Jeremy Hunt, in his role as Chancellor, has apparently said that no additional pay offer to nurses may be made this year. He has also ruled out backdating the next year's settlement. There is, apparently, no money available to meet this cost.
Ignore for a moment the total ignorance implicit in this comment, which ignores the fact that approximately 40% of any pay rise comes straight back to the Treasury in additional tax and national insurance contributions.
Ignore too the stimulus effect that this extra spending power for nurses will have in an economy deep in economic crisis.
And even ignore the additional tax paid when nurses do spend, and the recipients are taxed on what they get, as will the next net recipient, with ever growing returns to the government.
You have to ignore all these facts because Jeremy Hunt and the whole body politic appear to be totally unaware of them, even though they are glaringly obviously true economic facts.
Instead, assume that the nurses were a bank that had got itself into trouble, leaving savers and others at risk and then be sure that however much money was required in that case to keep that bank going would be made available, immediately.
Or imagine instead that the nurses did not work to save lives but instead sold gas and electricity to households, with the energy generated or created by others which they had bought on the basis of dubiously credible contracts, which were now going wrong. They'd get all the money they needed in that case.
As would the nurses get funded if they ran failing pension funds on equally dubious bases.
Money is readily and instantly available in these cases. But it is, apparently, impossible to find for nurses.
Why is that? I think there are three implicit assumptions unfortunately shared by most politicians.
The first is that all money paid to nurses and other state sector workers disappears into a black hole never to be seen again. It is a cost from which no benefit, let alone any income, arises. The fact that state spending on such services is a part of GDP is apparently unknown to politicians, and beyond their comprehension.
Second, when it comes to the value of the spend, politicians share the view of the Office for National Statistics (the ONS) that the value created by nurses and other state sector workers is equivalent to their cost. Private sector workers do, of course, add value through profit extracted by others as a result of their effort, but apparently state sector workers benefit no one else but themselves by reason of their employment, or so it is assumed. So no patient gains from being well, and no student benefits from learning from a teacher, are accepted as existing, just as no police officer adds value for GDP purposes. No wonder public servants go undervalued.
Third, because politicians have now passed the buck for employing most state sector staff to others (trusts, academies, and so on) they can deny any responsibility for these issues. It is, they say, up to these agencies what they pay, knowing full well that the funding these agencies get deliberately constrains what might be paid to staff.
We face then a conspiracy of silence, matched by a veil of ignorance, and a deep denial of the truth when politicians come to address these issues. Union leaders must require the patience of saints when having to deal with those capable of holding all three such opinions simultaneously.
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Thanks for this devastatingly concise analysis. It also explains the appallingly clumsy position taken by the politicians who are looking for ‘productivity’ as a basis for giving pay increases. Public services simply don’t – and cannot -work that way.
Superb!
There is no conception of the velocity of government money into public services – except the lame crap about pushing out private investment which is typical Neo-liberal trope.
It reminds me of what Mark Carney was talking about concerning the loss of bio-diversity and ecology – we only value something when it has gone – not when it exists – an elephant’s tusks when it is dead, land when it is deforested.
So – ergo, under Neo-liberalism, if it is state owned/managed its value outputs are negligible.
But if its negligible, why do all those American ‘healthcare’ companies see their value go up every time the Tories get into power or there is one more step towards marketisation?
And why do these HMOs want to get into the British healthcare system in the first place? It’s telling sin’t it – the big give away if you care to look.
Because that output value to the nation is something they want to corner for themselves. When it is is private – only then does it exist.
As you said Richard, its one big fucking lie. And this is how a nations’ wealth is stolen right before our eyes – the planet even.
I wonder what they are doing with the substantial amounts of money they have saved by not paying those on strike?
The income and status of the main Tory donors depends on their not believing , or not accepting, this.
Having the state as debtor to the private system, gives a few in the system- power!
Rising interest rates also give them income without having to do much to earn it.
Unravelling trusts and academies would shift power away from the unelected who run them.
Implementing ‘efficiencies’ (which are not efficiencies ) makes people nervous about their jobs and making wage demands.
The in power will present their view as ‘the way it is’ and ‘there is no alternative’.
Once the narrative is rejected the ideological edifice will fall.
I am reminded of the Romanian dictator Ceausescu addressing the crowds and then realising he had lost it.
