The idea that the NHS can remain taxpayer-funded and free needs to be re-examined as costs rise, a Conservative health minister has said.

Lord Prior, the Government’s minister for NHS Productivity, is moving to set up an independent inquiry into whether the current free-at-the-point-of-use service is sustainable.

“At heart, our ability to have a world-class health system will depend on our ability to create the wealth in this country to fund it,” he told peers in the House of Lords who had raised the issue.

The minister said that though he personally supported the current system, demands for a change in the health service’s funding model should be examined.

“I am personally convinced that a tax-funded system is the right one. However, if demand for healthcare outstrips growth in the economy for a prolonged period, of course that premise has to be questioned,” he said.

“I would like to meet … to see whether we can frame some kind of independent inquiry—I do not think that it needs to be a royal commission,”

“The issue is: what will the long-term demand for healthcare be in this country in 10 or 20 years’ time? Will we have the economic growth to fund it?”

Lord Prior is the Government's minister for NHS Productivity

The Conservative election manifesto pledged that the UK would “always have access to a free and high quality health service” with the introduction of 7-day services.

The NHS has been rated by a number of studies as the most efficient major healthcare system in the developed world.

One piece of research from 2014, carried out by the US-based Commonwealth Fund, found the British system was significantly more efficient than those of the US, Switzerland, France and Germany.

Paul Evans, director of the NHS Support Federation told The Independent at the time: “It shows that the basic concept of the NHS not only works, it stands up well against all other systems.

“But within these results is a stark warning about opening up the NHS to the market and profit driven companies, like the US, as it is clearly not associated with care that is safe and effective for all.”

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The announcement is the latest in a string of radical policies to be floated by Conservative ministers shortly after the general election campaign.

Culture Secretary John Whittingdale this week questioned the sustainability of the BBC TV licence system, while DWP Secretary Iain Duncan Smith has floated the idea of more private involvement in sickness and unemployment benefits.

The Government has also moved to print price labels on NHS drugs in order to make sick people aware of the costs of their treatment.

The comments by Lord Prior were made in the Government’s response to a parliamentary debate in the House of Lords on 9 July.

The minister added that the NHS was incredibly popular with the public and that “we have to be very careful in the messages that we give out as politicians”.

He added in a later statement to the Lords this week: "I believe fundamentally and passionately in a universal, tax-funded healthcare system—the NHS—that is free at the point of delivery and based on clinical need, not ability to pay. Having looked back on it, I do not remember uttering a word in that debate that would question that statement."