Thursday 28 June 2018

Not . . . not . . . HIGHER TAXES?

The Cabinet is wrestling with whether to give the NHS more money.  And if so how much.

The response to this has been telling. In the first place I don't detect any desire to extract structural health reforms as a price for a cash injection. And this despite, for example, a growing sense among some doctors that a modest payment for GP access, something routine in other European countries, might weed out some of the more frequent attenders.

The NHS is a money pit. An organisation that is paying prices for drugs which are many multiples of those charged on the high street is not the best custodian of public money.

Secondly there has been a chorus of outrage from those with vested interests in other areas of public spending (particularly defence), who have pointed out that every extra £1 for the NHS means less for them.

Thirdly there is the awkward fact that Britain is still living beyond its means. True, the Government is borrowing less than £1bn per week now, less than at any time before the financial crisis, but that's still money borrowed because we can't afford the standard of living we want now.  It might be legitimate to borrow to invest, but borrowing to finance current spending - to employ more nurses and doctors for example - is asking our children to pay taxes in future to sustain our lifestyle now.  This is something Conservatives have long felt was immoral.  And we have a Conservative government, remember?

You wouldn't think so, in particular because the talk is that any NHS boost would have to be funded partly by tax rises.

In a way, this is a hallelujah moment for me. I have long argued that Britain cannot afford its public spending at current rates of taxation. We have to decide what sort of public services we want, and how much we're willing to pay to get them. Excessive borrowing of the counter-cyclical type favoured by Gordon Brown from 2002 onwards has to some extent masked the acuity of this choice. But the long years of fiscal retrenchment under George Osborne and Philip Hammond, whilst nothing short of miraculous in economic terms (avoiding recession, cutting the deficit, creating record levels of employment, taking the lowest paid out of tax) have undoubtedly made public services worse.  And people are noticing.

The UK takes about 37% of GDP in tax. That's higher than the US, Canada, Australia and Switzerland.  Scandinavian countries pay more. We could pay more without the wheels falling off the wagon. Doing so might be better than borrowing from our children.