Lib Dems pledge 1p income tax rise to fund NHS

By James Gallagher
Health and science reporter, BBC News website

  • Published
DoctorImage source, Getty Images

A Liberal Democrat government would raise income tax to help fund the NHS and social care, the party has pledged.

It said a penny-in-the-pound rise on all income tax bands and on dividends would raise around £6bn a year.

The Tories said 30 million people would be hit by the tax rises. Labour said its NHS plans would be in its manifesto.

The Lib Dem pledge is complicated by devolution, such as Scotland having its own tax-raising powers.

The NHS is facing one of its toughest-ever financial challenges as it struggles with a growing and ageing population.

In the UK, £140bn was spent on health last year and around £25bn on social care.

The proposed tax rises are the Lib Dem's first significant policy announcement of the general election campaign.

Party leader Tim Farron said he wanted "to be honest with people and say that we will all need to chip in a little more".

He told the BBC: "This is an average of £3 a week for the average earner in this country, so a pint of beer a week to pay for a health and social care service that will last us from cradle to grave."

Higher taxes

A Lib Dem government would raise all tax bands by one percentage point.

The party estimates someone earning £15,000 would pay an extra £33 a year in tax, with someone on £50,000 paying an extra £383.

This would not apply in Scotland as income tax levels are devolved to the Scottish Parliament, where the Lib Dems are the fifth largest party.

The plans also include a UK-wide rise of 1p on dividend income taxes if you hold shares in a company.

In the 2018/19 financial year, the party says the extra taxes would raise:

  • £4.9bn for England
  • £280m for Wales
  • £165m for Northern Ireland
  • £35m for Scotland (as it benefits only from a share of the money raised by dividend tax)

The total raised is projected to reach £6.6bn a year by the end of the parliament.

The money would be guaranteed for the NHS and social care in England, but it is up to the devolved governments in Wales, Northern Ireland and Scotland to choose whether to spend the money on health or elsewhere.

Mr Farron added: "Theresa May doesn't care about the NHS or social care. People are lying on trolleys in hospital corridors and she has done nothing. The truth is you can't have a strong NHS with a hard Brexit."

The Liberal Democrats say the money raised will primarily be invested in social care which will get £2bn a year, as well as care outside of hospital, mental health and public health.

But it says its ultimate ambition is a dedicated health and care tax.

Norman Lamb, for the party, added: "Simply providing more money on its own is not enough and that's why this is just the first step in our plan to protect health and care services long-term.

"We also need to do much more to keep people fit and healthy and out of hospital, and that is why this new funding will be targeted to those areas that have the greatest impact on patient care such as social care, general practice, mental health and public health."

The outgoing Conservative government has promised to increase funding for the health service by £8bn by 2020 and £2bn for social care. The Lib Dems say their extra £6bn a year would be in addition to these plans.

'Record funding'

A £6bn a year rise in income for the NHS and social care would be "generous" compared with recent increases in their budgets, but against the historical average it is "quite small scale", the Institute for Fiscal Studies (IFS) said.

IFS spokesman George Stoye told BBC News that about half of adults in Britain pay income tax, so a penny in the pound rise would mean incomes in these households cut on average by 0.6%.

Conservative Jane Ellison said: "Now we know - a vote for anyone other than Theresa May means you will pay more tax.

"Jeremy Corbyn, the Lib Dems and SNP will hit 30 million people in the pocket with higher income taxes.

"Only a vote for Theresa May on 8 June can provide the strong and stable leadership we need to get a good deal in the Brexit negotiations, keep taxes low, and secure our growing economy.

"It is the only way we can build on the record funding we've given the NHS."

Labour said its plans for funding the NHS would be in the party's manifesto although it has already said it would halt hospital cuts.