§ 2.52 p.m.
§ Order of the Day for the Second Reading read.
§ THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE)
My Lords, I rise to move that this Bill be now read a second time. The Bill has two principal objects. They are, first, to double that part of weekly National Insurance payments which goes towards the cost of the National Health Service; and second, to separate these increased amounts from the National Insurance payments and thus make them an entirely distinct National Health Service contribution. In inviting noble Lords to give the Bill its Second Reading, I speak both for the Minister of Health and the Secretary of State for Scotland; for the Bill applies equally to England and Wales and to Scotland.
Before proceeding to give reasons for the Bill and the objects which it will achieve, it may be helpful if I explain exactly what are the present arrangements for the payment of contributions to the National Health Service through the National Insurance scheme. The weekly National Insurance contributions made by all people who have to do so or have opted to do so under the National Insurance Act, 1948, are paid into the National Insurance fund. The Act provides that a certain part of these payments—specified in the Fourth Schedule—should be transferred to the Exchequer as a contribution towards the cost of the National Health Service. The amounts so transferred are 10d. out of the total weekly National Insurance contribution paid in respect of insured men. For insured women the amount is 8d. For insured boys and girls it is 6d. In the case of employed persons 1½d. out of each of these sums is the employers share.
The origin of this arrangement is to be found in the Beveridge Report. One of the presuppositions of the social insurance scheme recommended in the Report was a comprehensive Health Service. Lord Beveridge thought that insured persons should not be relieved wholly of the burden of contributing towards the cost of such a Service in order that they 545 might bear it as taxpayers, and therefore suggested that some element in the insurance payments should go to meet part of the cost of a Health Service. This conception was accepted by the Coalition Government in 1944, and by the Labour Government in formulating the National Insurance Act of 1946.
I should now like to indicate the reasons why the Government have decided to double the existing National Health Service element in weekly National Insurance contributions and to establish it as a completely separate National Health Service contribution. The cost of the National Health Service has increased steadily year by year since it was introduced. In 1949–50, the first full year of operation of the Service, the total cost was £450 million; the estimated total cost for the current year is £690 million. It must be recognised, of course, that some of this increase results from increased costs and increased wages. Even when allowance is made, however, for the rise in the cost of living during this period, the cost in the current year on the basis of 1949–50 prices would be £515 million—that is, a real increase in the cost of the Service of 15 per cent.
This increase is the direct result of the steady expansion of the Service which has taken place since 1949. This expansion has shown itself in several ways: in the increased sums available for new building work—£20,700,000 in the current year, as compared with £15,400,000 in 1956–57 and £12,100,000 in the previous years; an increase in the total number of staffed beds in hospitals from over 512,000 in 1950 to almost 546,000 in 1956; and the fact that in the general practitioner services the number of doctors has risen from about 20,400 in 1949 to about 22,650 in 1956. I could give many other figures to show increases in many spheres, such as staff, dental treatment, sight tests and other aspects of the service, all of which demonstrate the same trend—that is, steady expansion year by year.
The greater part of the cost of the Service is, of course, borne by the Exchequer. In 1949–50 the Exchequer paid £345 million out of the total of £450 million. In the current year the Exchequer, under present arrangements, would pay £550 million out of a total of £690 million. If the expansion to which 546 I have referred is to continue and no new arrangements are introduced for re-distributing the cost of the Service, it will clearly mean that the taxpayer will have to bear year by year a constant and, I think we must admit, rather disturbing additional burden. We must ask ourselves the question: is it right to contemplate a regular annual increase of this kind. Might the taxpayer not legitimately ask whether there is no other reasonable way of meeting at least one part of the extra cost? The Government have been very much aware of this problem and have decided that it is unjustifiable to expect the taxpayer to pay more each year without some relief. They have examined possible alternatives, but have come to the conclusion that in existing circumstances the most appropriate way of dealing with the problem is to increase the payments made by insured persons and employers towards the cost of the National Health Service.
There are several strong arguments for considering such increases reasonable and fair. The first is that these increased contributions will be made by people when they are fit and active: no contributions will be paid, for example, by sick or retired people. The second is that when the National Health Service Act was presented in 1946, it was thought that contributions from insured people would meet 20 per cent. of the total cost of the Service—and it was considered reasonable that contributions should meet this proportion of the whole. In fact, as the total cost of the Service has increased, the proportion borne by contributions has become smaller and smaller. In the current year it will be only about 6 per cent. It is therefore reasonable, I suggest, that the contributions be increased, if not to the 20 per cent., at least to some rather higher proportion than at present. The third argument is that these extra payments should not bear heavily on people generally, observing that average earnings have doubled since 1946.
