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Health and care levy scrapped in ‘underwhelming’ fiscal plan

Health and care levy scrapped in ‘underwhelming’ fiscal plan
By Jess Hacker
23 September 2022

The 1.25% National Insurance hike – intended to raise ringfenced funds for the health sector – has been scrapped, the Chancellor today announced.

In a fiscal announcement delivered to the Commons this morning, Kwasi Kwarteng confirmed that additional funding for the NHS and social care will be maintained at the same level.

Prime Minister Liz Truss had pledged to scrap the hike – introduced in April this year and set to raise about £13bn a year – during her leadership campaign.

However, health leaders, including those at the BMA, have now warned that maintaining funding at existing levels is ‘little consolation’ to healthcare staff or their patients.

The Chancellor also confirmed:

  • The energy support package for businesses that also applies to the NHS. This will reduce wholesale gas and electricity prices for all UK business, charities and public sector organisations, including hospitals.
  • The NHS will be given the full flexibility to carry forward 100% of the proceeds of land sales into following years.
  • The more traditional Budget will be held later in the autumn, which is where health leaders expect to see health policy announcements.

Professor Philip Banfield, chair of council at the BMA, said: ‘With sky-high inflation and the soaring cost of living eroding the NHS’s budget, more funding is desperately needed to fill the gaping black hole in NHS finances.

‘A healthy population with timely access to essential healthcare services is critical for economic recovery. Investment in health is an investment in economic growth. Investment in our expert workforce is an investment in the future of our NHS. A plan for growth without a plan for health investment is not worth the paper it is written on.’

Similarly, the NHS Confederation flagged that rising inflation and the lack of a fully funded pay award indicate the NHS needs more money to ‘stay afloat’, with real term cuts of at least £4bn facing the health service this year.

Matthew Taylor, chief executive of the NHS Confederation, said health leaders ‘will feel very underwhelmed and worried by the implications’ of the Chancellor’s announcement.

‘There is a yawning gap which is leaving the NHS in a perilous position as local leaders will either have to cut back patient care or accept that waiting times will continue to lengthen,’ he said.

He added: ‘Our members understand that this fiscal announcement had a deliberately narrow focus but when such extreme financial challenges face both NHS and social care, including the day to day lives of their staff and patients, this should not mean the government sticking its head in the sand.’

And the Health Foundation warned that, while the protected £13bn is welcome, the absence of a plan for other public services will keep the health sector in peril.

Dave Finch, assistant director for Healthy Lives at the Health Foundation, said: ‘The NHS wasn’t meant to go it alone: we also need to see what support will be given to other public services that help to support good health, such as housing.’

It comes one day after the new health secretary unveiled her widely criticised plan for the health and care sector.

Dr Therese Coffey’s plan will see integrated care boards (ICBs) ‘hold practices to account’ in order to improve access to primary care.

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