Covidspring III: Hypothecate Now!
We would pay more tax for the NHS now and forever

The populist pragmatism of this government is the perfect ideology to benefit from the increase in state power of the state of exception. Johnson and Co are not basing their state craft on systematic thought. It is a political ideology that proceeds, aside from the founding idea of Brexit, from issue to issue. It is the bastard child of the union of neo-liberalism and new Labour.

In the evolution of historical ideas there always seems to be three stages. The traditional interpretation. The revision of that interpretation. The post-revision of the revisionist interpretation. It is the dialectic of historical thinking: thesis, anthesis and synthesis. But the revisionist view is usually not that extreme a repudiation of the traditional as to be a complete antithesis.

British historians are usually cautious to the point of preferring to take a nap than reverse an existing paradigm.  So British political history since 1945 can be read as tradition, revision and now post-revisionist rather than a dialectical paradigm shifting epoch of change.

Tradition was the post-war Keynesian period of mixed economy full employment destroyed by the hyper inflation of the 1970s. Revision to that came in the form of the Thatcher revolution in economic ownership and taxation which New Labour endorsed even as they attempted to mitigate. The intervention of 2008 was essentially a bail out of capitalism within the parameters of the revisionist structures.

The state of exception, this moment of the CovidSpring, opens the possibility of profound post-revisionism and the current government is just the kind of ideologically pragmatic populists to make the most of it. They have no idea what to actually do with the power they hold beyond the mantra of “getting Brexit done”.  The current crisis is actually therefore the answer to the existential crisis for this government, in that it gives them the chance to be something other than the party which took Britain out of the EU.

The Thatcherite revision of the post-war settlement changed many things but never really dealt with the paradox of the universal demand for free health and social care and the impossibility of paying for it within a political market that seemed to stop you from winning elections unless you advocated tax cuts.

In 2001, towards the end of his front line political career, Neil Kinnock came around to the idea of hypothecated taxation. “My own view is that support for the NHS is so universal … that it justifies the establishment of a hypothecated system of finance… With a specific national health and community care tax, the British public knows that every penny of that is only going to health and community care services.” So in 2002 Gordon Brown responded in typically New Labour fashion by increasing national insurance by 1% and promising this would do to the NHS. He hypothecated without created any instrument for hypothecation.

In 2018 rumours were flying that Jeremy Hunt supported hypothecated national insurance contributions for the NHS, an idea roundly rejected by the Institute for Government because the tax take from NI can fluctuate so much that it would frequently fall short of planned spending. I am not an economist or tax expert but believe there must be some way of hypothecating so that it deals with this issue and with the political necessity of being able to periodically cut other taxes or at least be seen to be cutting taxes.

The arrival of COVID-19 has transformed the political situation but has not changed the maths of NI or the need for parties to buy votes with tax cuts. What has changed is the political context. That means that the government could build a cross party consensus that there should be a change. That could be Kinnock’s separate and new tax which would be pegged to a ten year spending plan. Or it could be an increase in the base rate of income tax and an additional proportion of income tax revenue hypothecated for the NHS, so a fixed % above the personal allowance rate taxed for everyone at the same rate and earmarked for health and social care. Or maybe it is for a localised tax collected directly by the NHS Trusts at a county level. I do not know the answer but I cannot believe there is no way of doing this.

If found, it would be the quintessentially pragmatic populist move. It would need to leave room for future tax cuts without touching the NHS and social care.  It is the kind of bold stroke that should appeal to the popular pragmatists in Number Ten because of the degree of political disruption it would deliver. It would deprive Labour’s new leader of the shibboleth that the NHS is only safe with them at the moment at which it is the most popular and trusted institution in the country. It would also be the right thing to do. If they went one step further and embraced a universal income model then you would begin to have to wonder what the Labour Party was actually for? Highlighting the urgent need for Labour to launch a radical manifesto for reform after the Covidspring modelled on the Beveridge report and the five giants perhaps.

But beyond the political implications the end of the state of exception will represent a once in a lifetime opportunity to remake the political settlement. To deal with the problem of health and social spending and take if off the political agenda forever. The major legacy of the Covidspring: the NHS out of political ping pong, fully funded and defended in perpetuity. Who, sitting in their lock ins hoping to stay well, is not going to vote for that right now.