The survey
The British Social Survey has been running since 1983 to track the satisfaction of the British public for the health service.
In 2023 only 24% reported satisfaction with the NHS due to waiting times and staff shortages being the biggest concerns.
This is a record low since the poll began and has recently dropped 29% points from 2020 .
Government funding for the NHS
Health care Funding reports that 86% of government funding goes towards the NHS for day-to-day costs including medicines and paying staff.
In 2023/24 the spending amounted to £163bn in cash terms which is expected to increased to £192bn for the year 2024/25.
Many people have called for a shift in focus for spending claiming that the government needs to re-evaluate where the money goes in order to improve the NHS.
The Complaints
Waiting lists are at a high with people waiting months if not years before they receive treatment. GPs making referrals are often delayed as there is no capacity within the required outpatient department.
Waiting times in the hospitals are also creating anger with the public this is partly due to the poor patient flow where patients are not being transferred quickly as the social care lacks the capacity. Patients remaining in hospital means people cannot be seen until the space becomes available.
Staff shortages lead to a wide array of problems that are noticed by the public leading to longer wait times and unsatisfactory care for patients who require that extra supervision.
Can it be fixed?
The government has often relied on the role of the private sector to take on patients to reduce waiting lists and reduce the pressure on hospitals.
However a survey from BMA discovered that with this plan 60% of private practice doctors were then unable to provide care to their patients at the time.
The BMA also states the need for more encouragement in the medical fields for people to pursue careers within it. More options need to be presented including flexible working as often those who enter have to leave due to inflexible options.
Taxes for an improved NHS?
Is having a specific tax which covers only the costs of the NHS a beneficial way for the NHS to improve?
The survey showed that 48% of people would support an increase in taxes to allow for increased spending on the NHS.
42% of people would prefer to maintain the level of taxes and NHS spending.
Only 6% would want reduced taxes to spend less.
Would you be willing to pay a tax to improve the NHS?
According to the government, the tax increase of an extra 1.25p in the pound will help pay for £39 billion more spending on health and social care across the next three years.
Plans to increase National Insurance contributions were announced by the government back in September. Amid the spiralling cost of living crisis, the move by the government has faced widespread criticism.
Instead of paying National Insurance contributions of 12% on earning up to £50,270 and 2% on anything above that, employees will now pay 13.25% and 3.25% respectively. Meanwhile, those who are self-employed will see their rates go up from 9% and 2% to 10.25% and 3.25%.
Frances O’Grady, the general secretary of the TUC, has urged the government to offer more support to UK households: “With energy bills set to shoot up by £700, and by hundreds more in the autumn, many households face being pushed into the red [...] Ministers must do far more to help people get through this cost of living crisis.”
Boris Johnson has come under pressure from some Conservative MPs to scrap or at least delay the increase to regain public support as he awaits the findings of police inquiries into claims of Downing Street parties held when the country was supposed to be abiding by lockdown measures.
Critics, including former minister David Davis, are also pressuring the Prime Minister to abandon the national insurance plans due to the immense financial pressures many households are already facing amid inflationary cost increases and the imminent increase in the energy price cap.
However, on Friday, a spokesperson for the Prime Minister said, “The Prime Minister and Chancellor are fully committed to introducing the health and social care levy in April.
“We’ve spoken before about why we are doing that – in order to give the NHS the funds it needs to tackle the backlog that has built up, as well as tackling the long-term issue of social care.”
National insurance contributions, paid by employers and employees in the UK, are scheduled to increase by 1.25 percentage points at the start of the new tax year in April. The tax increase is a manifesto-breaking move by the Conservative party, aimed at raising £12 billion to support NHS funding amid the pandemic.
However, former minister David Davis, amongst others, has urged the government to abandon its plans because of the financial pressure households are already facing amid inflationary cost increases and the imminent increase in the energy price cap.
Speaking on Monday on BBC Radio 4’s Today programme, Davis said, “It was a judgment made on, frankly, quite a lot of wrong data.”
