NHS and schools face winter crisis

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Memorandum to the Secretary of State for Health (Frank Dobson)

Subject: Treasury's demand for a fundamental review of spending.

There is more scope for raising charges than making cuts in the NHS. The need to find savings has been made acute by the discovery that health authorities and NHS trusts were over pounds 300m in deficit at the end of the financial year, March 1997.

The Treasury has said it will not increase the Department's budget next year. This cannot hold - the real terms increases bequeathed by the Tories are ludicrously tight: a rise of pounds 0.1bn to pounds 33bn for 1998-9 and a freeze until the year 2000. An emergency cash injection will be needed. In the meantime, we have to look at the options:

Sell off more NHS land. For: land prices will rise with the housing market.

Against: most of the asset sales have been achieved.

Raise more in all NHS charges. For: There is room for increases; as a share of NHS finance, charges have fallen to 2.4 per cent of NHS spending compared to 4.5 per cent in the late 1980s.

Against: means-testing pensioners' free prescriptions could be politically unacceptable.

Hotel charges: hospitals could be allowed to raise more money for "hotel" items, bed, food, room, and five-star service. For: more variety, and choice. Against: two tier service could develop.

Rationing. For: saying some things, such as invitro fertilisation, are not available on the NHS would save at the margins; Against: we were elected to restore the NHS, not cut it; it would not save much.

An NHS tax.

For: it would show the taxpayer how much goes on the NHS.

Against: the Treasury doesn't want to tie its hands to earmarking taxes for one service.

Charging for visits by the GP. For: it would raise substantial sums, say pounds 10 a head. Against: it would be anathema to our supporters.