Examination of Witnesses (Questions 340
TUESDAY 11 DECEMBER 2001
MP, MR ED
3 340. So you have ruled out social insurance?
(Mr Brown) He then has to pay a top-up charge, and
then has to take out private insurance in a lot of cases to pay
for that top-up charge. So the social insurance system that operates
in France is a mixture of large premiums for employees and employers
based on the social insurance model, plus top-up charges (effectively,
that is what happens), plus a large measure of private insurance.
I think what happens is that when you look at the individual characteristics
of each country you find that in France's case it is administratively
expensive, it is not fully equitable because there are large numbers
of people who cannot afford to pay their hospital or health bills
and who are not covered by this social insurance system and there
has to be another form of arrangement devised for them. Equally,
France is moving towards a revenue-based system where more money
is actually taken through the tax system than through the social
insurance system now than previously. So if you are looking at
the French model there are certain drawbacks that have to be borne
in mind, including large individual expenses that have to be met
by people every time they go to the doctor or the hospital.
341. Can I cite the two basic reasons that Mr
Mandelson, and others, were trying to advance in support of a
more insurance based approach rather than the one you have chosen.
The first is that whatever average you take there is a long way
to go from where we are now to that. There is a theory that we
need a way of raising revenue that is tied more closely to the
NHS in a very feasible way, and the argument is that an insurance
based system would do that. The second argument is that the NHS
is still a very publicly funded and state controlled system, and
that a social insurance system would bring in a greater degree
of patient choice. You seem to have rejected those two arguments
before this debate that you are keen to encourage has even started.
Are you sure you do not want to keep an open
mind on these matters?
(Mr Brown) To take your second point first, it is
not clear that the social insurance system does necessarily mean
a far greater degree of choice. It is not clear and I think that
has to be investigated. Every system of health care, including
the system in the United States of America, is a third-party payment
system; it is where someone else, in the end, pays most of the
health charges for the people. Equally, you raise the first point
about, essentially, hypothecation. This is a debate, obviously,
that will go on in the country, but the idea that we should tie
the future of our National Health Servicewhich has to have
sustainable, long-term funding guaranteed year-to-yearto
some twist in the economic cycle, or to the fate of one particular
tax depending on behaviour changes or changes in the performance
of the economy, seems to me not to be the way that most people
would want us to proceed.
342. What would stop you, Chancellor, though,
resetting tax rates every few years in order to make sure that
that particular tax or insurance chargewhateverwas
providing a revenue that we needed to get up to a better standard
of health care?
(Mr Brown) Because if the revenues from one tax fall
this year why should the Health Service have to lose money this
year? If you want a pure hypothecation model, then the Health
Service has to be dependent on something that is also, itself,
dependent on the economic cycle. I do not think that that is really
what you intend by putting forward your hypothecation model. We
have, for example, said that where we raise cigarette taxes we
will put the money into the Health Service; we have also said
that where we raise fuel taxes in real terms (that is, excise
duty on petrol) we will put the money into transport, but that
is a long way from saying that the fate of a whole public service
should be dependent on the twists and turns of the economic cycle.
I do not believe that that is what you would like to see, and
I do not think that is what you would want to put forward.
343. There are other countries in Europe who
seem to be able to devise a system that is different from our
own but does not have that problem.
(Mr Brown) If you take France, the reason that France
has got more stability in its health care funding is because they
have moved more towards tax revenue guaranteeing the extra funding
that the health care system needs, and they have not allowed themselves
to be wholly dependent on a social insurance model. They have,
as a result of the difficulties the health care system faced,
moved towards a more revenue based system. As you know perfectly
well, six per cent of American national income goes from the public
sector into the private health care system. They have had to provide
a huge measure of national government funding from general taxation
revenues to support what is, essentially, a private health care
system in America. Even then, 34 million people in America do
not have private health care insurance.
344. Is not the problem with Wanless that he
seems to conclude two things: firstly, that our existing system
of financing the NHS is the best possible system out of all those
he looked that; secondly, he concludes that out of all the systems
he looked at we have the worst possible health service in terms
of outcomes? Do you not draw a connection between those two particular
(Mr Brown) Your point about health care outcomes is
something that is going to be dealt with in a whole series of
different reforms, and the modernisation of the Health Service
is very important. Behavioural changes are going to be very important
as well in the way people approach preventative health. As far
as investment in the Health Service in future years is concerned,
I think we all agreeand I am sure there is the makings
of an all-party consensus round the tablethat over 50 years
we have under-invested in the capacity of our national health
care system. We have under-invested in the buildings, in the technology
and in the staffing, and these are things that I believe we have
got to improve over the next few years by putting the Health Service
on a stable long-term footing. I do not think pure hypothecation
does that, I do not think the other proposals do that, but of
course the debate on this is going to continue over the next few
months, and if people have very specific proposals that would
modernise the Health Service system of funding they should put
them forward now.
