“NHS needs extra cash and overhaul” scream the headlines today, with NHS England boss Simon Stevens making the case for an additional £5bn in funding per annum to stave off a funding crisis.
There is no disputing Simon Stevens’ dedication to the NHS. He took a significant pay cut to take the job when he left private provider UnitedHealth, and has since then advocated a sensible approach to funding the NHS. But his call today did rather smack of hoping that ever more money will solve deeper-rooted problems.
Historically speaking, the NHS between 1979 and 1997 saw spending increases averaging 3.2% in real terms. The NHS Budget very nearly doubled between 2000 and 2010, and has been protected from the necessary savings that have been par for the course in other areas. Yet, as the National Audit Office noted in 2010, that didn’t necessarily translate into better hospitals.
“Over the last ten years, there has been significant real growth in the resources going into the NHS, most of it funding higher staff pay and increases in headcount. The evidence shows that productivity in the same period has gone down, particularly in hospitals.”
Why? More money created more middle managers. More money created higher pay . My colleague Alex Wild did a fantastic job last week demonstrating where a lot of that money went. Spoiler: the pockets of executives.
More money certainly didn’t do anything for the patients at Mid Staffs screaming in agony down empty corridors.
This is why today’s announcement, and the NHS arms race we saw during party conference season in which every leader assured more funding and more nurses, is the wrong way to go about delivering a health service that works in ten or twenty years. In today’s Daily Telegraph, Andrew Haldenby, the director of the think tank Reform, makes this argument in a most compelling fashion.
We need to think more critically about the long-term, and about cutting out waste and inefficiency. Our research demonstrated £50 million a year is lost on PR officers and non-jobs; last week, The Times reported on some £5 billion worth of inefficiencies. That’s money that could be on the frontline. That’s before we mention the seemingly endless financial black hole that appears whenever the NHS – or any Government department – attempts to tinker with its IT systems.
Governments are in a tough spot, of course. Reform the NHS, and you’re accused of meddling, opposition politicians ready to barrack you for fiddling with the “envy of the world.” Some of the reforms announced by Stevens today will save money in the long-term and should improve care for patients, but we need to go much – much – further.
And we need a little more honesty about the debate. Last year we spent just over £50 billion on debt interest, half the budget. As Norman Lamb, the Health Minister, said in his speech at Liberal Democrat conference:
“Yet, as our national debt grows year by year as we borrow to keep public services going, so the amount we spend on interest to service that debt grows.
“Every pound we spend on interest on debt means a pound not spent to support someone with dementia, to provide therapy for someone with severe mental ill health or to ensure that a cancer patients gets access to drugs that can keep them alive.”
Never let it be forgotten that Britain’s national debt is the greatest challenge to the NHS, to the police, to the fire service, to local government social care and to every other essential public service. In short, every decision must be made with the intention of bringing the deficit down. And with that in mind, regrettable as it is, it’s impossible to support any calls for more NHS funding.
Expenditure data: HM Treasury
Shadow Chancellor Ed Balls wrote in today’s Evening Standard about his alarming Mansion Tax plan. So, Mr Balls, can you answer these nine questions:
1. What bands and how much?
You said that those in homes valued between £2m and £3m will have to pay an extra £3,000 a year. But what would the other bands be, and how much would be payable in each band?
2. How many homes will drop out?
Having to pay a Mansion Tax will mean buyers won’t pay as much for a home as they would have done. Have you estimated the impact on prices of the Mansion Tax, and how many homes would fall a band or fall out entirely because of the tax?
3. How much less from Stamp Duty etc?
A Mansion Tax will reduce house prices, which means the Treasury won’t collect as much in taxes such as Stamp Duty and Inheritance Tax . Have you estimated the impact that lower prices will have on overall revenues from Stamp Duty, Inheritance Tax and other taxes?
4. How many widows will defer?
Have you estimated the impact on revenues from allowing low-income homeowners such as widows to defer payment, also known as the “death tax”?
5. How will the “death tax” trap affect the housing market?
Some low income homeowners will avoid moving so they don’t have to pay their deferred Mansion Tax when they sell. Have you estimated the impact on the housing market from the “death tax” trap of deferred tax bills building up, keeping larger homes out of the market and restricting associated economic activity?
6. Will it really raise £1.2 billion?
Even without modelling for deferment, the impact on prices reducing the numbers and the loss of other revenues such as Stamp Duty and Inheritance Tax, our estimates assuming charges ranging from £3,000 to £30,000 a year would yield only £830 million. How have you calculated your estimates?
Using estimates from Knight Frank last year on the number of homes in each of the bands below, we guessed some charges you might introduce for bands over £3 million. These charges range from the £3,000 a year you mentioned for homes in the £2m-£3m to £30,000 for homes over £10 million. As you’ll see, the total revenues add up to £415 million. Since then, Knight Frank have confirmed that the total number has risen from 55,000 to 110,000. Even if you assume the revenues double, too, this only yields £830 million, well short of your £1.2 billion target.
|Band||Monthly charge||Annual charge||No. of properties||Revenues, £m|
7. How will you avoid massive cliff-edges?
Our estimates suggest an annual Mansion Tax of £14,400 for a home valued at £9.9 million but a £30,000 bill for a home valued at £10 million. That creates a huge cliff edge with a substantial distortionary impact. These amounts will have to be even bigger if the tax is to raise the £1.2 billion you claim, meaning even bigger cliff edges. How will you avoid these cliff edges?
