The Resolution Foundation has published a chart that reveals just how big the Tory assault on the NHS has been. As they said in an email circular yesterday:
The chart below from our Healthy Finances report shows why we're having [a] row [about NHS funding]. If the government doesn't announce quite a bit more cash for the NHS, average annual spending growth is on course to be lower this decade than at any other time in the NHS's history. Real terms per capita spending is set to grow by an average of just 0.4 per cent a year between 2010-11 and 2019-20, down from an average of 5.9 per cent a year in the preceding decade.
As the chart makes clear, that's the lowest spending increase since the 50s. No wonder the NHS is in crisis. And no wonder some of us say that's entirely by choice.
No wonder too that some of us say that this can be solved by choice. I quote an editorial from the Guardian yesterday:
Before spending more money on the NHS, British politicians should take the advice of the US economist Stephanie Kelton: in a UK lecture this week, she explained that it was wrong for politicians and the media to argue that the government must balance its books, just like a household. If a household were to continually spend more than its income, it would eventually face insolvency; it is thus claimed that the government is in a similar situation. This is false.
Yet politicians are obsessed with avoiding an increase in the deficit, an impulse so ingrained that Professor Kelton described as it “almost Pavlovian”. An analysis of the UK's economic position tells us how to fund the NHS: growth is flatlining, real wages are stagnant and there's little inflation. The UK's indebted households are sinking deeper into debt. Hardly the time to raise taxes. The public sector deficit ought to be seen as an instrument to support the economy, not a way to break it. To pay for the NHS, which is critical for long-term prosperity, the government should engage in Keynesian deficit spending: this would help to keep not only the public healthy but the economy too.
Stephanie asked me to join her at that lecture to take part in discussion. I was unable to do so. It sounds like I missed something special. Not least because Stephanie's prescription is entirely correct: I wrote much the same a year or so ago.
It's by choice that the NHS is in crisis.
It's by choice that it can be got out of it.
And the right choice is glaringly obvious.
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There’s a 38 Degree petition doing the rounds that calls on people to tell Theresa May to increase taxes in order to fund £4 billion for the NHS. I’ve emailed them explaining why that’s not necessary (the tax bit). I don’t know if anyone reads their emails but I urge anyone to contact them advising them that their taxation ‘rationale’ is not the way to go. I don’t have a copy of the email itself but here’s their webpage – https://home.38degrees.org.uk/2018/06/15/nhs-funding-faqs.
I just posted this in response:
Can I be quite clear: the last thing this country needs right now is a tax increase. We have low real wages, high real unemployment since vast numbers of people are in very marginal self employments and zero hour jobs that only give the impression of full employment, and at the same time we have low inflation, low interest rates and low government debt compared to demand for it, which is high as ever increasing numbers of baby boomers want more and more debt to underpin their pensions (which is waht a great deal of government debt it used to fund).
In other words, please stop talking about tax for the NHS. What this country needs is an economic stimulus. That is, it needs to run a deficit. And by doing so we put people to work, and they pay tax. And there’s get what they spend. And they pay tax. And a virtuous up-cycle is created whereas more tax right now would suck the life out of the economy.
There is then a way to fund the NHS. It’s called running a deficit. And it works. And the debt is nothing more than the savings of those who want to entrust their money to the government for safe keeping, which is a great ting for them and it to do.
So please, no talk of additional, hypothecated or other taxes. Let’s just do it – and if we do there will, in any case, be a great deal of additional tax paid
Richard Murphy
Professor of practice in international political economy
City, University of London
This is why I have delisted myself from 38 Degrees.
I was there. She was great. Got to meet some people I only knew from Facebook;o) I’ve just had the idea to run a fringe meeting on MMT at the LP conference in Liverpool. It will need to be put together quickly as the deadline for placement in the fringe guide is soon. Surely the funds could be raised?
Happy to help if I can
Carol – are you thinking of setting up a crowd funder?
No, I’m not. I’ve never done it and I have many other things for which I am responsible. I’ve been out all day today but had an idea on the way back to contact some of the new MMT people I met at the StephanieK talk to see if we can get something going. I’m happy to contribute towards the cost.
“It’s by choice that the NHS is in crisis.”
Needs repeating again and again!
The only point I would have diverged on with the Guardian is “Keynesian deficit spending”. Better to call it investment.
In
https://braveneweurope.com/david-laws-and-charles-s-adams-is-world-leading-nhs-healthcare-an-affordable-proposition
we referenced this paper [there may be better one?]
https://globalizationandhealth.biomedcentral.com/articles/10.1186/1744-8603-9-43
which says that the return on health investment pays back around £4 for every £1 spent. Plus in the UK we are lucky that with the NHS we are starting from a position that is far more efficient and effective than say the bloated private health care system in the US.
I don’t know a better paper
Does anyone else?
