Yesterday the Daily Mail published a story on its website headlined “£7,000 per person is the true cost of welfare as UK spends a quarter of national income on handouts”. This is a story about some data published by the EU which shows the amount each nation spends on ‘welfare’ – a measure which here includes healthcare and pensions. The Daily Mail calls these ‘handouts’. Is NHS care a handout now? The article below displays a bit more honesty (only a bit) and includes this chart (look at the chart title. Romania and France don’t even appear on the chart!)
It trumpets the fact that UK spending on welfare is 17.5% above the EU average, but then also says it is only the 15th biggest spender in the EU. You could just as easily (and perhaps more honestly) write the headline as :
“UK spending on welfare (including health and pensions) is lowest of any Western European nation” (OK so I wouldn’t make a good sub-editor, but you get the idea).
It’s becoming quite fashionable at the moment to advocate raising existing taxes (or introducing new ones) specifically to ‘pay’ for increased investment in public services, particularly the NHS. A lot of people say they would be quite happy to pay a bit more tax if it meant we can invest what is needed to ensure a world class NHS. This comes on the back of years of talk about our ageing population creating new pressures on the NHS leading to a ‘funding crisis’. The thing is though, we can afford to invest in the NHS and we don’t need to increase taxes to pay for it.
Taxes don’t actually pay for government spending at all. In fact, government spending ensures we have the money to pay tax. The spending comes first. Richard Murphy explains this quite nicely in this blogpost, and I’ve tried to explain it myself here. Taxation has a number of purposes, but paying for public spending ain’t one of them (even though 99% of people think it does).
We will always have the money to pay for extra NHS spending, the question is whether we have the resources. An important part of any health service is obviously going to be the medical personnel, so if we need to increase capacity, the question is are there enough qualified people available to hire, or enough people willing to be trained to do the work? The cost of hiring an extra doctor or nurse, is not the salary cost, it’s the cost to the economy of that person not doing what they would be doing if they weren’t a doctor or nurse.
Similarly with medical facilities and equipment. There is always enough money to purchase those things, but the question is, is using them in the NHS more or less important than what they would otherwise be used for? I would argue that usually, the answer would be more.
I think by floating the idea of increasing taxes to pay for things like the NHS, it allows the fiction of taxes paying for spending to continue. If everything we might want to do to further public purpose is couched in terms of how it will be paid for, it gives the other side the advantage. It’s far better to talk in terms of real resources rather than money. As my fellow MMTer Neil Wilson is fond of saying, it’s time to get real!
The Lib Dem Conference started this weekend, and the first big announcement was that they would increase funding for the NHS by £1 billion. When I saw this earlier today, it brought to mind the scene from Austin Powers where Dr Evil doesn’t realise $1 million is no longer a particularly big number.
In the context of the NHS’s £110 billion budget, and extra £1 billion is pretty insignificant, as was Labour’s announcement of an extra £2.5 billion a couple of week’s ago. The announcement today seems to have got the response it deserves – a collective shrug.
There was an inspirational speech at the Labour Party Conference today. Sadly the speaker wasn’t a Labour front-bencher however. It was 91 year old RAF veteran Harry Smith giving an emotional account of life growing up in Barnsley before the birth of the NHS, and urging us to be vigilant to prevent us from going backwards. Here’s the video of the speech:
Harry has also written a number of columns for the Guardian which you can read here. He has more common sense and decency than most of the House of Commons combined!
At PMQs today, Ed Miliband questioned David Cameron on the NHS. In response to a wuestion on the 18 week target, Cameron claimed the number waiting 18 weeks had fallen since the election. Labour disagreed, saying the number had risen. Labour seem to be correct and Cameron wrong.
It’s not the first time the Tories have been caught out using dodgy stats (although Labour aren’t immune either). Here are some other instances courtesy of a comment I saw on the Guardian website:
2. Cameron’s error today was not an isolated incident
Now all parties spin stats in a way they think best suits their argument, so what’s the problem you might think? Well, if we are going to argue over whether a particular policy is working or not, it is essential to agree on some basic facts. If we can’t even do that, a proper evaluation of the policy is impossible. It also leads to a general mistrust of statistics to the extent that no figures (regardless or the source) are believed, whether they be on unemployment, crime or immigration.
Here’s my weekly roundup of the best links from the last 7 days. The week started with George Osborne declaring his commitment to full employment. This is what some people thought of Osborne’s pledge, but full employment can be defined in different ways. Neil Wilson provides his definition here:
Tuesday was April Fool’s Day, and Paul Bernal put out this post. It’s actually a pretty good satire that explains the issues a lot of lefties (me included) have with the Labour Party:
There have been a couple of articles this week by people with a different (and more accurate) view on how the economy works, that have appeared in more ‘mainstream’ sources. First up, Peter Martin blogged on Labourlist about Ed Balls’ desire to run a budget surplus:
And here’s one from Philip Pilkington writing in The Guardian about what he sees as the problem the left faces in trying to increase living standards at the same time as shrinking the importance of the financial sector:
In this article by former financial regulator Bill Black, he explains how the knowledge to prevent the crisis was already available to us but was ignored:
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