8. What if a future Chancellor freezes thresholds?
So many taxes, like Stamp Duty, Inheritance Tax and Income Tax started out as taxes only for the rich. You say that this time it’s different. But how will people be sure that a future Chancellor won’t freeze the thresholds?
9. Why not add Council Tax bands instead?
We don’t need higher taxes, we need to cut waste and cut taxes. People who have bought expensive homes will typically have paid vast sums in Stamp Duty to buy them and Income Tax, Capital Gains Tax or Inheritance Tax to raise the money to buy them. But if you really must tax these people more, couldn’t you have chosen a simpler way that wouldn’t make our tax code even more complicated than it already is? Why have you chosen to campaign for a whole new tax with new thresholds, valuations, rates, bands and rules instead of simply adding new bands to Council Tax?
After another successful year, it’s time once again for our Annual Review. In our tenth year, we’re trying a new format – quite obviously inspired by our Chief Executive Jonathan Isaby’s journalistic past!
Will Company Tax still exist in 20 or 30 years’ time? Good question. I don’t know. But I’d like to find out the answer.
Australia’s Treasurer, Joe Hockey, answered my question with refreshing honesty at a lecture hosted by the Institute of Economic Affairs about the future of corporate incomes taxes (“Corporation Tax” in the UK).
I pointed out the relentless downward pressure on average corporate tax rates in the OECD and how some small countries like Estonia have abolished corporate income taxes, instead taxing distributions of funds rather than profits. Much like our corporate tax proposals outlined in by our 2020 Tax Commission‘s Single Income Tax.
I asked if Australia might be the first big economy to bow to the inevitable and follow suit. After joking that he would indeed announce that he was abolishing the tax at the lecture, he discussed the challenges with relation to corporate and cross border consumption tax issues, including the OECD’s Base Erosion and Profit Shifting initiative.
At some point, the downward pressure on Corporation Tax rates will become too great for a big economy to resist abolishing it entirely. The substantial simplification and transparency benefits, along with the considerable wider economic benefit from effectively removing taxation from investment will become too big relative to the revenue additional revenue it raises in comparison to a tax on distributed earnings.
It’s a pity our politicians are so timid that they would prefer to wait until they have no choice rather than seize the competitive advantage available from being the first country to do it.
Responding to the Prime Minister’s speech at Conservative Party Conference and the announcement of two major taxation policies, Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:
“This was a positive speech for taxpayers, with tax cuts for the lowest paid and long-overdue relief for ordinary people being clobbered by the higher rate of tax. Leaving more of people’s money in their own pockets is not just morally right, but the best way to promote economic growth and long-term prosperity. Taxes in Britain have been too high for too long, and the Prime Minister is absolutely right to want to bring them down for hard-pressed working people.
“The next step must be to bring National Insurance thresholds in line with Income Tax, taking those on the lowest pay out of tax altogether.”
Responding to the Chancellor’s speech at Conservative Party Conference, Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:
“The Chancellor is spot on that you can’t tax your way out of a deficit, and that Britain’s astronomical debt must be dealt with. However, much more needs to be done to face up to the huge challenges Britain faces. That means radical tax reform, a war on waste, and another hard look at public spending.”
On the freeze of working age benefits, he continued:
“Freezing benefits is a necessary step towards restoring discipline to our public finances, and ensuring that taxpayers get a fair deal from the welfare system. The benefit system must support those in need and help people into jobs, but can never become a long-term alternative to work.”
On the headline measure to abolish the 55% “death tax,” he continued:
“A tax cut – any tax cut – is always welcome, but piecemeal measures like this don’t represent the radical reform our tax system needs. Britain needs more vision, more ambition, and more boldness from all of its political leadership.”
Responding to Labour’s plans to introduce a number of taxes and increase spending on the National Health Service, Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:
“This was sixth form socialism of the most uninspiring kind. It is lazy and dangerous to implement populist measures that won’t raise the money politicians promise. Windfall taxes will hurt pensioners who rely on stable returns for a comfortable retirement, sin taxes hit the poorest hardest, and a Mansion Tax would be a vindictive gesture that will eventually find its way down the property ladder to hit much less expensive homes, too.
“If we want more money for essential services and cancer drugs in the NHS then there must be a serious and sustained war on wasteful spending, alongside a rigorous reassessment of priorities.”
Berwick Town Council has spent £1,511 threatening a Councillor over a facebook page exposing the alleged misuse of Council powers and funds, it is claimed.
The page focused on the perceived turmoil and confusion caused by the Councils’ decision to take over the management of Berwick’s Portas Pilot, a project focused on regenerating Berwick Town Centre with £100,000 of taxpayers’ money, as well as other uses of the Town Clerks’ delegated power to award council money to projects and subcontractors.
