According to the FT this morning:
England's NHS is in “critical condition” after years of underfunding, an official review into the health service has warned.
Lord Ara Darzi's government-commissioned report, out on Thursday, attributed the dire state of the health system in large part to the austerity policies of the 2010s, which slashed public spending in a bid to cut the budget deficit.
Apparently, the suggestion is that the NHS has been underfunded, at least as far as investment is concerned, by £37 billion.
Starmer's reaction is forecast to be predictably stupid. In a speech to be made today, he will apparently offer The “biggest reimagining of our NHS since its birth”. And he will add:
We know working people can't afford to pay more, so it's reform or die.
This would not be a concern except for the fact that Starmer said this and that the prescription is so dire.
If the shortfall in NHS funding is because of a shortage of investment, then the obvious response required is to provide that investment. Of course, that is not going to be paid for by “working people”, by which he implies taxpayers.
Partly, that is because taxpayers never fund government spending.
Partly, it's because if there is a shortage of investment, then very clearly, it is new capital that is required.
In either case, to say the NHS is in a crisis because of a shortage of tax revenue is just wrong. It is not. It is in crisis because of successive government's obsession with debt and their refusal to borrow the funds required to deliver the NHS we need.
So, a simple question is, can £37 billion be found? The answer is yes, of course it can.
Firstly, £33 billion of government bonds were sold to shrink the size of the Bank of England balance sheet between April and June this year, and no doubt quite a lot more have been since then. None of this money was put to productive use, but the City did provide it. Cancel the quantitative tightening programme, and it could be used to fund the NHS instead. We know the market wants bonds. That they have bought these proves it. So sell them a new NHS bond for £37 billion now and solve the problem.
Alternatively, use quantitative easing, although cancelling QT would be better. But do new QE instead, if need be.
Or just issue a new bond alongside the QT programme. I think that might be hard in one go, but not all the money is required in one go, so do it at the rate of £10 billion a year and markets will absorb it with ease.
Or, instead, go around the City. Instead, just issue a National Savings and Investments (NS&I) bond for £37 billion to raise the money directly from the public. Allow it to be held in an ISA. Pay a fair rate of interest. Market it well. The money will roll in.
So does the NHS have to ‘reform or die' under Labour, proving in the process that the Tory policy of denying it funding until it collapsed, then requiring private sector medicine instead, was correct, although the conclusion will now (totally bizarrely) be delivered by Labour, who have fallen right into their trap? No, of course, it does not.
In a country with £15 trillion of financial wealth of course there is money available to fund the NHS.
And cuts are not needed.
Nor is privatisation required.
All that is necessary is sufficient financial imagination to permit the raising of the NHS to make good the shortfall the Tories left. I have outlined the way to do that, with alternative options being available just in case one fo them does not appeal. All are technically possible and entirely plausible.
What we are seeing is Starmer, Reeves and Streeting announcing today that they are choosing to deny the NHS the funding it requires to meet needs. That's the reality of what today's announcement is all about. And yet more people will die as a result of Rachel Reeves' obsession with balancing her books as a consequence.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
What about a National Savings pension plan?
Similar to the options available for public sector pensioners.
That would be interesting to say the least
I agree
And it should be done
I agree with this post whole-heartedly.
To not do as you suggest means that Labour(ed) essentially agrees with the state the NHS has been left in.
So, why did you vote for them?
Yes I know that it was a vote against the Tories, but this whole system of ours is supposed to bring about change.
Plainly it is not such a system.
Oh dear.
Time to change the system.
BBC R4 Today platforming maveric Sir John Bell (oxford University) of AstraZenica fame – saying NHS is not underfunded – and using phrases like ‘no use pouring money’ into NHS.
His conflicts of interest – with hundreds of thousands in pharma shares etc have been called out – yet BBC treat him as an independent Oracle.
NewsNight BBC2 did have Nuffield Trust person saying we must rule out yet another ‘top down’ ‘reorganisation’.
Governments just cant resist meddling and ‘restructuring’ – many many times over the decades.
As you say Richard you can always rely on Starmer to say the wrong thing. A bit like last minute parachuting MP’s into reluctant constituences – this ‘quick’ reveiw, followed a day later by an instant response, seems not like governing – just ideological positioning.
You are spot on about John Bell – no doubt now wanting to be Lord Bell
Thanks for that background on Prof Sir John Bell. Is there also a clue in his accent?
I had another of those ‘shouting at the radio (R4 Today…)’ moments!