Charles touches on a point we were discussing yesterday and that’s how to counter the “household” analogy: ‘The only point I would have diverged on with the Guardian is “Keynesian deficit spending”. Better to call it investment.’
We have to watch our language – “investment” has positive connotations. And what about “Keynesian”? Are his ideas “outdated”, like Marxism – quite interesting once upon a time, but we’ve moved on now and their prescriptions are now no longer valid, so we should not use their names? I don’t think so. They have much to offer and we ignore their most penetrating observations at our peril. But does using their names merely invite ridicule and undermine the project?
Charles, and everyone,
One of the arguments against the American Health system, on which they are curiously silent, is that it’s massively prejudicial to the working of a genuine free market, because small employers cannot afford to finance health coverage for their staff, and so the market is distorted away from the small, to the large, employers, because the first thing, or among the first things, an American seeking work looks for is decent health coverage, the sort small, innovative, employers are usually unable to provide.
I know this will only be accessible to those of you who are on Facebook, but the interviewee on this video clip makes the point clearly, in calm response to the near hysterical ignorance of the interviewer.
https://www.facebook.com/senatorsanders/videos/10157075940152908/
Good point Andrew
I think Chomsky pointed out some time ago (2011) that privatisation follows a well-worn path: first, they defund it, then when things don’t work and people complain they say “OK, privatise it.”
Indeed
“Stephanie asked me to join her at that lecture to take part in discussion. I was unable to do s
Bloody hell, Richard. Couldn’t you have washed your hair another day ? 🙂
I was at a pre-arranged gig in Leicester!
Not only was Richard at a pre-arranged academic gig, but afterwards he gave a talk and Q&A entitled “How to pay for it – the answer to the question every activist is asked” to a packed Secular Hall audience. For which we’re very grateful!
I wish we could get used to comparing our health spend with others as percent of GDP. Way lower than most ‘Western Europe’ countries – the pre-expansion EU15.
Our 8% (depending on who you believe) has a lot of catching up to do with the EU15 10.5%. And that in turn is lower than more civilised Germany & France.
So we are at least £30bn south of where we need to be as a modern European country.
An article on p2 of today’s FT shows how far the message has yet to go: “Doubts cast on ‘Brexit dividend’ for NHS” (well, we never knew)….”Ex-Treasury officials warn cash boost would require higher taxes or borrowing”
Yes, it’s the usual suspects, Paul Johnson and Nicholas Macpherson. But May still thinks the “Brexit dividend” (9bn) would finance some of the additional costs to provide an increase “of at least 3% above inflation every year” for the NHS.
Macpherson wants spending cuts elsewhere or increased taxation to pay for the NHS and more public spending, while Johnson prefers more taxation or more borrowing.
These people have built careers and reputations on neoliberal economics. They are given space because they speak comforting orthodoxy. They will never change. Even when the facts change.
I just attacked this whole way of thinking on LBC radio
I went for a test at my local hospital yesterday afternoon. Out of the four appointments around me, the two before and the one after no one turned up. If people took the time to inform the hospital they cant or wont attend then appointments can be used for other people.
As most doctors will tell you the system only works because some people do not turn up
If everyone does the work load is impossible
Someone at the Unison conference today came up with the very same thing. This is just the sort of thing which tories like to push (isn’t it a disgrace – they should be punished – ah, let’s introduce fees for appointments – that’ll stop it) . Does anyone believe that if someone doesn’t turn up for an appointment the GP just sits there and waits until the next appointment is due? I imagine the doctor ia delighted that they can spend a bit more time with the next patient … as if.
Exactly…
I have recently had to back off from this blog because I have become just too busy to comment on it meaningfully to the standard it demands and deserves.
Anyhow, reading about the recent cash injection promised by the Tories into the NHS – and seeing how that is also having tax rises attached (farcical) – has made me very angry over the weekend and I felt that I have to say something.
This latest ‘offer’ from the Tories is a new low in their mal-administration of the country. I did not think that they could get any worse. And they have. I mean – tying this proposed extra NHS cash as a benefit of BREXIT?
I recently made a comment in defence of just getting on with BREXIT because I see it as the only way that people will learn the error of their ways. But using an outlandish lie from the ‘referen-DUMB’ to justify the increase? Dear me. Well – I’m not stupid enough to swallow it. Are you? I know many who will though.
But I have also concluded that what we are seeing is something that we have discussed on this blog before: ‘the end of days’ – increasing evidence of chaos in our society and it governance as symptoms of national decline.
Well – this is what such decline looks and feels like – BREXIT, austerity, lying and all.
For so long we have used the wrong ideas and the wrong people to lead us (read Aeron Davis’ book ‘ Reckless Opportunists’ for example and see what you think).
The only good thing is that after decline and fall, regeneration is meant to follow on. God – I hope so. I hope it will be worth it.
