Britain 'will have to scrap NHS under euro'

The National Health Service will have to be scrapped if Britain signs up to the euro, Gordon Brown, the Chancellor, was told yesterday.

A report published by the European Central Bank (ECB), which is in charge of the single currency, warned that free health care would have to be limited solely to emergency treatments.

The cost of maintaining the NHS would overwhelm European economies and result in inflation skyrocketing if the recommended changes were not made, the ECB added.

As well as arguing that tax-funded health services and long-term care will be unaffordable, the report – published in the ECB's monthly bulletin, based in Frankfurt – stated that Britain's ageing population would make state pensions a thing of the past. Tax rises to meet the extra requirements would rapidly become politically unacceptable and the sums in question would be too large to borrow, the ECB said.

Its recommendations will hit the Government particularly hard because Britain has one of the largest tax-funded health services in the European Union, with only a small proportion of treatments paid for privately.

The article advised swift changes, with patients to begin paying for more private operations in the near future. It added that governments should differentiate between "essential, privately non-insurable and non-affordable services" such as emergency care, and those where "private financing might be more efficient".

It said: "Greater private involvement in healthcare financing can be achieved, in particular, through patient co-payments, as already implemented in a number of countries."

Treasury officials voiced surprise at the report and pointed out that tax and public expenditure were matters for individual governments.

A spokesman said: "Taxation and public spending are matters for individual member states. While deficits are constrained by the requirements of the stability and growth pact, public finances in the UK are widely seen as being on a sustainable path, certainly when compared to most other European countries."

He added that Mr Brown had made a speech last year in which he concluded that a tax-funded system was not only the fairest form of health care, but also the most economically efficient.