WOW! Euro would mean end of Brit's free health care

May 05, 2003 - London Times
Euro would mean end of free NHS - central bank
By Graham Searjeant, Rosemary Bennett and Greg Hurst

ECB wants state health care restricted to emergencies only

BRITAIN will be forced to scrap the National Health Service if it joins the euro, Gordon Brown was told yesterday. The European Central Bank, which manages the single currency, gave warning that free health care would have to be restricted to emergency services only, otherwise the cost would overwhelm European economies and lead to soaring inflation. Britain has one of the biggest tax-funded health services in the EU, with only a tiny proportion of treatments paid for privately.

The report, in the Frankfurt-based ECB's monthly bulletin, said that Britain's ageing population would make state pensions, tax-funded health services and long-term care unaffordable in the future. Tax rises to meet the extra demands would soon become politically unacceptable and the sums in question would be too large to borrow, the ECB said.

The article, which is published under the ECB's authority rather than being just a working paper by researchers, recommends swift reforms with patients paying for more private operations. Governments should distinguish between "essential, privately non-insurable and non-affordable services", such as emergency treatment, and those where "private financing might be more efficient".

"Greater private involvement in health care financing can be achieved, in particular, through patient co-payments, as already implemented in a number of countries."

British taxpayers and employers have just been hit by higher national insurance contributions introduced by the Chancellor to pay for more spending on the NHS. Although the extra cash is accompanied by reforms, these do not include any measures requiring private contributions by patients towards their care.

The ECB's report will be used by the campaign against euro membership as evidence that the single currency would dramatically reduce national sovereignty. Last night Alan Milburn, the Health Secretary, who is in favour of Britain joining the euro, said the Government would never let the NHS be put at risk.

"For as long as there is a Labour government the NHS will be funded from general taxation and health care available according to need and not the ability to pay," his spokesman said.

Treasury officials said they were surprised by the report. "Taxation and public spending are matters for individual member states. While deficits are constrained by the requirements of the stability and growth pact, public finances in the UK are widely seen as being on a sustainable path, certainly when compared to most other European countries," a spokesman said. He added that Mr Brown made a speech last year in which he concluded a tax-funded system was not only the fairest form of health care, but the most economically efficient.

A spokesman for the anti-euro No campaign, said: "It has always been clear that joining the euro would put at risk the Government's spending commitments, but this endangers the entire NHS."

In a few weeks, Mr Brown is expected to rule out an immediate referendum on the euro, saying his five economic tests have not been met. He and Mr Blair are locked in negotiations over what happens next. Mr Blair and pro-euro Cabinet allies would like the door to be left open for a referendum this parliament.

The ECB's controversial report comes as the Government prepares to take on Labour backbenchers over the future direction of the NHS, laid out in Tony Blair's flagship policy to liberate top-performing hospitals from Whitehall control. Mr Blair has argued that the creation of "foundation hospitals" will drive up standards by giving the best trusts more power to innovate the improve their services. But many Labour MPs believe that the move will hatch a two-tier system within the NHS and are preparing to vote against the Bill when it comes to Parliament on Wednesday. Ministers have been dismayed to learn that a report by MPs criticising their plans will be published just hours before the vote.

The Times has learnt that although the cross-party Health Committee has abandoned earlier proposals to reject foundation hospitals in principle, it will still attack aspects of the proposals. The MPs will say that staff and patients could end up gravitating towards the new trusts, which will have greater powers over how to spend their cash, leaving ordinary hospitals undermanned and under-used. Measures to allow the new hospitals to borrow could mean a drain on the resources available for other hospitals, as any lending would have to be backed up by funds from the Government's health budget.

The report will also point out that shifting power to hospitals and away from family doctors may mean community-based services, especially those for the elderly, get overlooked. However, the MPs will welcome some measures contained in the Bill that allow local residents to elect a board of governors at the trust and get involved in other management decisions.

Publication of the report has been delayed by wrangling within the committee between government loyalists, who back the plans, Labour opponents who want to stick with existing NHS structure, and Conservatives who say that the plans do not go far enough. Eyebrows have also been raised at the decision of the committee chairman, the Labour MP David Hinchliffe, to publish the report on the same day that he leads the revolt. He has tabled the rebels' amendment opposing the Bill. In advance of the vote the Government has offered a series of concessions to the rebels in the hope of paring down the numbers.

On Tuesday, Mr Milburn will pledge £100 million to help lower-rated hospitals to reach the standard necessary to qualify for foundation status He will say that teams of experts will be sent to any hospital seeking foundation status to help to draw up a timetable and action-plan by the autumn. Under the programme, every trust should be eligible for the new powers in five years time. The first wave of NHS trusts eligible for foundation status is due to be announced shortly.

The latest concession comes alongside an extensive ministerial lobbying campaign to try to peel off the rebels and minimise the revolt. Signs emerged yesterday that the charm offensive was helping to change minds. Mr Milburn said he would be "surprised" if it was on a similar scale to that over Iraq when 139 rebelled against the war in March. He was dismissive when asked if Tony Blair might resign if the vote was lost, telling BBC One's Breakfast With Frost: "Well we're not in that position and I don't believe that we're going to be in that position, to be frank about it." His confidence was echoed by a senior Government source who told The Times that privately whips were talking in terms of around 50 rebels.

Even a prominent critic of the policy admitted that the scale of the revolt would not compare with that against the war or the showdown expected over university top-up fees. The role of the Chancellor, who is unenthusiastic about foundation hospitals, has been crucial in addressing the concerns of MPs. He has told prospective rebels that they should support the Bill on Wednesday and then raise detailed objections at later parliamentary stages.