The Dyslexic Professor: Is there an entrepreneurial approach to a Covid-19 dividend to fund healthcare? June 2020
Of course, any conversation about Covid-19 has to start by reflecting on the terrible suffering and loss across families, communities and nations before acknowledging the huge debt we all owe to key workers and especially healthcare professionals. I gladly do this.
But, is there a possible entrepreneurial approach to a Covid-19 dividend to fund healthcare in the UK? Entrepreneurial in terms of addressing a long ingrained problem in a new way. Can any good come of the collective realisation we were not ready and it is the tireless commitment of so many people that is pulling us through. Of course, there will be the investigations and recriminations – but what of the reflections and solutions? What can we learn from the Covid-19 pandemic?
For me, there is one overarching issue that we all knew about before Covid-19 but, for whatever, reason did not address. Yes, we had debates … yes, we had prospectus … we even had another Parliamentary Inquiry!
Yes, you have guessed it: How to adequately fund healthcare in the UK?
At present, the NHS is funded from central taxation and Social Care funded separately from local taxation* (*primarily by council tax, business rates and central government grants) resulting in a separation of activities aligned to funding streams not clinical and care needs. The resulting gap, whether narrow or wide, results in confusion and suboptimal decisions – both in terms of finance and more importantly healthcare outcomes.
Many impressive reports have been published with strong recommendations:
So, I want to propose a more entrepreneurial solution which focuses on addressing the funding issue first and foremost and then allows the professionals to decide on the best way to allocate the resulting pot.
I think the key is to keep it simple, transparent and fair and to ask both income generators (income taxpayers and organisations) and wealth owners (asset-based) to contribute. In order to do this we need two new parallel taxes which generate an annual healthcare fund for both NHS and Social Care – merged into a single Healthcare Budget:
- Healthcare Income Contribution (HIC) [not income tax] at a single percentage level (say 1% – in the same way as National Insurance Contributions) collected through PAYE – visible on each payslip. There would be both employers’ and employees’ HIC.
- Healthcare Duty Tax (HDT) [not a capital gains] at a single percentage level applied on: a) property purchases (HDT-P) (say 1% – in the same way as the Stamp Duty Land Tax); b) property sales (HDT-S) (say 1% – as a new tax); c) new Entrepreneurs’ Sales Tax ((HDT-E) (say 1% on assets eligible for Entrepreneurs’ Relief).
These are both ‘transaction’ based taxes – meaning they are not annualised like income tax or capital gains. You pay when you have the income or wealth.
So in this proposal: a) individuals, b) employers, c) property buyers, d) property sellers (this is significant), e) entrepreneurs selling companies all pay into a single Healthcare Budget.
For me, there would also be something compelling in agreeing to a single rate of tax applied across all tax revenue streams. Say, 1% and agreed at each Budget statement.
Nigel Lockett | #dyslexicthinking
The Dyslexic Professor | Professor of Entrepreneurship | Hunter Centre for Entrepreneurship| University of Strathclyde