@PVSR, good comment. But don’t you think this is all part of the plan? We get to a point where there is chaos (and there will be if hard BREXIT happens), then the government can impose emergency powers, never to be rescinded if they have their way, the top 1% clean up in several ways cornering essentials and selling high for example while the population is held under draconian laws, the internet curtailed ( as in China).
Maybe those in power are happy to appear stupid but they have a hidden agenda?
Just saying that it is a possible explanation for the current state of affairs.
Yes Ian – these days anything goes – what you say could happen. Absolutely.
But I’m talking about when there is a more thorough systematic breakdown of the apparatus of rule as well as the rulers themselves. Sooner or later neo-liberal capitalism and the political system that supports it will run out of road.
At this time the hard work that people like Richard and many others puts in should get a real opportunity to be tried out.
That is what I hope will happen anyway.
We have to live in hope
So will it help if we all sing “Things can only get better” again?
As a matter of interest, if not concern, did John McDonnell or Jeremy Corbyn attend Stephanie Kelton’s presentation?
I do not know
No. Why would you think that? I believe that Bernie Sander’s brother was thre. Mariana Mazzucato did the intro. I spoke to her afterwards – she doesn’t seem to have got MMT herself.
I wholeheartedly agree with this, but I also think that it wouldn’t hurt to collect some of the tens of billions of pounds of corporate and other taxes which the government declines to act on. This is money which is already owed, just not collected, and I find it offensive to talk about hikes in income tax and NI while this remains the case.
OK, devil’s advocate: If it were possible to increase health at a stroke why do other countries have health insurance to fund this service? Thinking of France and Germany for example and I know they are in the EURO so that complicates matters but the USA has a health insurance scheme (and very inefficient I believe) which could be funded from federal money?
So why don’t they do it that way? I suspect it is entirely political and a way of supporting that industry sector, in the case of the USA anyway but Germany does it this way. Not claiming to know the ins and outs of the finances I admit so certain about it being fully self-supporting.
Because they want to spend at least 2% more of GDP on health than we do
Next question?
If we’re looking at other countries for a model, how about Cuba? I don’t know how their tax system works, and the blockade makes it difficult for them to source patent drugs and high-tech equipment. But they have about the highest proportion of health professionals to population (~600 patientts per GP) in the world, and do training for many other countries. I’m pretty sure their system is universal and free at the point of need. That is not achieved surely by collecting taxes or borrowing but presumably by issuing the Pesos to pay the staff and maintain the clinics.
Oh dear, John Mc has just use the term ‘Magic Money Forest’ against Theresa May.
I despair
Estimates of the direct cost of administering the privatisation are between £10BN and £30BN per year (i.e. in CCGs, tendering processes, contract management etc.) – Google it for yourself.
As the amount of privatised services goes up, these costs are likely to rise still further. These costs do not include the profits taken out by privatised services nor the costs the privatised services incur from their side to manage the contracts. (In my extensive experience on both side of the outsourcing fence, I have never seen a single outsourcing deal that was beneficial in the long run, and my estimate is that the overheads of outsourcing are c. 50% – which means you need to get a 33% efficiency improvement just to break even – and if it is that easy to get a 33% efficiency improvement, then why not take it without privatisation.)
Put simply, the NHS crisis is one created by Conservative Party privatisation dogma – they will not accept that some public services should remain in public hands and are determined to privatise everything regardless of whether it makes economic sense.
Thanks
The costs you itemise, Paul, are as you say the direct and indirect costs of privatisation. They are additional to the costs of health service provision. They should never have been attributed to the NHS budget at all. If it comes through, I’m sure the privatisers are bright enough to absorb the promised 3.4% and more without necessarily delivering any tangible benefit to NHS patients or staff at all.
This is partly why I set up the Centre Party. No other party is even trying to put Britain back in its feet.
In my view we need to re-build this country with a high wage high skill economy. For this we need a properly funded and supported education system. No daft targets. No national curriculum. My suggestion is the use a European style 5 track secondary system having Grammar, Technical, Business, Agricultural and Arts schools. Their curricula would be set by tertiary educators.
The NHS would be restored to what is should have developed to had it not been under constant attack from Governments since about 1970.
Taxation would be based on a Graduated Land Tax. This would replace all other taxes on land. I envisage a Right to Buy for tenants, (farmers and business).
The railways would be returned to the Big4 model.
Income tax would be rolled back
There is no place for the Big 4 model for UK railways
Income tax does not need tio be rolled back
LVT cannot be the preferred UK tax base without massively shrinking the state
Sorry – but this is not an agenda I can subscribe to
The big4 model worked well from 1922 until Tory privitisation.
Why would the GLT lead to a massively shrunken state in any case what is the virtue of a bloated state? Whitehall has increased massively since 1945 but the number of people governed has gone down from 25% of the world population to less than the population of England so why do so need such a number?
Why do you not want the number of people paying income tax to be reduced?
Can you claim that our tax system is efficient?
If you think we have a bloated state I can’t be bothered to waste my time debating with you
Please find some far right site to waste your time on