Forget the EU – let’s call a referendum on higher taxes to save the NHS

We are about to have a referendum on the wrong topic. Responding to the needs of a growing elderly population is the overwhelming challenge

Before May 2015, the Conservatives insisted that the NHS and elderly care could improve magically without the need for tax rises (Christopher Furlong/Getty Images)

We are far enough away from the next general election to have an almost sane debate about the NHS. As soon as that election moves into view we will leap towards a fantasy land where public services are delivered without spending any money and where genuinely difficult reforms are cast to one side. For now though – as the NHS creaks, generating disturbing headlines most days of the week, and demand soars for elderly care while spending is cut – important voices dare to speak out.

Before we hear them, remember what the debate was like before the election last year. I am afraid a brief return to the madness is necessary in order to show how difficult it is to make tangible progress.

Labour would not commit to spending more on health and elderly care than the Conservatives, although privately its senior figures knew that it would have to do so if they won and that in one form or another taxes would rise to pay for the increases. The Conservatives insisted that the NHS and elderly care could improve magically without the need for tax rises. Much of the media encouraged the fantasy debate by screaming hysterically about any utterance from a politician that implied a halfpenny increase in public spending. “What about the deficit?” “Taxes on your hard earned money will soar pointlessly!”

Now let us wallow in the current fleeting post-election sanity. This week the Chief Executive of NHS England, Simon Stevens, called for a new national consensus on a “properly resourced and functioning social care system”. Former Health Secretaries or ministers, Stephen Dorrell, Alan Milburn and Norman Lamb seek a cross-party commission to examine resources and structure, aiming for an end to the destructive, morale sapping, money wasting, bureaucratic divide between health and elderly care, while acknowledging more spending is needed.

All of them echo the Barker Report, commissioned by the Kings Fund and published in 2014. In her prescriptive and illuminating report, the former senior Treasury official Kate Barker proposed bringing together health and social care, a single ringfenced budget, with one commissioner to co-ordinate it all. Equally important, she also argued that the government should assume spending on health and social care would rise to between 11 and 12 per cent of GDP by 2025 - a level of expenditure already met by other equivalent countries for health alone.

In order to pay for what other countries take for granted Barker recommended a series of tax rises on the affluent elderly, including the end of universal free travel passes and other costly perks that a lot of the beneficiaries could do without. I spoke at the launch of the Barker report and warned that, while the report was admirable, its timing was not good. Before an election no party would commit to tax rises that hit those who vote.

Not only did they not commit, but matters have got worse since then. Barker reported back towards the end of last year, noting that real terms cuts in social care is placing even greater pressure on the NHS, with matters worse in the local authority sector. In October, the Quality Care Commission reported that one in five homes did not have enough staff on duty to ensure safe care. Good luck falling old and needing care in the NHS or separate social care system. You or your relatives will either spend a fortune on lightly regulated private care or face neglect as public spending falls to miserly levels.

Some health specialists wonder whether George Osborne will make further cuts to tax relief on pensions, in effect a hefty tax rise on the relatively well off, to meet the need. He might do, but I doubt it. Osborne has a Tory leadership contest to fight. After which that seemingly far off general election comes into view when we enter the ‘tax and spend’ fantasy world where public services improve by magic. On the other side Labour is not trusted, at least when out of power, to spend a halfpenny of voters’ money.

How to resolve the conundrum, at a point where voters do not trust politicians and yet only politicians can act to bring about the changes required? I am no fan of referendums but if we are to have them I can think of no better cause than one on the question of whether voters will back a tax rise-specified in detail - in order to pay for health and elderly care, combined with thought through reform instead of the chaotic fracturing of recent decades.

Every penny of proposed spending and the merger of the NHS and social care would be scrutinised in advance, while the government and providers would be held to account subsequently. The referendum would not be about the fate of a Prime Minister. A government would offer to facilitate the changes and investment if the voters wanted them to go ahead. If not, we would all struggle along as now.

It would be about the voters and what they expect a government to deliver. The voters would have a stake as tax payers, decision makers in a referendum and as potential users of the services. As direct participants they would be in a position to make connections, between a debate about colossal sums of money, structures and outcomes.

We are about to have a referendum on the wrong topic. The UK’s membership of the EU should not be the big issue of the day. Responding to the needs of a growing elderly population is the overwhelming challenge. I know the problems of referendums and the Treasury will have a nervous collapse, opposed to earmarked taxes let alone an unpredictable plebiscite to decide whether they will happen. But such a referendum resolves the nightmarish conundrum in an era where politicians are unfairly loathed or ideologically disinclined to act.

Let the voters decide whether for selfish reasons they want to invest through higher taxes, and support significant reform, or spend a much bigger fortune when they or their relatives need poorly delivered care.