Ideas spread underground then appear as if from nowhere. My Labour councillor friend has read Stephanie Kelton and discusses it with colleagues. Similar ideas are seen more often on readers comments on the Guardian and Independent.
I think a number are inhibited because they will be accused of believing in the magic money tree but the deteriorating situation may encourage them to be bold.
It might seem at times to Richard that he is the voice of a small band in the wilderness but I hope that as the crisis deepens people will look for alternatives. of course it would be better if they could be converted by reason but, as I say above, for many now in power, their position depends on them not believing it.
With everything that’s happening around me, I need to keep reminding myself of the two frogs plunged into a bucket of milk.
They both thrash and struggle desperately to get out but alas one of the frogs gives up the struggle, sinks to the bottom and perishes.
This gives the other frog renewed energy and he thrashes and struggles even harder until eventually the milk turns to butter allowing him to climb out and dance away.
Completely unrelated but, as I’ve stated before, I don’t participate in social media but, like a voyeur, I occasionally have a peek to find out what some of the zombies are up to (present company excepted of course).
Normally I’d only be allowed to view one or two tweets at most before the wall comes down informing me that I need to sign up for further access,
As of a few days ago, however, the aforementioned wall can be brushed aside allowing full access.
Obviously I can’t comment or participate in any way but I just thought that you should be aware that something strange is going on in Twitterland.
Nothing about Twitter is as it was anymore
Jeremy Hunt- champion of patient safety! what a lying, hypocritical slimy toad he is.
In common with many Tory MPs he wants to privatise the health service.
https://www.independent.co.uk/news/uk/politics/jeremy-hunt-privatise-nhs-tories-privatising-private-insurance-market-replacement-direct-democracy-a6865306.html
Demanding productivity is a farce when the NHS has been denied resources to fund new equipment or update IT that would enable this. What the Tories mean by productivity is replacing properly qualified staff by cheaper inadequately trained people eg physican assistant instead of a doctor and reducing the length of training time for a doctor.
I hope the whole bunch of them are struck down with serious life threatening Covid / heart attack / stroke and find out what that means now. And i hope they are sent to the back of the queue and no one whisks them through as a VIP. May they rot in hell the lot of them.
Jeremy Hunt oversaw the destruction of the NHS while pretending, and being accepted by all the MSM as Mr Nice Guy.
https://www.opendemocracy.net/en/jeremy-hunt-tory-leadership-boris-johnson-nhs-junior-doctors/
Not only did he allow the consistent underfunding of the NHS but he actively ensured costs increased and his mates made large profits – he sold off the NHS staff agency thus at a stroke radically increasing the costs to the NHS! https://www.independent.co.uk/news/uk/politics/jeremy-hunt-nhs-firm-nhsp-health-department-save-money-taxpayers-ps70-million-year-a7807911.html
Quite probably to a company that his aunt Virginia Bottomley was involved with! Conflicts of interest !!!! “Recruitment company Odgers Berndtson — chaired by Tory former health secretary Virginia Bottomley, who also held Mr Hunt’s South West Surrey seat before 2005 — is believed to be going through the legal stages in order to make a bid.”
https://nhsfunding.info/staffing/nhs-bosses-plan-to-sell-temp-agency/
Why do we have such a pathetic MSM that never investigates and never joins the dots?
Thank you Richard. Perfectly put.
Presumably, if a Government minister goes into the newsagent to buy a paper and finds he has only a £20 note, he realises he can’t afford it. Using his own logic, he cannot acknowledge the possibility he might get change.
An unrelated bugbear, “Efficiency Savings”.
Why does the fire service rescue cats from trees?
If they have time to do this, surely the fire service must be hopelessly inefficient?
The answer is that maybe 5 days a week they have excess capacity and can rescue cats.
The other two days, there are major fires and they need all their capacity or more.
“Efficiency savings” are a synonym for stripping resilience from a system.
So true
Alas the Fire Services no longer do cats – there are two reasons
The first and serious one is follows the loss of a fireman who fell and died rescuing a cat, so it is only now in extreme situations that this might even be considered.
And as a fire service team leader told me ‘you never see cat skeletons up trees’.
: – )
If this is a conspiracy of silence from the government, avoiding the key issues, is there also a conspiracy of silence coming from the general media reporting on these strikes?