“They didn’t know at the time that by April we would have the highest inflation rate in 30 years, they didn’t know that interest rates would be going up, council tax would be going up, the fuel price is about to jump by £700 a year for the average family. Therefore they didn’t know quite what pressure there would be on ordinary people.”
The Prime Minister is expected to reveal a rise in National Insurance that will see approximately 25 million people pay extra tax. In return, he will promise to introduce a cap to the amount an individual will ever pay in social care costs – a figure that will likely come in at between £60,000 to £80,000 – and will vouch to better protect individuals from having to sell their homes to pay off care bills. However, how large the tax rise should be is yet to be decided.
According to the Telegraph, the government is currently favouring a 1% rise in National Insurance, although there are talks about a higher figure, possibly up to 1.25%.
The introduction of any tax increase is likely to be seen as a breach of the Conservative manifesto for the December 2019 election, which promised there would be no increases to the rate of National Insurance: “We will not raise the rate of income tax, VAT or National Insurance”, the manifesto reads.
The social care package will involve two moves. Firstly, it will introduce new measures to ease the impact of the UK’s social care crisis. Secondly, it will provide extra funding for the NHS to tackle soaring waiting lists. In England, 5.5 million people are currently waiting for NHS hospital treatment and it is feared that this figure could increase to 13 million in the coming months. The government says that the increased funds from a tax hike would help clear the NHS backlog built up during the pandemic.
While delivering the government’s spending review for 2020, UK chancellor Rishi Sunak cautioned that the “economic emergency” caused by the COVID-19 pandemic was just beginning.
“Our health emergency is not yet over and our economic emergency has only just begun,” he said, adding that his priority was to “protect people’s lives and livelihood”.
The chancellor’s warning came as the Office for Budget Responsibility estimated that the UK economy will contract by 11.3% by the end of 2020, the country’s largest recorded fall in output for 300 years. Unemployment is also expected to peak at 2.6 million in 2021 and remain above pre-pandemic levels until 2024 at the earliest.
Chancellor Sunak said that departmental spending would be £540 billion next year, up 3.8%. He also promised a “once in a generation investment in infrastructure” towards schools, hospitals and roads, which the government would spend £100 billion on next year. £3 billion in additional funding will be earmarked for the NHS. Government borrowing will rise to almost £400 billion, reaching its highest level outside of wartime, to finance these projects.
The government’s foreign aid budget will also be cut, and there will be a “targeted” pay freeze on public sector workers, the chancellor said, from which the NHS and lowest paid workers will be exempted.
In other news of note from the spending review, the chancellor said that he had accepted the Low Pay Commission’s recommendation that the minimum wage – now rebranded as the National Living Wage – be increased by 2.2% up to £8.91 per hour. It will also be extended to those aged 23 and over, down from the current age of 25, and the minimum age for younger workers will be increased as well.
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"The chancellor will need to find £20 billion to £30 billion in spending cuts or tax rises if he wants to balance revenues and day-to-day spending, and stop debt rising by the end of this parliament,” noted Richard Hughes, chairman of the Office for Budget Responsibility, following the spending review.
Moorwand and K Wearables announced on Monday their intention to give away 300 “K Rings” – contactless pay providers in the form of a ring – to NHS staff in a display of gratitude for their work in combating the COVID-19 pandemic.
The rings are designed to facilitate contactless payment by having their wearers imitate a knocking gesture over a card reader, which can be used to trigger transactions up to £45 in size.
By removing the need to touch a surface, contactless devices present a safer payment alternative for essential workers amid a global health crisis.
Moorwand’s chief commercial officer, Luc Gueriane, commented on the giveaway: “We are in a time where community is at the forefront of everything we do. Although we may be apart, we as a nation have never felt more connected, so it is vital that communities and businesses come together to support health workers in any way they can.”
“Partnering with K Wearables to provide an easy payment solution to 300 NHS workers was instantly an initiative we knew we wanted to be part of.”
“K Wearables offered 100 free contactless payment rings to NHS frontline heroes, so the team could show its gratitude and we were overwhelmed with the immediately positive response”, added Philip Campbell, founder of K Wearables.
