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ABHI at 30 Guest Blogs. The Politically Vexed Question of How To Pay for Health and Social Care

Research by the Institute for Government has identified three funding questions that the Government must answer in order to place health and social care on a firm financial footing.

1) How much more money is needed?

2) How should additional funds be raised?

3) How can funding be provided consistently and predictably over time?

The Government’s June NHS funding announcement only partially answered the first of these questions, as it only covered NHS England, not the whole of the health budget, and did not address social care.

Critically, by failing to satisfactorily answer the second question – how additional funds should be raised – the Government risked the settlement being unsustainable. In the short term, the Government was lucky that reduced borrowing forecasts provided enough fiscal space in the Budget to pay for the NHS’s 70th birthday present. However, there are still serious questions about long term funding of the health and social care system. Unless there is a clear plan on how to raise additional funds, it will have to come from cuts to other parts of public expenditure where there is little low hanging fruit left to pick.

So how should government approach the politically vexed question of how to pay for health and social care? The scale of the sums involved would be challenging for any government, but is particularly tricky for a minority government.

Our research looked at 17 past examples where governments have tackled knotty policy issues – from health and social care, to tuition fees and pensions. Based on this analysis, we believe that a parliamentary inquiry – modelled on the Parliamentary Commission on Banking Standards – offers the best chance of providing government with sufficient political cover to act.

There is already cross-party support for such an inquiry, with a letter coordinated by Sarah Wollaston MP, the chair of the Health and Social Care Committee, securing the signatures of over 100 MPs. Such an inquiry could be set up quickly. And if it were chaired by a select committee chair, there would be the advantage that a high-profile body would be available to continue to champion recommendations beyond the life of the inquiry.

To maximise the chances if such an inquiry succeeded, it would need the support of the Prime Minister and preferably the Chancellor too. Opposition parties should be given an opportunity to comment on the chair and remit. It would need a chair who was politically savvy. And, it should undertake extensive public engagement, to improve the quality of the recommendations and build public support and awareness.

That leaves the third question – how to ensure funding is provided consistently over time? We recommend the use of an independent body. Such a body would monitor spending plans and recommend adjustments in light of changing circumstances. It would also scrutinise the Government’s costing of individual health and social care spending measures.

These responsibilities could be given either to an existing body – for example the OBR – or to a new one, established specifically for the role. Either way it would need autonomy and high-quality leadership.

Answering these three questions will be difficult – the issues are highly political and the precedents are poor. But the situation is not impossible. The recommendations above represent a realistic route that this Government or any future one could use to implement a long-term and sustainable funding solution for health and social care.

Nick Davies, Programme Director, Institute for Government