I haven’t kept a close eye on what all of the different news orgs are saying, but surely at least one of the bigger ones is able to point this out. Given whenever I see reporting on this it seems to focus on vox pops I have to guess not.
If not, that’s kind of an awful indictment of our country’s journalism.
It has to be wondered how long this wilful ignorance on the part of government can continue, as more and more workers are coming out on strike. I’ve just got back from going to offer moral support (and biscuits) to a teachers’ picket line at Buckie High School (and urge anyone else to do the same to any local strikes – biscuits not obligatory – whether or not you are in that union: I’m UCU retired), and it’s just growing, Not because – I wish it were – people feel the need to fight back against a brutal government, but because on “these wages” people can’t get by any more. Simply can’t manage. Public support’s better than any I’ve known, but the govt, fully aware it’s going to lose the next election anyway, seems simply not to care. Impasse, but impasses never last.
I think it’s more a case of conspiracy than ignorance, both by politicians and the largely right wing press. Why the BBC should also be largely silent is anyone’s guess. However, these people aren’t daft whatever we might think of them. I believe they share an ideology which only values those entities which offer dividends to share holders and corporation tax to the Government. As the public sector don’t offer these benefits, at least in terms that can be put on a balance sheet, they don’t value them. As you point out however, everyone is a share holder in what the public sector provides, whether in health, education, or bin collection.
One of my favourite subjects, a Jeremy Hunt article! The Health Secretary was being taken to a Judicial Review by one of the greatest physicists ever , the Cambridge Lucasian Professor Stephen Hawking , until his death.
‘The scientist had warned it was an “attack on the fundamental principles of the NHS” to allow commercial businesses to run parts of the health and social services.’
https://m.belfasttelegraph.co.uk/news/uk/professor-stephen-hawking-praised-nhs-and-battled-health-secretary-jeremy-hunt-36703452.html
But don’t take my word for the dubious nature and career goal of Jeremy Hunt. It was horrifying when he was being considered as something of a ‘nice Tory’ to become PM at one stage. Having been also a Foreign Minister before his current spell as Purse Strings holder.
“Hunt was health secretary – the longest-serving in history – barely makes it into the narrative at all. If it does, it’s restricted to his battles with junior doctors and funding – both of which Hunt likes to portray as victories”
https://www.opendemocracy.net/en/author/caroline-molloy/
The article by Molloy is from 2019, pre-Covid, but it is encyclopaedic in the destruction of the NHS that Hunt made his career goal and which is now close to being completely butchered, whilst the complicit media and neutered academia – no more Hawking Heroes apparently – let our greatest gift , the NHS, die.
Hunt isn’t doing anything different that he hasn’t dreamed of since 2005 , when he even wrote about what he planned to privatise our health care.
I was at a conference with Stephen Hawking on the NHS shortly before he died – we were both speakers
Like us all, he was a flawed individual, but also profoundly courageous and unafraid to speak truth to power
Interesting reference by Ian: “…Romanian dictator Ceausescu addressing the crowds and then realising he had lost it.” Perhaps that tipping point may arrive here if/when the trade unions organise a “Day of National Action” and all go on strike for a day. Pretty well everything in the UK would grind to a halt for 24 hours, but the extremity of the UK Government’s position would be even more evident and undeniable if the wider public (who’d mostly be stuck at home anyway) get on the streets to support the strikers. If an overwhelming number of the population are either on strike or on the streets all across the UK in support of the strikers, it’s perhaps our likeliest route to the “Ceausescu Moment” and a general election before any greater damage can be inflicted on our public services. The public might be persuaded to participate if it’s pointed out to them that they’ve been paying taxes for decades to provide public services and now the UK Gov has been destroying those self-same services for decades by failing to fund them adequately. It might not reflect the reality of how money is created, but it reflects the true outcome of UK Gov policies since Thatcher came to power.
I would be joining in
Is it really just the politicians that share in the three assumptions listed in this blog, I wonder?
Other commenters above have already mentioned the mainstream media also play a role in maintaining and sustaining these assumptions, but what about the civil servants in each government department? When they prepare the budgets for their respective deparments, can they not see themselves that assumptions 1 and 2 are false? Can they not see work out themselves that 40% of their spending will be recovered from direct taxation, or get information from HMRC to confirm it? And can they not work out the beneficial spillover effects of the additional spending within and across departments? Or do they acatually have all this information on hand, but are prevented from using it by the politicians in charge?
