politics

The Tories know that the NHS timebomb means taxes must rise further still | Gaby Hinsliff


Back in the days when they couldn’t win an election to save their lives, despairing Tories would comfort themselves with the idea that the facts of life were still Conservative. Sure, New Labour was in power. But it could only stay there by operating within recognisably rightwing political parameters, and it couldn’t keep that act up for ever. Eventually the public would turn back to the real Conservatives.

To anyone who has spent the past decade insisting that the left is winning the argument, if not the actual election, this may sound maddeningly familiar. For as this week’s budget makes clear, the facts of life are arguably Labour now. On all the big economic questions – from taxes to climate change to the virtues of big state intervention during a pandemic – the right is losing the argument. There is broad cross-party consensus that taxes must rise, albeit fierce disagreement on who should pay them. Boris Johnson may balk at the practical sacrifices involved in reaching net zero, freezing petrol duty and cutting the cost of domestic flights days before a critical climate conference, but he no longer flirts with climate deniers. Like toddlers trying to walk in their mums’ high heels, Conservatives dressing up in leftwing ideas will never get it quite right, any more than pro-remain Labour MPs do when awkwardly trying to embrace Brexit. But what seemingly hasn’t yet dawned on much of the Tory party is that they’re stuck in these uncomfortable shoes for the long haul now.

There was a strange interlude in Rishi Sunak’s budget speech where he plaintively declared that all this tax-raising, big government stuff isn’t really him; that the pandemic had forced this government to act strangely out of character but that “now, we have a choice”. Yet the truth is that there is an ongoing structural imperative to tax and spend in coming decades that Westminster has long known was coming but seems to have forgotten, in all the drama of the last few years.

Buried in the Office for Budget Responsibility’s report this week was a warning that by 2024-25, spending on health, social care and pensioner welfare together – the unholy trinity of an ageing population – could be double what it was in the mid-1960s as a share of GDP. Ominously, the OBR noted that the pace of population ageing “raises the question of how to accommodate likely further increases in spending on health, care and state pensions given the limited remaining scope to shrink other areas of public expenditure”, a thorny issue on which it will soon report in more detail. But the problem is unfolding already, right in front of our eyes. A staggering £84bn of the £111bn a year increase in day-to-day Whitehall spending between 2009-10 and 2024-2025 will have gone on health and social care, according to the Resolution Foundation thinktank.

It should be said that the biggest driver of health spending even now isn’t population ageing, but our understandably insatiable appetite for living better and happier lives in a world where new medical breakthroughs thankfully keep on coming. If there’s an operation that would relieve our pain, of course we want it. If someone discovered a cure for dementia tomorrow, it would be inhumane to withhold it. But add these ever-rising expectations to demographic pressures and the creeping chronic illnesses caused by unhealthy lifestyles, and the OBR has previously estimated that hospital inpatient activity could rise threefold and outpatient activity fourfold by 2065-66 (or sevenfold and eightfold for the oldest patients). Imagine what that might mean for NHS budgets. Now imagine where that leaves education, welfare or housing, fighting for the scraps left over.

Surging economic growth could get us out of a tight corner, of course, generating the extra wealth we’d need. But this government’s attempts to unleash it will be hobbled by its own hard Brexit, which the OBR thinks will knock 4% off GDP. Sunak may long to cut taxes, but it wouldn’t be surprising if they had further to rise, as Paul Johnson of the independent Institute for Fiscal Studies pointed out post-budget.

The right will almost certainly have a ready answer to this unpalatable new reality, and it won’t involve meekly accepting it. Some Tory backbenchers will agitate for European-style models of social insurance – even though similar trends in healthcare spending are visible across an ageing Europe – or charges for routine healthcare, or other forms of privatisation; anything but more taxpayer-funded spending. They’ll say the NHS has become a bottomless pit, and use its increasingly tatty state to undermine public support for the current model. This will be the next big battleground, and the frightening thing is that Labour barely has an answer. If the left can’t produce its own blueprint for benign reinvention of the NHS – exploring how best to prioritise on a finite budget, whether we get more bang for our buck by focusing on prevention, how to exploit new technologies such as artificial intelligence in healthcare, as well as new sources of funding – then it risks once again being overtaken by something malign it didn’t see coming.

Of course it’s comforting that the facts of life are Labour now. It’s always gratifying, in an exasperating kind of way, to watch the penny seemingly drop; to see your enemy struggling to get their head round something you’ve long understood. But it’s not enough to feel vindicated by events, or to have won the historical argument. It’s winning the next one, and the next, that counts.



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