Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

It was Angela Merkel who said a few years ago that Germany would not be able to sustain the current levels of welfare and health expenditure. The same is true for the UK, although no senior politician has yet had the bravery to say so. NHS costs have risen from around £20 billion per annum when John Major was Prime Minister, 20 years ago, to £155 billion per annum today. Clearly this is not financeable if expenditure continues to grow at this sort of rate.

The main cause of rising expenditure is the combination of new and existing treatments being available, extending people’s lives and causing older people to account for a growing proportion of the total population. NHS spending is far higher per capita on older citizens than those under 60. As Professor Keith Willett and the recent CPS articles have pointed out, the NHS needs much better management to stop spending increases being wasted and leading to reduced productivity. Expenditure on, for example, scans which was carefully rationed ten years ago, is today used virtually on-demand. A fundamental issue for the NHS is that its provision of services is free which leads, inevitably, to unlimited demand.

Common sense suggests that the older quartile of the population, who account for the major proportion of NHS expenditure, should contribute to their costs on a means-tested basis; and that as a result, expenditure would be more carefully managed. Arguably every adult should also pay a flat £10 for a GP visit, as both a useful source of revenue and an incentive to keep appointments and not waste GPs’ time.

When governments are eventually forced to accept such changes, it will be left-wing politicians who make the most noise, hoping to boost their political standing: but I anticipate the older part of the population will, in the main, appreciate and accept that it is fair that they should make some contribution toward their substantial medical costs. Dentistry charges were introduced not that long ago and have been readily accepted.

One by-product of a requirement to contribute to medical costs is likely to be a very necessary and desirable increase in savings, in turn increasing investment and productivity; and, at last, bringing our Current Account into positive balance.
Government needs to get a move on in making up its mind and formulating policy here, as those affected need sufficient notice to be able to start to save more, ahead of potentially substantial health expenditure needs.

The alternative of seeking to finance ongoing increases in NHS costs out of general taxation cannot avoid hitting the younger part of the population unfairly by making them pay an increasing proportion of NHS expenditure relating to the older part of the population. The younger generation is already significantly worse off than their parents, particularly as the result of the huge increase in house prices in London and the South East.

It is a reasonable moral proposition that in a civilised society people should not go without the necessary medical treatment because they cannot afford to pay for it. But the way to address this does not have to be by making everything free to everybody. We are used to, and accept, means-tested charges in other areas, so why not healthcare?