Apart from that, is there anyone else that is pointing this out, apart from yourself Richard, here and on Twitter? Are there any think tanks or researchers who are looking into these effects, and explaining it to the public?
I say this not to absolve politicians from the role they have in this, but to point out that it will be extremely difficult to get them to change their assumptions while they are immersed in an echo chamber of mainsteam media and civil servants who share and reinforce those assumptions.
I think the only way out of this would be for someone to set-up an equivalent to Independent SAGE but for budget spending (and Independent Office of Budget and Tax Responsability, maybe?), whose job is to shadow the work of the OBR, but include in their alternate report a) the additional tax revenue generated from direct taxation and multiplier effects from the budget spending itself (if the OBR doesn’t do so already, and if it does, where can we find that info?), and b) the budget spillover effects (the equivalent of Richard’s “tax spillover effects” but applied to budget spending, as I suggsted in a post many blogs ago) of a spending from a deparment across all other departments, both the purely monetary effects (budget savings and/or extra revenue generated) as well as effects on other indicators that the government may be interested in monitoring.
I appreciate that this will be a monumental task, especially point b), and that it will take more than one person to do this. Perhaps, Richard, you might know the right people who could start the ball rolling on this task?
Ignorance of how things really work will indeed be a hugely difficult hurdle to get over. The problem is the “we can’t afford it” mantra strikes a chord with millions of individuals and families for whom affording things is a genuine problem. So they accept the “truth” of this by analogy with their own situation.
Eventually though, the populace will see through this lie, like the emperor’s new clothes.
The Tories believe the market is all seeing and dancing and thus controls the economy but seem to forget the labour market. Which must mean that when there is a shortage, the price goes up to attract additional nurses and doctors. So when there is a shortage the government must pay them more and thus increase the supply. (The reason there are very few doctors trained in the UK is that the student fees does not cover the training cost and the government hate paying)
The UK business and industry should be very concerned about the UK going over to health insurance as they will either have to pay their employees more or like in the US have to pay their health insurance directly. This extra cost has made USA manufacturing uncompetitive.
Note the USA health industry cost is 18% of GDP without covering the low paid, 10.9% and a similar number with inadequate insurance.
The Chancellor knows well all your points, as I am sure does the Prime MInister.
That’s why I despise them, both hypocrites.
Please all share this information on fb etc. we can all help educate our population.
Steve Barclay came out with the comment about striking staff consciously inflicting harm, which really disgusted and angered me.
My MP is Jeremy Hunt. First as Health Secretary and now as Chancellor. I can think of no other single person who has consciously inflicted more harm on the UK population with the limits he personally put on NHS spending, and treatment of NHS staff.
‘Excess deaths’ are currently running at of the order of 1,000 plus per week. The college of emergency medicine suggests 350-500 caused by delays to treatment. Whilst the data is mixed the order if magnitude is consistent.
It is not an exaggeration to say that Hunt’s and Tory policies are directly and consciously causing death and ill health. Interviewers should be calling this out at every opportunity.
Ive written to Hunt to point this out. He or his minions usually reply. Im not expecting a reply this time.
I’m just back from some time in Berlin where of course the history is everywhere. Having written the previous note, Arendt’s phrase about the banality of evil popped into my head. It’s a not a word to be thrown around lightly but when the link between seemingly remote political, policy decisions and deadly consequences is so clear…
It has to be used….
Brilliant post Richard , its a shame you were not invited on to the Radio 5 Live phone in this morning . the ignorance shown by some people is beyond belief …..
And I quite like chatting with Nicky Campbell
Thank you for this. It has summarised the whole situation so succinctly and clearly.
The total ignorance on how much will come back to the Treasury and how it will stimulate the economy is gobsmacking as someone from Barnsley would say. And these people are in charge of our destinies.
[…] Ministers have created a conspiracy of silence, matched by a veil of ignorance and a deep denial of … Tax Research UK […]
I’m reminded of Arthur Scargill’s famous quote on “the economics of the mad house.” Scargill’s context was the wilful destruction of the mining industry as the government closed scores of nationalised mines preferring to import coal rather than pay British miners whose wages supported communities as they flowed through the local community drawing tax at every point in the spending chain.
Of course it was never about the economics, the whole idea was to break the back of organised labour of which the miners were the vanguard.
Plus ca change, plus ca meme chosee