“We were delighted when our new issuer, Moorwand, generously offered to help extend this to 300 rings for NHS workers. It's great to be working with likeminded partners and we hope the recipients enjoy using K Ring as much as we all do.”
The precise shape of the UK’s post-Brexit taxation regime is yet to be decided; however, the indications are that radical changes are unlikely. Much will depend on the terms of the UK-EU trade deal, which is due to be negotiated this year. The EU has been abundantly clear that UK alignment in terms of taxation, labour and environmental regulation is the price for EU market access.
Yet, former Chancellor, Sajid Javid, warned that "There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year." It remains to be seen whether his successor, Rishi Sunak, will be as bold or soften in the face of the economic consequences of losing trade with the EU. Below, Miles Dean, Partner at Andersen Tax UK, offers Finance Monthly his predictions on what we are likely to see in terms of taxation as future trade deals are negotiated.
Given the scale of UK trade with the EU, it appears probable that substantial alignment will ultimately be seen as a wise trade-off in order to retain valuable market access to the EU. The EU remains the UK’s largest trading partner. 44% of all UK exports went to the EU in 2017, with 53% of all UK imports coming from the EU. The efficient operation of cross-border supply chains are vital to the UK’s automotive and aerospace industries. These largely depend on the free movement of goods across the Channel.
The Conservative Party’s clear majority in the 2019 general election makes the UK’s future tax policy somewhat more predictable. While some more excitable commentators feared that the Conservatives would slash corporation tax, deregulate and sell off the NHS, the party’s 2019 manifesto went in rather the opposite direction - deferring a scheduled cut in corporation tax to fund the NHS. Section 46 of the Finance Act, 2016 had pledged to reduce the rate of corporation tax from 19 percent to 17 percent from 1 April 2020. However, Prime Minister Johnson told the Confederation of British Industry’s annual conference on 18 November 2019 that the this planned reduction would be put on hold to fund the NHS and other “national priorities”.
44% of all UK exports went to the EU in 2017, with 53% of all UK imports coming from the EU.
To offset this disappointment to UK business, the Conservative Manifesto announced other business-friendly measures, including a review of business rates, an increase in the R&D tax credit rate from 12% to 13% and an increase in the structures and buildings allowance from 2% to 3%. Yet none of this amounts to anything resembling dramatic reform. Indeed, this cautious approach rather suggests that the government is heeding the EU’s bottom line in terms of alignment, and that it does not intend to radically alter the UK’s taxation regime.
The idea of the UK becoming a giant Singapore-style tax-haven after Brexit also appears to be on hold. Indeed, the government is even promising additional anti-tax avoidance measures and a new digital services tax, showing a commitment to maintaining and even expanding the UK’s tax base.
The new digital services tax may yet be influenced by trade negotiations – this time those with the United States, as regards a US-UK trade deal. The Government’s plans to introduce a 2% digital services tax from April 2020 would disproportionately affect US tech companies such as Google and Facebook. The US treasury secretary Steven Mnuchin has warned of retaliation by new US taxes on UK car imports, saying “If people want to just arbitrarily put taxes on our digital companies we will consider arbitrarily putting taxes on car companies.” Downing Street replied in turn, saying that such tariffs would “harm consumers and businesses on both sides of the Atlantic. We feel [the digital tax] is a proportionate step to take in the absence of a global solution. We made our own decisions in relation to taxation and will continue to do so.”
Despite the Government’s declaration of independence in terms of taxation policy, this incident illustrates that any greater independence in trade and taxation policy brought by Brexit has limits. There will inevitably be trade-offs and constraints. UK decisions on taxation do not operate in isolation, but can have broader political and economic consequences. The UK exports some £8.4 billion worth of cars to the US each year. The early agreement of a UK-US trade is a priority for the government. US pressure may well yet influence the government’s digital taxation plans.