And the presenters also, of course 🙁 using ‘pouring taxpayers’ money’ into government spending…
I listened to Wes Streeting this morning. It was thoroughly depressing. He frame of reference is household budget economics. The language gives it away. Tax payers money. Savings here to support budgets elsewhere. Helping Rachel Reeves. Ministers are clearly heavily scripted. We will continue to get references to the “black hole”. Economic illiteracy which will not fix the NHS and will mean more suffering. You have outlining how the NHS could be funded Richard. The investment would undoubtedly have a multiplier impact and create a virtuous circle. Healthier population, fewer people off work more economic activity……etc
Extrapolating from Micro to Macro is a dangerous game but ask anyone what is most important in life and high on the list will be good health – for oneself and those we love. So, we MUST deliver better health care…. NOW.
The merits of Lord Darzi’s review are that (a) we haven’t had to wait long for it and (b) it says the NHS needs urgent treatment.
In practice, the only short term treatment that we can deliver is more money. Money is not sufficient but it IS necessary… and this is true whatever position you take on “NHS Reform” – reform always takes time and also money to oil the wheels.
So, step 1 has to be to spend more money to get the system as currently designed working as well as it can. Only then should we consider how do we make it better/cheaper/more sustainable etc..
Any reader of this blog will know that there IS money available so Labour just needs to get on with it.
Wes Streeting said in television this morning that he is lining up NHS cuts to meet the demands of Rachel Reeves’ budget
There will be no more money
The campaign to ensure no money is spent, and escalating fear to do anything at all is being ramped up, using the obsession over the national debt (a neoliberal shibboleth being worked to death here). The biddable OBR is being rolled out to forecast the economy, and especially promote the Debt/GDP outcomes) to 2073/4; Debt to GDP will be over 270%. I find it hard to write that, with a straight face. I have never seen such a comically absurd projection, in my whole life (Neil Macdonald, C4 News economist, pointed out it was higher than in WWII; but he would say that, wouldn’t he?). It is in the OBR Fiscal Risks and Sustainability Report, September 2024: “The rise in borrowing feeds through into higher debt which eventually, if policy were to be left unchanged, would reach 274 per cent of GDP in 2073-74. Over the first decade of the long-term period, debt is projected to be broadly stable as a share of GDP as the primary balance is initially in surplus and close to the level of the debt-stabilising primary balance.
From the early 2040s onwards, the impact of demographics and the increase in net interest payments start to outweigh nominal GDP growth, and so debt as a share of GDP starts to rise exponentially. It is slightly lower than the debt level at the end of the projection period inFRS 2022, largely as a result of more favourable demographics and a higher primary balance. Regardless, if these pressures were to materialise as we project then governments would need to take mitigating policy action to prevent this upward debt spiral.” (1.27, p.16 for those interested).
Examining the assumptions they assume the world fossilises in 2024. Effectively nothing fundamental changes; everything is in stasis and a kind of passive equilibrium reigns over us (no radical technological change, no politics, no wars – nothing different that can’t be neatly quantified, handled and sorted. In short it is utter nonsense. Fifty year forecasting of this kind, executed as a single-point estimate in this way, is indulging in fantasy. Even Stalin restricted his imbecility to a five year plan. here we have a fifty year extrapolation of a cosy world that somehow doesn’t really change in any significant way (and that isn’t going to happen); except to scare everyone to death here and now: which is its sole purpose. This small excerpt from a big document is what hits the news stands, and media round. Surprise. Surprise. Not! This is a shameful, pointless piece of work by the OBR, because they must know this exercise is far, far beyond their capabilities. Do they offer this surrounded by some measurable probabilities to give us a sense of the statistical margin of error of the estimates. Certainly not. Because the liklhood is, this will be 99% confidence it is off-the-chart wrong.
This is how low we have now sunk. This specious piece of junk is economic Trumpism.
I read this after writing my post at 8am this morning
We seem to be of one mind
NHS reform or die says Starmer
It’s not the NHS, or indeed any of the public sector, that needs reform- it’s the Government !!!
What did the b******s expect to happen when you underfund the public services under the auspices of Austerity !
Health worse, crime worse, education worse, energy worse, water worse, etc., etc.
When will somebody have the balls to stand up and say ‘This had and continues to be done on purpose. If we had funded these properly then this crisis wouldn’t have happened. So now not only to fund these areas properly, we have to find funds to rectify the mess as well !’
If “taxpayers never fund government spending”, what is taxpayers money spent on? I’m not talking about the time lag where government money is spent then taxes follow on from that. That is clear. What isn’t clear is the claim that taxpayers never fund government spending.
If the wealthy (companies and individuals) were taxed more, wouldn’t that allow more government spending on the NHS & other services?
