Banana councils, the NHS and social care

If Surrey’s ‘secret deal’ is to be a harbinger of a new health and care service then the whole murky world of local government funding needs rethinking.

The algebra is simple. The NHS is having another terrible winter. It does not collapse, but “spills demand” on to the next line of defence, local government welfare. But while the NHS gets more money annually from the Treasury, local government gets less, some 30% less since 2011. It cannot cope with the new pressure.

The equation resolves itself into rationing, by quantity and quality: fewer care places, fewer home visits and fewer district nurses leads to more bed-blocking, fewer operations, longer trolley waits.

Tory Surrey is a responsible supplier of post-hospital care. Like all councils, it is allowed by the Treasury to increase its council tax by 5%, specifically to boost its care budget and thus ease pressure on the NHS – which the Treasury is responsible for funding. Surrey county council regarded this as nothing like enough. It therefore activated its statutory right to hold a referendum on a 15% increase.

Far from showing delight at a wealthy council accepting this burden, the Tory government was appalled. Tories do not increase taxes. The chancellor (and Surrey MP) Philip Hammond duly did what Jeremy Corbyn called a secret deal. If Surrey abandoned its referendum and the 15% hike, it could retain revenue from a different tax – the local business rate, which normally went to the Treasury. That is, the Treasury would in effect spend more on health and care in Surrey, but secretly and, so far, just for Surrey.

This is the stuff of a banana republic. If Britain wants to spend more on health and elderly care, it should raise it and spend it honestly. Instead, the Treasury is running around its fiscal A&E department, staunching the flow of political blood by slamming on plasters wherever a patient screams or twists an arm.

Leaked Surrey council tax texts allow Corbyn to ambush May at PMQs
Some might argue that an NHS free at the point of delivery has had its day. New disciplines and incentives, through fees or insurance or more prevention, must constrain marginal demand. But for the time being, it makes no sense to squeeze the NHS at the top – where politicians are exposed – and dump its problems on to local government and different funding streams at the bottom. It wastes money and distorts priorities. It is illiterate public finance.

If Surrey is harbinger of a new health and care service, and business taxes are to relieve an ever-burgeoning NHS, so be it. But few places are as rich as Surrey. Revenue will have to be redistributed from rich to poor areas. In other words, it is not just the NHS that needs rethinking, but the whole murky world of local government finance.”