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Nobody can predict the future. When it comes to Brexit, events are notoriously unpredictable. However, the actions of the UK government have been moderate – even if the rhetoric is sometimes less so. Mr Johnson came to power with the promise of keeping the credible threat of no-deal on the table, as a negotiating tactic. However, his aim was not to end up with no deal, but with a more favourable one. Having made the compromises required to achieve a withdrawal agreement, we can hope that a similarly reasonable approach will prevail in the UK-EU trade negotiations. No doubt the threat of no-deal will also remain on the table, for tactical reasons, as before. Therefore, while it is possible that the talks will collapse, resulting in a no-deal Brexit at the end of 2020, that outcome appears unlikely.
Even in a no-deal scenario, the Government’s no-deal Brexit tariff regime means that 88% of imports would not be taxed. The Confederation of British Industry estimates that 90% of the UK’s goods exports to the EU, by value, would face tariffs averaging 4.3%.
While the UK could theoretically abolish VAT after Brexit, the technical guidance for a no-deal Brexit indicated that the current VAT system would continue. Since it raises around £125 billion per annum, it is inconceivable that it will be abolished let alone restructured to any significant degree.
While the UK could theoretically abolish VAT after Brexit, the technical guidance for a no-deal Brexit indicated that the current VAT system would continue.
A no-deal Brexit would disproportionately impact sectors such as agriculture and manufacturing. Likewise many EU sectors would be badly affected. Since a deal is in the interests of both sides, it’s reasonable to hope that one will be achieved, even if it is imperfect.
The broad shape of a UK-EU agreement that would facilitate market access is already known. It will require sufficient UK alignment on key matters, including taxation. While the detail is undecided, in broad terms it means little change to the UK’s taxation regime. Perhaps, the government may seek some wriggle-room on VAT or corporation tax. Yet the fact that the government has shown no appetite for radical change in taxation is telling. Maintaining the status quo on taxation helps to keep a UK-EU trade deal within the government’s sights.
Miles Dean is Head of International Tax at Andersen Tax in the United Kingdom. He advises privately held multinational companies, entrepreneurs and high net worth individuals on a wide range of cross border tax issues.
Andersen Tax provides a wide range of UK and US tax services to private clients and businesses, helping them achieve their personal and commercial objectives in a tax efficient manner.
A simple increase of 1% on income tax and National Insurance could pay for the 3.4% increase to the NHS budget announced by the Government says leading accounting, tax and advisory practice Blick Rothenberg.
Robert Pullen a Director at the firm said: “The debate has been raging over the weekend about how the increase to the budget could be paid for. There was alarm recently when a report from the Institute for Fiscal Studies and Health Foundation said that the NHS would need an extra 4% a year - or £2,000 per UK household - for the next 15 years and that the only realistic way this could be paid for is by tax rises of 3% on VAT, income tax and National Insurance contributions.”
Pullen said: “If a 3% tax increase is implemented, this would undoubtedly cause further issues within the Government, but a more manageable increase of just 1% to income tax rates could give the additional funding required."
He added: “We have calculated the impact of a 3% increase for an employed worker who is not at retirement age. It would mean extra tax of £892 for someone on £25,000 (3.5% effective tax rate) up to £11,747 for someone on £200,000 (5.9% effective tax rate).”
It is potentially worse as the tax brackets increase, Robert said: “For the £25k earner, that equates to £17 per week or £74 per month and for the £200k earner £226 and £979 respectively.”
He continued: “The NHS budget in 2016/17 was around £122bn, and so a 3.4% funding increase, as proposed, would broadly be equivalent to an extra £4.2bn per year.”
He added: “We calculated, using HMRC statistics, that if income tax rates were increased by 1% then in the tax year 2016/17 an extra £4.2bn would have been generated."
“This means that a 1% increase for an employed worker who is not at retirement age would mean extra tax of £297.00 for someone on £25,000 (1.19% effective tax rate) up to £3,196.00 for someone on £200,000 (1.96% effective tax rate).”
He added: “This would go some way to filling the hole in the finances without relying on the ‘Brexit dividend’ crystallising but if the dividend does come to fruition the one percent could be even less."
