11,000 people die in the UK each year because George Osborne is obsessed with closing the defict

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The Guardian has reported this weekend that:

Thousands of patients die every year after being admitted to hospital at the weekend, partly because too few senior doctors are on duty and back-up medical services are not available, dramatic new research shows.

About 11,000 more patients a year die within 30 days of going into hospital if they are admitted for treatment between Friday and Monday than do those who arrive on a Tuesday, Wednesday or Thursday.

My wife is a GP: she questions some of the stats used in this report, and some of the logic. I am going to accept them at face value because they are the political narrative of the moment and because no one really disputes the stats that deaths at weekends are worse: they question why. And no one really doubts the problem could be addressed by having hospitals better staffed at weekends (although not just by doctors, but from top to bottom since hospitals only function as teams). So why does that not happen? There are three obvious reasons.

The first is we do not have enough doctors. We could train more, of course, but that takes time. Between now and then (which is a long lead time) without poaching doctors from other countries the only way to have more doctors at the weekend is to have fewer in the week: it's not as though (and I know this is true) they are sitting doing nothing from Monday to Friday. But since that could potentially increase deaths overall by reducing the general level of healthcare because it would mean that you never have an optimal team at work that is no solution to this problem.

Second, you can poach staff from overseas: the classic NHS solution, done for decades. It has worked. There is a problem though: the UK's anti-migrant rhetoric is making this country a less hospitable place to work. We desperately need people to come here to work and send out the message that they are not wanted. As a policy for helping the people of this country get the health care they need this one ranks in the category marked 'dire'.

But there is a third reason, and that is that the government has said that this problem must be solved at the same time as the NHS faces a massive real round of spending cuts in the face of rising real demand for its services and an escalating cost base as what is medically possible expands.This is the issue I want to focus on.

I am not sure what the cost of fully funding the NHS for seven days a week might be: it is significant in my opinion and impossible within current budgets. Given the NHS as a whole costs £140 billion and two-thirds is labour costs let's assume doing this properly might cost £5 billion a year. Many would think that significant in a time of supposed austerity when the supposed deficit will be £69 billion this year. I would argue we have simply got that process of deciding significance wrong. There are other ways of estimating, I would argue.

The first is to say what would be the cost of saving these lives. You could argue that this was £454,000 each, but that would be absurd: that would assume that no one else seen by better-staffed hospitals at weekends got a benefit from doing so, and 98.7% of all people seen at hospitals do not die as a result of admissions. So, it ould be absurd to allocate all the cost to those whose deaths have been prevented.

But, actually, there's then the fact that the cost would not, anyway, be £5 billion because overall and on average at least £1.8 billion of what was spent would come back in tax straight away, and because others would feel better off as well because there was more spending then those others would also spend more, so increasing the tax revenue again. It's likely that the £5 billion cost could effectively be halved in this way (it may be a bit more or less, I am just illustrating a point here).

So the cost, even if allocated to those whose lives are saved is now down to £227,000 each.

And then there's the fact that in practice this additional cost will not be paid: it will be borrowed. Instead of running a deficit of £69 billion we could run a deficit of £71.5 billion (that's and increase of £5 billion spent less £2.5 billion tax back).

That has an interest cost. The current price of 15 year borrowing is about 2.5% for the UK government. And that's about the average borrowing period right now. So the annual cost of this is £62.5 million.

That's £5,681 per life saved. You could argue that should be priced over 15 years: that (very crudely indeed, and to overstate things) would be £85,000.

But then you have to consider four other matters. The first is that government debt has never been repaid, on average. It rolls forever. So we're very unlikely to ever repay the sum borrowed to pay to save these lives. People have always wanted to but UK government debt and there is no reason to think that will ever change. So, we'll actually never pay the £227,000 per person whose life is saved: it will simply sit on the government balance sheet for ever. So we can ignore that.

The second is that if we could create real inflation, as is the government's plan, then whilst it is true that nominal interest rates would rise the real cost would fall: we're actually paying too much for borrowing right now because we do not have inflation. Until recently when inflation was taken into account there was almost no real interest cost to government borrowing because the interest paid was close to the fall in the real value of the debt because of inflation. With PQE in play creating the inflation we need this could happen again: real interest costs could fall dramatically. Mark Carney says 1% is the most likely.

Third, you have to realise that if we cancelled the debt - which is what QE has done to one-quarter of all government debt at present, the real interest rate could fall to no more than 0.5% at present with the option available of it being 0%. Now I am not saying we would ever cancel all government debt: that would be unwise simply because people really want to own it, and I think they should have that chance (which is a good reason for not clearing the deficit) but the chance that QE will not be used again over the next 15 years is remote in the extreme.

So now let's assume one-quarter of the debt has no real cost and 75% of it has a 1% real cost having allowed for inflation (which Mark Carney thinks is fair) and price this at a simple rate over 15 years, which is the longest period likely to be needed once the time value of money is taken into account, and we come to cost of £25,568 per life saved.

Now there's the fourth point: that interest will be taxed. Let's assume it is only taxed at 20% (which is low) but that still cuts the cost to £20,454.

Now let's assume that only quarter of the cost of the NHS being open seven days a week can really be attributed to lives saved: the rest being down to other conditions better treated, reduced claims for negligence at weekends, greater efficiency because people do not need to take time off work to get appointments and so on. In that case, the real cost using these assumptions per life saved may be about £5,100.

Now, I stress, I've simplified things.

I stress, you cannot keep making these assumptions that everything can be paid for in this way, but that's not for financial reasons; that's because we'd run out of people to employ long before we ran out of money creation ability.

And, I stress, the additional cost of work may be higher or lower than I have shown and the tax recovery likewise a bit different.

But the assumptions on interest rates, QE and loans not being repaid are all good approximations to reality.

And so the question is whether or not a life saved is worth £5,100, spread over time?

And whether it's worth trying to close the deficit to save that sum.


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