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In today’s newsletter:
Does the NHS need more money?
The Spending Review
An interview with New Zealand’s Deputy PM
What is the European Commission smoking?
I knew they were going to say it. And they promptly did. Of course they did.
This week’s Spending Review announced “a 3.0% average annual real terms growth rate” in day-to-day spending on the NHS, plus “the largest ever health capital budget”. I knew exactly that the response from healthcare wonk land was going to be: not bad for a start, but still not enough.
And that was indeed their response.
The King’s Fund said that these spending increases were “lower than the historical average”, that “[i]t is hard to see how all the things she [Chancellor Rachel Reeves] mentions […] can be met by this settlement alone”, and that “while capital budgets are being shown to increase, they do so by nowhere near enough to […] deliver a modernised health service”.
Similarly, the Nuffield Trust said that “the NHS deal looks generous. But seen in the context of all the promises made by the government […], today’s settlement soon melts away. […] [I]t will be difficult for the NHS to invest in the technology and facility upgrades it needs”.
The British Medical Journal ran an article with the self-explanatory headline “NHS leaders say extra £29bn a year is not enough to cut waiting times and modernise services”.
The NHS Confederation added:
“The funding boost is welcome […] [b]ut […] this additional £29 billion won’t be enough to cover the increasing cost of new treatments, with staff pay likely to account for a large proportion of it. So on its own, this won’t guarantee that waiting time targets are met.”
Give it a few weeks, and the Guardian, the Independent and the New Statesman will be back to complaining about how the NHS is being “deliberately defunded”, probably alongside that obligatory Noam Chomsky quote. (“That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.”)
There is no conceivable level of NHS funding at which healthcare wonks and left-wing commentators will reach the conclusion that this is enough.
My main issue with the Spending Review, though, is not the fact that the NHS budget is going up. It’s that there’s not much else going on in this area. Neither in the Spending Review itself, nor in other statements. The review only contains the usual platitudes about how prevention is better than cure, about “care in the community”, and about technology. These are things that politicians say when they don’t know what else to say.
I am glad the conversation on the NHS has shifted in recent years. Positions such as mine have been upgraded from “lunatic fringe” to “unpopular but arguable minority opinion”. That’s progress!
But we are still very far away from seeing actual policy changes.
Kristian Niemietz
Editorial Director
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IEA Podcast: Executive Director Tom Clougherty, Director of Communications Callum Price, and Editorial Director Kristian Niemietz discuss the spending review, IEA YouTube
Brace for Budget tax increases
Responding to the Spending Review, Tom Clougherty, Executive Director at the Institute of Economic Affairs, said:
"For all the preceding rhetoric, it is very clear that no 'zero-based' review of government spending actually took place for this Spending Review. Instead it was a familiar story – more money for the NHS and a squeeze on day-to-day spending elsewhere.
"It remains to be seen whether more health spending will produce better outcomes. Given the recent lack of productivity in the health service, this extra money could easily be wasted.
"As for the rest of government, spending restraint is welcome but it needs to be accompanied by public service reform. To spend less, government must do less – and employ fewer people. It isn't clear that message has got through.
"Defence is getting the lion's share of increased capital spending. Elsewhere, trying to shift capex from London and the south-east to other regions might be smart politics, but may also reduce the economic return such spending produces.
"Crucially, this Spending Review did nothing to address the supposed 'fiscal black hole' that exists against the Chancellor's fiscal rules. So we should brace ourselves for tax increases in the Autumn, and a Summer of speculation over exactly where they will fall."
Executive Director Tom Clougherty appeared on Sky News
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Executive Director Tom Clougherty appeared on TalkTV
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Tom was also quoted in Guido Fawkes, the Daily Mail, and the Lancashire Times.
Our government and politicians are hooked on spending and Rachel Reeves' review proves it, Director of Communications Callum Price, LBC
News and Views
New Zealand's Deputy PM David Seymour: "That's a Fight Worth Having", Director of Communications Callum Price interviews New Zealand’s Deputy PM David Seymour, IEA YouTube
UK economy on track for a dismal second quarter, Economics Fellow Julian Jessop, quoted in the Daily Mail, This Is Money, Daily Express.
“The 0.3% fall in UK GDP in April is another lesson in basic economics.
“The contraction was partly due to the unwinding of the temporary boost in the first quarter, when manufacturers had brought activity forward to beat US tariffs.
“There was a similar timing distortion in the data on legal services and real estate activities, as output fell back after a rush to complete purchases ahead of changes to stamp duty.
“But there was a large drag too from the increases in staffing costs and in many household bills, which hit business and consumer confidence hard.
“Some surveys suggest May might be less bad, especially with fears of a global trade war now receding. However, job losses appear to be accelerating, wage growth is slowing, and inflation has jumped, which will all continue to weigh on spending.
“The three-month on three-month growth rate still looks good at 0.6%. But this figure will fall sharply in May and June as the comparison rolls on.
“The recovery has clearly stalled. Growth in the second quarter as a whole is now likely to be close to zero, and government policies are at least partly to blame.”
What is the European Commission smoking?, Head of Lifestyle Economics Christopher Snowdon, The Critic
“A leaked report from the European Commission has revealed plans to tax the pants off e-cigarettes, nicotine pouches and other life-saving substitutes for cigarettes. It is in the process of reviewing its Tobacco Excise Directive which sets a minimum tax rate for cigarettes. It was last set in 2010 and its impact, which was never very significant, has been completely eroded by inflation. Every EU country taxes cigarettes at a higher rate than the EU minimum.”
The NHS Was NEVER The Best Healthcare System In The World, Communications Manager Reem Ibrahim interviews Editorial Director Kristian Niemietz, IEA YouTube
'Free' bus and train perks need to be axed urgently in one area says expert, Communications Manager Reem Ibrahim quoted in the Mirror, the Telegraph, the Daily Mail, GB News
“Reem Ibrahim, from the Institute of Economic Affairs, said: “It is difficult to justify a system where the wealthiest age group in the country is having their travel funded by taxpayers.”
“The 60+ Oyster card and Freedom Pass schemes are financially unsustainable, and are not targeted to those genuinely in need of support. We urgently need a more targeted approach, rather than entrenching an unfair and costly system.”
Director of Communications Callum Price appeared on TalkTV to discuss Government investment in nuclear energy.
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Keir Starmer's absurd interference that will only benefit criminals, Communications Manager Reem Ibrahim, the Express
“Can the Government legislate our ‘bad’ behaviours away? The naive and possibly conceited have always believed the answer is yes. If the Government bans enough things and taxes the rest, we will simply do as the nanny state says.”
This is not the healthcare system taxpayers deserve, Strategic Partnerships Manager Matthew Bowles, CapX
“NHS pay structures need modernising, but offering pay rises without reforming services is merely an exercise in political avoidance. Until policymakers understand that NHS sustainability concerns systems as well as salaries, the pressures will continue, and so will the growing frustrations of the public.”
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