Labour shouldn’t increase National Insurance contributions to fund the NHS

What’s safer, more appealing and more likely to guarantee electoral victory than the clinical and antiseptic interpretation of a ComRes survey? Expensive American politicos-for-hire might have a claim to the title. Still, the news that 49% of people would pay more [tax] if the money was going directly to the National Health Service (NHS) should be taken with a daily recommended amount of salt.

People might say to a nice young surveyor, “Sure, I don’t mind paying a little more tax…” but then these people get into a polling booth and the first thing they feel for are their pockets; first for their wallets, then for a pen to strike against the party that makes their lives ‘easier’. People vote for the party who elicits the right feelings, not the party who presents the best arguments.

The public may be sceptical about a tax increase, even though it could have an immediate and significant role in reducing the NHS’ funding gap, and keep the NHS free at the point of need. It has been well documented that the NHS is facing a serious funding gap if demand continues to increase and budgets remain frozen – up to £30bn by 2021 according to NHS England. Surely, people chiefly need to feel like they are getting value for money from the nation’s beloved institution and that Labour can deal with its problems.

The shadow health secretary Andy Burnham has been working hard to demonstrate causation between problems in the NHS and the increasing use of the private sector. However, voters don’t really care about the politics of NHS funding. They want to be able to see a GP, get hospital appointments in reasonable times and have their operation(s) quickly and safely.

Just attacking the privatisation element of the NHS can paint future ministers into tight corners so perhaps the Labour message should shift away from the fiscal management side of things. The Mid-Staffs episode was a dark period in the history of the NHS, but rightfully, the Conservative propaganda has largely failed to have any imprint on the wider public. So, the NHS continues to be one of Labour’s trump cards, firmly standing as an area people regard the Labour party strong on. Tinkering with tax to keep the NHS going as it is, may not necessarily elicit the right feelings with the general public. Surely, there are other fronts worth fighting on.

Well, at least the Labour party is going out of its way to convince the electorate that they’re fiscally prudent and are not rushing into any spending decisions. However, we have a National Health Service not a National Hospital Service and entertaining NI tax talk threatens to deepen mistrust in politicians and undermine public confidence in the welfare state. Furthermore, what of all the other state services? If all that new NI revenue is just for NHS spending, then wouldn’t Labour still end up implementing the coalition’s plans to cut public services?

The Labour party should try not indulging ‘A penny on National Insurance for the NHS’, mainly because such taxes are unprincipled and unfair in an era of cuts and because frankly, National Insurance is one of the worst taxes with which to fund the NHS. Why focus on a tax that only hits wages, to the exclusion of other capital income streams like dividends and rent? Why would the Labour party, the party founded by the working-class, shift taxation more towards earned income rather than capital? Why suggest an increase in a tax paid by people aged under 65 (and employers) even though a majority of NHS spending goes to the elderly, the main users of the NHS? Oh yes, forgot, it’s because they vote right?

What’s more, NI incentivises the use of zero-hour contracts and will further incentivise employers to replace full time jobs with multiple part-time jobs. Which although will be of some benefit to some, may be of detriment and unsustainability to more. And again, does it elicit the right feelings when it comes to Labour’s overarching message?

Sure, the key concern is solving the NHS’ funding crises, but this needs to be done in a way that fits well with Labour’s 2015 narrative. Most people might prefer to pay £10 to see a GP than 1% extra NI that could cost an extra £500 per year. Disclaimer: That was a crude back of the envelope calculation, but not too dissimilar to the one people might do in the pooling booth were they voting tomorrow.

In any event, an ‘NHS Tax’ would never last long really, as a Labour government might not be able to resist taking the money into the central pot for over things. On one hand, it pays for Labour to confront the issue now rather than deal with something unexpected if and when it party forms a government. On the other, people vote for the party who elicits the right feelings, not the party who presents the best arguments.