345. So you have not ruled out social insurance
(Mr Brown) I have not seen detailed proposals.
346. Peter Mandelson can still submit his idea?
(Mr Brown) Everybody can put forward their proposals,
including yourself. No doubt the Liberal Party will want to put
its own proposal. I have not seen detailed funding proposals put
forward either by any other organisation or any other party that
has stood the test of creating a sustainable, long-term improvement
in investment in the capacity of the Health Service.
347. Chancellor, have you estimated the additional
expenditure involved, in cash terms, to meet the 8 per cent target?
(Mr Brown) I have said that over the next few years
we are moving the health care proportion up to 7.7 per cent by
20034 and we will make all our decisions about future years
in the spending round. That is what I have said.
348. There is no estimate yet of the likely
(Mr Brown) All these decisions are going to be made
in the spending round, but as the Prime Minister has said it is
our policy to get up to that 7.9-8.0 per cent figure that has
been named over the last two years.
349. But you have no idea how much it is going
to cost yet?
(Mr Brown) These are decisions that we will make in
the spending round about the absolute amount of money we are going
to put into health care. I am sure you will not be disappointed.
350. You read out one of Wanless's conclusions
when you presented your Pre-Budget Report that the current method
of financing through a general tax is "fair and efficient"
but you did not quote the previous paragraph where he suggests
more use of charges for non-clinical services. Are charges for
non-clinical services also fair and efficient?
(Mr Brown) What Wanless has said is that he wants
to continue to look at this question of non-clinical services,
but I may sayso that nobody is in any doubt about thisthat
on clinical services and charges, which is the main issue about
charging for health care, he says "On equity grounds I do
not think it right that some individuals should be able to access
clinically necessary services through the NHS by paying for them
when others whose need is at least as great could not simply because
they could not afford to pay." Then he says "Flat rate,
out-of-pocket payments are unrelated to income and therefore regressive.
They relate access to health care much more directly to ability
to pay than either general taxation or social insurance. There
is evidence that charges discourage people from seeking treatment
at all." So I think it is important to get the balance right
in this; he does not favour clinical charges.
351. No, but for non-clinical services he suggests
charges. Do you think those charges are fair and efficient?
(Mr Brown) Some charges exist at the moment, and nobody
has proposed in the course of our Government that we change that.
You must remember that when Mr Wanless looks at these things he
is looking at things like car parking or computers in hospitals
and things like that. This is not clinical charges and I think
we should be clear that Wanless went on to say "There is
evidence that out-of-pocket payments increase inequalities in
access to health care. One in four people in France declared they
had been put off seeking care for financial reasons, with women,
older people and the unemployed forming a large proportion of
those not seeking care. This is clearly inequitable." So
he has ruled out medical charges.
352. That is clinical services and I am asking
you about non-clinical services. As you pointed out, there are
already charges for single maternity rooms and for car parking.
You announced, in the NHS ten-year plan, charges for bedside TVs
and 'phones. He suggests more charges. Would you rule out, for
example, charges for food?
(Mr Brown) Hold on. What Wanless has said is that
this is an issue he is looking at, he has not given us his final
report yet. The examples he has given are computers in hospitals
and car parking. I hardly think that these are controversial.
Of course, when we did put forward these proposals about what
we were doing in the ten-year health plan there was no objection.
I think you have got to be very clear what you are saying here,
Mr Fallon, and he has ruled out clinical charges.
353. Are you ruling out, for example, charging
for food or laundry?
(Mr Brown) That is not our proposal and I believe
that Wanless is unlikely to recommend that, but we will look at
354. Chancellor, you describe the 8 per cent
as an aim. Is it a guarantee? Are you definitely going to hit
the 8 per cent, or is it an aim?
(Mr Brown) I will return to the words that the Prime
Minister used in the House of Commons two weeks ago. "It
is our policy to reach that".
355. Are you interpreting his words as a guarantee?
(Mr Brown) I am interpreting his words as our policy.
356. As a guarantee?
(Mr Brown) It is our policy. I will use his words,
and these are the words that he used, and I will repeat them.
357. Is it a guarantee?
(Mr Brown) It is our policy.
358. I will try again with Mr Fallon's question.
You must have some indicative numbers for how much it would cost
in cash on this year's prices to get to that 8 per cent figure
by 2005-06. What is the cash figure that you calculate?
(Mr Brown) All the decisions on these figures will
be published in the Public Spending Review. I do not think you
would expect me to anticipate
359. I would expect you to have some rough calculations
(Mr Brown) I do not think you would.