My Lords, except to congratulate the noble Baroness, Lady Watkins of Tavistock, on her excellent maiden speech, our restricted time means that I will skip the usual niceties and nuances and concentrate on the absence of a credible funding system.
We are in the middle of a decade when we expect the NHS to cope with substantially increased demand and service expectations on an annual budget increase of roughly 1% a year in real terms for 10 years. Before this decade, successive Governments provided the NHS with a real-terms annual increase averaging 3% to 4%. It is virtually impossible, I suggest, to retain a good-quality labour force, meet rising demands, improve quality, and redesign service delivery on a 1% annual real-terms increase for a whole decade, ending up with 7% of GDP, roughly, being spent on our NHS.
By 2020, the combined health and care system will face a funding gap, I would suggest, of some £35 billion a year, with the 2015 spending review closing that gap, on the most favourable interpretation, by about £10 billion. The rest of the money comes from our old friends: pay restraint, new ways of working, and better productivity. I accept that the NHS could use its existing resources much better but, even if the NHS delivered all the proposals of the noble Lord, Lord Carter of Coles—a very big “if”—it would not close the funding gap. The 2015 spending review totally fails to deliver a credible funding strategy and actually makes a bad situation worse by failing to provide any kind of viable funding system for publicly funded adult social care or public health. The NHS and social care are confronted not with a managerial or professional failure but with a failure by politicians across the political spectrum to engage with the public on how we fund a sustainable, integrated health and social care system over the longer term.
To have good-quality and readily accessible health and care services, largely free at the point of clinical need, the public have to be helped to understand that they must pay for them, whether through more taxation, some form of co-payment, or a combination of the two. To get to grips with this rather politically unpalatable truth, we need an authoritative, independent inquiry that will work quickly to examine the possible options for new funding streams to provide some buoyancy and future-proofing. The Front Benches in both Houses need to get behind the ideas of either the noble Lord, Lord Fowler, or the Liberal Democrats, outlined by Norman Lamb in his 10-minute rule Bill. We need to start acting now to future-proof the NHS’s funding.