In the light of these considerations, noble Lords may well agree that it is desirable to increase the contributions to the cost of the Service by insured people and employers, but they may be wondering why it is necessary to establish quite separate National Health Service contributions. It would be possible to obtain the money without a separate Health Service contribution, but it seems 547 desirable from the Government's point of view, to demonstrate to everyone the separate identity of these contributions. Too often in the past people have been unaware that the National Insurance weekly payments contain this National Health Service element; or if they were aware of it, they did not know how small it was. By establishing a separate contribution we shall make the position clear to everyone and thus avoid confusion. For general convenience, however, these new and separate contributions will not require a separate stamp. One stamp will cover both payments, and it will contain wording to make it clear to everyone that it does cover two quite separate payments.
I should like to give the House a brief description of some of the provisions in the Bill itself. Clause 1 provides that as from an appointed day every person who pays or is liable to pay contributions under the National Insurance Acts, whether an insured person or an employer, shall also be liable to pay a specific contribution towards the cost of the National Health Service. I would emphasise that no new class of persons is being asked to make these contributions. Under subsections (2) and (3) of Clause 1, taken with the First Schedule, the total amount of these new contributions will be 1s. 8d. for a man; 1s. 4d. for a woman; and 1s. for a juvenile; and 3½d. of each of these sums will be payable by the employer in the case of employed persons. These sums compare with the present 10d. for a man, 8d. for a woman and 6d. for a juvenile, with l½d. of the total amount at present paid by the employer. Altogether the increased contributions will provide about £80 million, compared to the present £40 million.
Subsection (4) of the same clause provides that the contributions shall be collected by the Minister of Pensions and National Insurance on behalf of the Minister of Health and the Secretary of State for Scotland. They will be shared between England and Wales, on the one hand, and Scotland, on the other, in proportion to the total insured populations in the two countries. Clause 2 deals with the consequential effect on the weekly insurance rates; and these are set out in the Third Schedule of the Bill.
548 In Clause 3 we have made the necessary provision for ensuring that the Health Service contributions and the National Insurance contributions are collected together as one payment for the convenience of everyone. We also provide in this clause that the appropriate provisions of the National Insurance Acts, and regulations made under these Acts, regarding collection and enforcement apply to the combined contributions.
There is a further point on Clause 3 which is worth special mention. The first is that in subsection (4) there is a provision which has the effect of repealing the present rule that the Health Service element in National Insurance contributions may rank for relief for income tax purposes. This ensures that, no matter what the level of income may be, the full amount of the contribution accrues to the Health Service without the Exchequer at the same time suffering a loss through relief from tax. It will, however, be open to employers (except employers of domestic servants) to claim relief from income tax on contributions made by them on behalf of their employees. This is on the ordinary basis that these contributions are a business expense.
Clause 5 enables the Government of Northern Ireland to pass legislation for purposes similar to that contained in this Bill. I hope that I have succeeded in making clear to the House the general objects of the Bill, and given sufficient indication of its detailed provisions. I am convinced that these new proposals will help us to maintain a full and adequate Health Service and that the cost will be distributed fairly and reasonably. I therefore ask your Lordships to give this Bill a Second Reading.
§ Moved, That the Bill be now read 2a.—(Lord Strathclyde.)
§ 3.05 p.m.
§ LORD MILNER OF LEEDS
My Lords, your Lordships will be obliged to the noble Lord, Lord Strathclyde, for the clear exposition he has given of this Bill. He has made it clear that it has two principal objectives: first, to double the contribution paid to the National Health Service by the individual, and to that extent to relieve the general taxpayer of an equivalent amount; and, secondly, to establish for the first time a separate 549 Health Service contribution, if not, indeed (I am not quite clear about this), a separate Health Service Fund.