After raising questions around these decisions on the facebook page the whistle-blower received an email and later a letter demanding that the posts be taken down. These legal steps allegedly cost the taxpayer £1,511.
Questions have been asked over the legality of the launching of these legal proceedings as it is alleged that the decision was made outside of a properly constituted Council meeting, by four members of the Council Finance Committee, without the apparent knowledge of the Town Clerk.
Taxpayers’ could question whether raising legal actions against a member of the public attempting to scrutinise controversial uses of taxpayers money is the best way to spend scarce resources. A Council spending taxpayers’ money should not reject taxpayers’ scrutiny.
Today sees Eric Pickles, Secretary of State for Communities and Local Government, sign into law new rules banning councils from forbidding citizens and journalists from reporting council proceedings in blogs and on social media.
This marks a victory in our long-running campaign to open up democracy at the local level. Andrew Allison, our former National Grassroots Co-ordinator, wrote a crucial report for the TPA in October of last year that provided the Government with enough evidence to drive through the changes.
These changes are great news for taxpayers, as democracy should never live behind closed doors. The Government is to be congratulated for making local government a more transparent, open place.
Yesterday marked a busy day on the War on Waste Roadshow, stopping off to spread the word four times as we made our way north to Newcastle.
A quick drive up the A19 from our hotel in Scunthorpe saw us arrive in Hull just in time for Andy Silvester, our Campaign Manager, to do a live interview for BBC Radio Humberside before the rest of the team were joined by Andrew Allison, the TPA’s former grassroots co-ordinator. In glorious early morning sunshine the various placards, signs and flags we’ve packed into the back of the minibus looked very good indeed.
From there it was on to York, setting up outside the famous Betty’s Tea Rooms, where we were joined by a number of activists to spread the word. Residents were less than thrilled with the revelation that new furniture at the County Council offices cost some £1.4 million.
A short drive took us to the North East and the charming market town of Yarm, where the wasteful spending of half a million pounds on “improving” the parking on the High Street did nothing to aid our pursuit of a parking space! Once finally installed, the highest number of supporters and activists so far helped us hand out leaflets and raise awareness of issues in Yarm and across the North East. Despite the increasing drizzle, we soldiered on to Newcastle with a brief leafleting stop at the foot of Grey’s Monument.
Fingers crossed for another successful day – we head off for Carlisle in ten minutes!
This Wednesday, Queen Elizabeth II will take to the throne in the House of Lords and deliver the last Queen’s Speech of this functioning, if occasionally fractious, Parliament. In it, the Coalition will set out the legislative programme for its last year of power before next year’s uncertain election. They have a chance to deliver a lasting legacy for taxpayers – but will they?
We particularly hope to see the Coalition deliver on one of their first promises – to enshrine a “right of recall” in law. Currently, voters have little recourse when they feel an MP has let them down other than to circle the date of the General Election in their calendar. Giving the public the right to petition for a ballot when they’re aggrieved by their MP’s behaviour would be a fantastic way to increase the accountability of our elected representatives. Voters across the world, who have been given the right of recall, have acted sensibly and appropriately, only using it on rare occasions. There is no reason to fear British voters having the same power. Concerns that it would create “kangaroo courts” – most notably expressed by our Deputy Prime Minister – only reflect how far the gap has grown between the political elite and the people they represent.
On a similar note of accountability and transparency, if Britain is to reduce a £1.3 trillion debt burden, it will have to wage war on waste across local and national government. The Coalition’s insistence that government at all levels publishes spending details online has meant that waste is more obvious and easier to identify, and that transparency is vital if we are to hold politicians to account for how they spend our money. However, the Coalition won’t be in power forever, and a future administration may not share its commendable commitment. A short bill, to enshrine in law that all departments, quangos and local authorities have to continue publishing how they spend our money, would guarantee that transparency in the long term. Similarly, there has been unwelcome speculation that the Coalition might weaken the Freedom of Information Act; this should be avoided.
Whilst these measures would encourage transparency in how our representatives spend and act, the Coalition should also do more to introduce transparency into the tax system. A merger of National insurance and Income Tax wouldn’t cost the Treasury anything, but it would allow hard-working Brits to see quite how much of their money is being taken by the taxman.
The Coalition has a last chance to set out a radical vision for a more accountable political class and a more honest tax system. Let’s hope they take it.
You can read a fuller list of the TPA’s proposals for tomorrow’s Queen’s Speech here.
It’s not merely the huge scale of the national debt that is a cause for concern, but also the rate at which it is increasing. The national debt will rise by £137 billion this year alone, and by 2016-17 it will hit a total of £1.5 trillion.
To put this frightening borrowing into context, the rate of increase in the national debt would have::
“The deficit may be coming down but we shouldn’t let that distract us from the rapidly increasing national debt. Somebody has to pay these bills, and that means this terrifying debt burden will fall on the shoulders of future generations of taxpayers. Politicians must get serious and wage a war on waste, instead of borrowing from our children and grandchildren to pay for things we can’t afford today.”