The government needs to cancel the inflationary impact of its spending. That is what tax does. Why ask the rich to pay more? Because that also addresses inequality. It really is no more complicated than that.
Why borrow when a lack of government spending can be sorted by tackling gross inequality through taxes. It really is no more complicated than that (apart from also making sure that the government spends wisely and not as a perennial Santa Claus to their greedy pals).
As one commentator has previously said, be afraid, do not grow old or suffer ill health because you may not make your expected life span.
I asked my (government minister) MP to confirm that Reeves has read the Exchequer and Audit Departments Act 1866, and understood the implications of it for government spending. (We are not supposed to contact any MP not of our constituency, apparently.)
I received a reply yesterday. Note, this was after the PLP meeting for all MPs that discussed the Winter Fuel Allowance cut.
“I am afraid I haven’t had a chance to speak with the Chancellor about the legislation to which you refer and so I am not in a position to confirm her awareness of it or otherwise. I do know she is a highly intelligent and capable woman and I sure [sic] Treasury officials will have briefed her fully on all relevant legislative considerations.”
Reeves has blamed the Tories. Next in line: the Treasury officials.
“Nothin’ to do wiv me, guv.”
Thanks
Useful related info at https://www.hansardsociety.org.uk/publications/guides/how-does-parliament-approve-government-spending-plans
I gather the Contingencies Fund can be tweaked to accommodate the supply of extra funding when that’s required, so why aren’t we seeing that being done? Pure spite, I’d suggest. Utter malevolence.
The NHS could save huge sums of money by ending all privatisation of NHS services. In the area where I live a private company (Locala) has lots of contracts to deliver NHS services. From talking to the staff employed by Locala conditions of service are much worse than when they worked for the NHS directly. I would like to know how much the NHS is paying Locala to deliver services? If these many services were brought back in house it would save the NHS a tidy sum of money.
Reeves, Streeting and Starmer won’t mention this as they are committed to keeping private companies in the NHS. When they talk about ‘reform’ of the NHS I believe they mean they want further privatisation.
https://navigator.health.org.uk/theme/thatchers-announcement-review-nhs.
Too many reviews without substance! An internal market which is not competitive. PFI’s that are extorting monies. Infrastructure that is derelict. Clearly we are on a road towards privatisation?
I really didn’t expect much more from Labour but the cat is out of the bag.
Forgive me if I’m too simple but hasn’t the majority of the austerity cuts imposed upon the NHS been related to cutting jobs?
Ergo, throw some desperately-needed more jobs into the mix by creating the financial room necessary at the outset.
Tax income rises since more people are in work.
These new employees contribute more to the economy in general.
The NHS gets back to being a world-leader in healthcare, attracting inward investment instead of asset stripping.
Am I really being a clueless eejit by suggesting this?
No
David Byrne says:
In 2009, in answer to the inevitable economic effects of the US banking collapse, the Obama administration introduced the American Recovery and Reinvestment Act 2009 (ARRA).
This injected approximately 800 Bn dollars of stimulus into the US economy with a focus upon infrastructure, education and health investment. The effect resulted in 3% GDP growth.
In the Uk, the banks were bailed out and we received 15 years of austerity and politically motivated economic decline.
An integral part of the US, ARRA healthcare investment was in Health Information Technology (HIT) at a suggested cost of 80 Bn dollars. This programme was instituted partly to computerise patient records to ensure efficiency in the running of medical services. Incentives and penalties were applied to encourage ‘industry’ cooperation.
The SKS presentation yesterday stated that there would be a 10 years plan for NHS renewal to address recommendations from the Darzi Review.
Over this period, looking from a business standpoint, implementation could be self-financing. Reduced costs would arise from:
-sickness prevention and reduced demand for the service
-Health Information Technology
-more efficient utilisation of staff and hospital resources.
The implementation would ultimately deliver rationalisation, operational efficiencies and cost savings resulting in opportunities for NHS growth.
Unfortunately the Obama administration (Treasury) supported the Banks, and allowed them to rip-off Main Street America, with scandalous misuse of home foreclosure with horrendous economic, social and political consequences. It left a bitter middle-America, with appalling distorting effects on politics; effectively galvanised the Tea-Party movement, doubled down on Main Street mistrust of Washington and Wall Street, anger against the Democrats, and began the Road to Trump.
Read Neil Barofsky, ‘Bailout’. And for the dawn of Tea Party (p.127).
I heard on the news the government wants to make it easy to make an appointment to see a doctor with a simple app. Great I thought the only problem it won’t create more appointments simply due to the lack of doctors etc.
Precisely
Correct
This will be the gaming version of the NHS