To take the second purpose first, it is instructive to remember a little of the history of National Health Insurance. Under the National Insurance Act, 1911, Drought in, of course, by Mr. Lloyd George, the Health Service was provided as part of a general, though limited, social insurance system. Under that Act, the worker, the employer and the State each made a contribution, and the contributor was entitled to certain fixed benefits, which were provided by virtue of the premium or contribution paid. In those days, of course, prescriptions had not to be paid for—they were free. Then, under the Act of 1946, brought in by the Labour Government, there was no separate premium or contribution; the contribution was merged or included in the total payment under the National Insurance. Act. The National Health Service Act made no provision for contribution; the provision was made in the National Insurance Act. Now, for the first tine, there is to be a direct contribution in respect of the Health Service, imposing or doubling the liability upon the individual; and, at the same time, the payment for prescriptions—which as your Lordships know, was introduced by this Government, and has since been considerably increased—is to continue.
If I may say one word on the matter of the prescription, your Lordships will remember that that payment has to be made by sick people to the chemist on obtaining a medicine by means of a prescription. Whilst originally the charge was to be 1s. per prescription, under the present Government that payment has been increased, in that one has now to pay for each item in a prescription. That is a heavy additional burden, and a burden on sick people. Take the case, for example, of someone suffering from diabetes. I am told that there are three items in that prescription, which means that every time sufferers who are prescribed insulin go to the chemist, instead of paying 1s. they have to pay 3s. for the medicine on the prescription. It is a continuous and a permanent payment which the sufferers from certain complaints have to make. I have always thought that the payment for a prescription was wrong and unfair, because it 550 puts a burden on the sick person at a time when he or she can least afford it. There may be justification for making all pay a contribution when well, but surely, it should be for those who are fit and well—the community as a whole who are not in need of medical attention—to make their contribution towards the prescription needed by the unfortunate sick person. I am aware that one of the reasons alleged for that imposition was that it was said that sick persons were requiring, and doctors were giving, unnecessary prescriptions; and it was said that there was considerable waste. In my view, that argument was very much exaggerated. In any event, surely the right course was to take steps to ensure that medical men issue prescriptions only in proper cases, and not to deal with the matter by way of a side wind and make a charge against a sick person.
To revert to the main issue, the establishment of a separate Health Service charge and a direct contribution, the noble Lord, Lord Strathclyde, has giver various reasons for this drastic change. He has mentioned one result which I think will probably be welcomed. I gather that one incidental result will be to do away with the income tax allowance hitherto made in respect of individual contributions. Clearly, that should indirectly, help those who pay little or no income tax, as the allowance, I gather, will not be made to those who pay income tax at the higher rates and to that extent the Revenue will benefit. The allowance will be made in the case of firms who can justify the payments for their staff as being part of their business expenses. That will be a desirable change Otherwise, it is difficult to see the real reason for the change to a separate contribution.
Is it to enable the charge to be raised from time to time as costs go up? For example, now that the charge, or the fund for the contribution, is to be separate, is it the intention of the Government, if the doctors obtain higher remuneration, again to increase the contribution, which is now being increased from 10d. to 1s. 8d.? If the doctors' remuneration is increased, will the contribution of the individual contributor also be increased, or is the object to make a beginning in establishing a wholly or mainly contributory Health Scheme? 551 Some of us on this side of the House suspect that one or other, or possibly both, of those objects is in the mind of the Government. I hope that the Minister will be able to disabuse our minds of any of those suspicions.
With regard to the first object of the Bill, to double the existing contributions and relieve the general taxpayer, the noble Lord has made it clear that that is necessary by reason of the increased cost of the Service, which has risen from some £450 million, I gather, in 1949–50 to some £690 million—a truly terrifying sum—in 1957–58. The noble Lord has given as the reason for that increase in cost the great expansion in the Service which has taken place—and no doubt there has been some very considerable expansion of the Service. The Government themselves, however, must bear a very large responsibility for that increased cost. I hardly need reiterate to your Lordships the rise in costs and prices in all commodities that has taken place.
