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Anorak | The NHS needs £2,000 more per household

The NHS needs £2,000 more per household

by | 25th, May 2018

There’s a report out insisting that to keep the NHS angels treating our woes we’ll all have to stump up £2,000 more a year. Or at least, we need more taxes of about £2,000 per household to pay for it all. It’s not entirely obvious that this is actually so:

Taxes will “almost certainly” have to rise over the coming years simply to prevent the National Health Service and social care system from slipping further into crisis, a major new report concludes.

It needs a lot of cash:

Funding the projected increases in health spending through the tax system would need taxes to rise by between 1.6 and 2.6% of GDP – the equivalent of between £1,200 and £2,000 per household, the experts said.

There’s a problem with the report.

The Institute for Fiscal Studies and Health Foundation said the NHS would need an extra 4% a year – or £2,000 per UK household – for the next 15 years.

It said the only realistic way this could be paid for was by tax rises.

A detailed report of how they’ve gone wrong is here. A simple one is as follows.

Ever since it started the NHS has had a higher inflation rate than the rest of the economy. This isn’t a surprise, we expect services to rise in cost relative to manufactures. No, don’t worry about why (“Baumol’s Cost Disease”) but it’s something that we have seen is true for hundreds of years and we expect it to continue to be true. Except, except – this is only true if we don’t try to change the manner in which we do things. If we attempt reform then it is possible that we’ll prevent that rise in costs.

What have we been doing since 2010? Yup, that’s right, we’ve been “destroying” the NHS by bringing in all those market and competition ideas, haven’t we? And a remarkable thing has happened. Since 2010 is the only time that the NHS hasn’t had a higher inflation rate than the rest of the economy. Quite the contrary in fact, prices for the same output have been falling in the NHS relative to those prices in the rest of the economy. Since 2010. Since we started to reform the NHS. By having those markets and competition.

That is, NHS reform actually works to solve this problem in this report. So, it isn’t – necessarily at least – that we need more tax money for the NHS. We could continue what we’re doing, which is to continue to reform the NHS, more markets, more competition, and deal with the problem that way. After all, we’ve got the proof of the past 8 years that it does actually work.

What’s bad about this report is that all of the information I’ve just used is in that very report. They just don’t manage to piece it together.



Posted: 25th, May 2018 | In: News Comment | TrackBack | Permalink