would cover the holder and any dependents.

But beyond possession of a national insurance number, what other forms of contribution might the NHS recognise? The capacity to avoid drunkenness? The taking of exercise? Might this national insurance system incorporate – to pick up on an idea presented by Dan Fox at a Pragmatic Radicalism event – some kind of no claims bonus?

These are all important and searching questions. Too much so to be answered by politicians. Instead politicians, in the form of the Labour party, should seek to put in place governance arrangements for a new national insurance model that allows NHS service users to answer them. To decide what contributions should be recognised by this service, and how.

Debate on the future of NHS financing is often limited to the merits or otherwise of additional taxation, whether hypothecated or not, or service charges. While we need a considered national debate on future NHS financing, these options are too limiting. And would restrict NHS service users to a largely passive position. We need instead to look at renewing national insurance and recognising contribution within this model. Through governance arrangements that connect the popular morality of NHS service users with the financing challenge of this service.

Articulating and advocating for these plans would show that Labour has the capacity to fix different problems, as well as a heart in the right place. It would also demonstrate Labour’s ability to successfully innovate in the face of severe fiscal constraints. Big reform, not big spending, as Ed Miliband promises. It confounds perceived Labour weaknesses around fiscal credibility and capacity to take tough choices. Which is much superior than any pretence that simply replacing Jeremy Hunt with Andy Burnham will be sufficient to meet the challenges that the NHS faces. Labour should be a party that boldly rises to national challenges, mobilising the population behind its responses, not crude and narrow tribalism.

Jonathan Todd is Deputy Editor of Labour Uncut

Tags: , , , ,

2 Responses to “The politics of mutualising the NHS and reviving National Insurance offers Labour a big opportunity”

  1. Madasafish says:

    My wife and I have been unpaid carers – for her mother from age 88 till she died at 96 -and for our daughter who is schizophrenic. We also help – shopping, lifts – our neighbours in their 80s. (We are both OAPs in our late 60s.. so have time.)

    Whilst it would be nice to be paid by the state to recognise this, it’s a pipe dream. There is not enough money for the current systems and to start the debate about paying for unpaid carers is surely raising false hopes which cannot ever be fulfilled..

    I am an accountant by training and one look at current Government spending – and the ageing population – makes it clear that unless the economy grows at a far faster rate ( eg 4% pa.) than historical trends or energy costs collapse and stay down – then the current economic crisis is the NHS is going to look like a picnic by 2030.

    Paying carers may be great for carers but the only way to fund it is to increase taxation. A LOT.

    An increase in taxation slows down economic growth.

    Given the problems we face, as a party Labour should be exploring ways of helping the economy grow more rapidly and make the UK a more attractive place for business to flourish.

    So far all I read on here is ways of spending more money. You are tackling the wrong issues. Expand the GDP – and the tax revenues will follow..

    Given tehat Ed’s speech hardly mentioned the economy (let alone teh deficit), you are looking the wrong way. If Labour are elected on current policies- the poor will end up much poorer.. See Jim Callaghan as a horrible example of when things go wrong. Or more recently, President Hollande.

    And I cannot see UK interest rates remaining low when we are running an annual deficit twice the size of France’s and Labour’s economic policy – as stated by Ed Balls – is not to eliminate Governmental borrowing on an annual basis.. thus ensuring the deficit will grow endlessly.

  2. John Reid says:

    It’s no good, your banging your head against a wall, the organisers and advisors won’t listen, they’re too young to recall 1992 ,and just won’t accept what you’re saying, you’re quite right of course,

Leave a Reply