In the past year alone, up to February, 1957, food prices rose some 3.9 points, and housing 4.8 points, without taking into account the increases which the recent Rent Act is likely to bring about. The price of milk, bread and most commodities, and even of money itself, has gone up under this Government, with the result, of course, that wages and salaries have had to go up too. Therefore, a very large proportion of this increased expense must be, and in my judgment is, due to the Government's deliberate action. Why, therefore, should the contribution towards that additional expense be shifted from the general taxpayer where it lies at present to the individual contributor, including, of course, the lowest paid workers in the country, many of whom are very hard put to it in present conditions to maintain themselves? Surely it is a rather mean and pettifogging action to impose an additional burden of £40 million, out of a total of £690 million, to relieve the well-to-do taxpayer, and for the most part to impose that £40 million on the lowest paid workers in the country. The better-off taxpayer pays according to his means, and, as I understood it, the object of the Labour Government was to give the Health Service to those who were most in need. It must 552 be clear that this Bill spells greater hardship for many of our fellow-citizens, and that at the same time as there is this transfer of additional liability from the general taxpayer to the individual contributor, irrespective of means, the surtax payer under the Finance Bill is being relieved of almost an identical amount of between £35 million and £40 million.
Furthermore, whilst the precise figures are not easy to come by, I think there can be no question that the proportion paid by the Exchequer towards the Health Service is decreasing year by year in comparison with the national income. One would have assumed that in those circumstances the Exchequer would bear a larger share of the cost. Our Health Service is the envy of the world. Whilst there is much still to be done, there can be no doubt that the existing scheme has brought better health and greater peace of mind and happiness to millions of people in this country. It has kept men and women at productive work, has saved money in many directions and during illness has been a great consolation—indeed, I think a great benefit—to the British people. Therefore, we are not clear why, at this stage, the Government should seek to make this change in the scheme. It is because we believe that this Bill is really part of the Government's whole policy of transferring burdens from the Exchequer to individuals, irrespective of means or need and, as we think, to the greatest disadvantage of those least able to pay, that we oppose it.
§ 3.17 p.m.
§ LORD HADEN-GUEST
My Lords, I want to say a word because I disagree with my noble friend who has just spoken. He himself is, of course, entitled to National Health treatment. Many people in his position in life are entitled it it and get it. And there is no reason why they should not. They get very good treatment, on the whole, but in my view—and I speak with long medical experience—there is undoubtedly a great waste of money in this scheme. Large numbers of people go for treatment who really do not need treatment at all. They need dealing with on the material plane by being "bucked up" to face their life as it is, instead of becoming chronic invalids. I myself have a panel doctor, 553 as I daresay my noble friend has too. Everybody in the country is entitled to have National Health Insurance treatment. I believe that we should not be satisfied with the present situation but should look into the matter fully and decide whether we cannot deal more economically and efficiently with this question than we are dealing with it at present.
A great many people go to the doctor and get a large bottle of medicine. I went the other day to my panel doctor. It was the first time in my life that I had ever been to a panel doctor. I told him I had a mild complaint. I was prescribed a large bottle of medicine which will last me, I think, for about two or three months. I do not know whether I shall require it all that time—I do not suppose I shall. I came to the conclusion, after a number of experiences of that kind, that there was great waste.
Moreover, I was for a long time chairman of the national medical committee which dealt with the medical profession as a whole, both in this country and outside, so I can claim to know something about the organisation of the medical profession. I gave up that appointment less than two years ago. I think it is time we had an investigation into the whole question of whether we are adequately dealing with the situation as it is. It is nobody's fault, but it is very easy indeed for a doctor—and some doctors there are who have done it—not to discourage his patients from having medicine but rather encourage them, in order to try to cheer them up. But one can go too far in that direction. I believe that a doctor should go straightforwardly to cure his patients by bringing before them ideas of health and well being. A number of people go to see their panel doctor regularly because they think it is a social occasion—every doctor who has been in practice knows that to be a fact. They have a good gossip in the room. In my view that state of affairs is not satisfactory, and I think it is time—I do not want to cast any undue aspersions on the panel service—that we looked into this matter thoroughly, to discover whether we cannot improve the situation, to make the service more efficient and more health-giving than it is at present.
§ 3.20 p.m.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
My Lords, I am always willing to listen to my noble friend Lord Haden-Guest in these matters—he has professional experience—but I think that if he had been speaking in another place he would not have been in order on this particular Bill.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
But I do not think it would have been allowed by Mr. Speaker. I do not think it arises on this particular measure. We are concerned about the general change, as I am quite sure my noble friend Lord Milner of Leeds has already said (I had to be away at another meeting), in the basis of the financing of the National Health Service. I should particularly like to know exactly what is the range of the revised charges in the First Schedule to the Bill. Paragraphs 8 and 9 deal with non-employed men and women and will be based upon the existing Statute. But I am rather concerned about Paragraph 10:Non-employed boys and girls under the age of 18who will have to pay 1s. a week. At what age will these compulsory health insurances begin in regard to non-employed boys and girls? Is that covered by the existing Statute? I have not had time to look it up. If so, what is the age, or what will be the operational age, under this Schedule? I think that is most important.
We must all be concerned about the actuarial basis of a great national service, but a great deal of the increased cost in the last five years has arisen from inflation quite outside the control of the medical service, and especially with regard to the charges for improvement and developmental work which was required. There has been a steep rise in the cost of financing those necessary developments and equipments. If we are gradually to get away from the principle which was adopted under the original Act of a free national medical service, then it is better that we should have fairly long notice. This particular increase is raising the cost to the individual to double what it was when the original 555 Statute was passed. If this is to be a precedent for every general item of additional cost in the future, I think we ought to have some explanation of it, so that we may inform the country accordingly.
§ 3.27 p.m.
§ LORD STRATHCLYDE
My Lords, I am grateful to the noble Lords who have taken part in our discussion of this matter. The noble Lord, Lord Milner of Leeds, said that it was a direct consequence of the National Health Service. There has always been a contribution from National Insurance to the National Health Service from the beginning of the National Health Service—in fact, it goes back to 1946. In regard to charges—which really have no concern with the present Bill—I would remind the noble Lord that power to make these charges was given by the Labour Government in 1949. So it is not altogether attributable to the present or to a Conservative Government.
§ LORD MILNER OF LEEDS
In fairness, the noble Lord ought to say that they were never brought in by the Labour Government, but that the present Government have brought them in.
§ LORD STRATHCLYDE
If a Government take power to do things, surely that shows an indication that they intend to do so. If that is not so, why on earth should they take such power? Certainly in another place I might have put quite a different interpretation on what the noble Lord said just now. In regard to the point made that the Bill acts harshly on those who suffer from diseases such as diabetes, I would tell the noble Lord that there are provisions which enable a practitioner, in appropriate cases, to provide for a three months' supply of insulin on the one prescription form. The noble Lord, Lord Haden-Guest, has given us an example of that in his own case.
The noble Lord, Lord Milner of Leeds, said that it was difficult to see the reason for the change. I pointed out to the House the increased cost to the service. I pointed out that it is not all due to rises in prices and wages, but to a considerable extent to the expansion of the service—to the extent of some 15 per cent. But I will differ from the noble Lord when he suggests that the inflation 556 is due to the cost of living going up in advance of wages and salaries. From my own reading of the Press and debates in this House and in another place, it seems to me that wages and salaries, at least in recent years, have been going up prior to the increase in the cost of living—in fact, that may well be the principal cause of the increase in the cost of living. The noble Lord says that many workers are hard put to it. I said in the course of my earlier remarks that it is not unreasonable to increase the contribution in view of the fact that earnings have risen to double the rate at which they stood in the year 1946. I would say this to the noble Lord as well: that when the 1946 Bill was introduced the contributions were intended to meet 20 per cent. of the total cost of the National Health Service. I have already told the House that the present proportion is 6 per cent., and under this Bill it will increase to 12 per cent. I do not think that this is an unreasonable increase.
The noble Lord further said that the proportion of the cost was decreasing in relation to the national income. Offhand, I cannot just work that out. But I will tell him that when the National Health Service Bill was introduced it was stated in the Financial Memorandum which went with the Bill that the Exchequer would bear 72.4 per cent. of the total cost. In fact in the first year of operation it bore 76.3 per cent.; since then it has been running at about 80 per cent., with fluctuations down to as low as 78 per cent.; and in the current year the Exchequer will bear 79.9 per cent. of the total cost. So whatever may have happened in relation to the national income, it has not happened in relation to the total cost of the Service.
I was asked a question specifically by the noble Viscount, Lord Alexander of Hillsborough, in relation to item No. 10 in the First Schedule to the Bill. The operational age is the school-leaving age and there is no change whatsoever in the existing law. One other question was asked—namely, whether any National Health Service fund was now established. The answer to that question is: No. The National Health contributions are to be paid by the Minister of Pensions and National Insurance direct to the Health Ministers, towards the cost of the National Health Service. I indicated that 557 in the course of my opening remarks. I hope that I have answered the questions which have been put to me, and I shall now be grateful if your Lordships will grant this Bill a Second Reading.
§ On Question. Bill read 2a; Committee negatived.