Fact-checking a few claims about the NHS

What with the campaigning for the general election having gotten into full swing last week, many claims have been made regarding which Party would be better for which aspect of security, the economy, education etc. One particular video regarding the NHS started doing the rounds on Facebook a few days ago. This video makes a number of claims regarding the supposed impact that the recent Coalition and Conservative governments have had on the NHS, with the video then going on to suggest that a Conservative government would be bad for the NHS. For a bit of excitement, here is said video:

 

 

The claims made in that video are many. Some are valid, whereas others are not. Let’s take each of them in turn.

Claim 1: We are experiencing the largest sustained drop in NHS funding as a percentage of GDP since the NHS was founded.

Reality: This claim is false. As per the information shown in the graph below (from the Institute for Fiscal Studies) NHS spending as a proportion of GDP has been stable over the past couple of years, and the decrease between 2009 and 2012 was no larger or longer than decreases in the mid-to-late 1970s or mid-1990s.

bn201_fig1

Moreover, the more relevant metric of NHS spending per capita continues to increase – in other words, more is spent per person on the NHS than ever before, although the rate of that increase has slowed in recent years.

bn201_fig2

Claim 2: If the internal market was abolished we [i.e. the NHS] could save billions.

Reality: This claim is also false. The internal market actually creates savings and is not “wasteful” as is claimed in the video. On the contrary, it promotes competition and stimulates the NHS to provide better services – importantly, the benefits of competition in healthcare are well established. Furthermore, it is actually the refusal of many within the NHS to accept the proven benefits of competition that is causing some harm to the NHS – indeed one of NHS Improvement’s main aims is to promote and encourage “buy-in” of competition among those in the NHS. Hence, abolishing the internal market would actually cost billions rather than save them.

Claim 3: Health tourism costs the NHS £200 million per year, which is insignificant in terms of the overall cost of the NHS.

Reality: This is generally true – although the costs to the NHS associated with people who are not ordinarily resident in the UK are of the order of £2 billion per year, that includes many people who did not come to the UK specifically and solely to use the NHS (i.e. it includes people who are not “health tourists”. Instead, estimates put the upper bound of the costs associated with those who travel to the UK for the sole purpose of using the NHS at around £300 million per year. When compared to the total annual NHS budget of about £90 billion, the costs associated with health tourism are indeed a trivial amount.

Claim 4: Immigrants are not ruining the NHS, they’re running the NHS.

Reality: True. Immigrants from within the EU currently represent about 10% of doctors and 4% of nurses. If non-EU immigrants are included, therefore, the figures are likely to be slightly (although probably not a huge amount) higher. Given that there are already quite severe labour shortages within the NHS, it is clear that without the immigrants currently working within the NHS, the functioning of the NHS would be severely hampered. Moreover, immigrants are net contributors in terms of taxes vs benefits, so also contribute to the NHS in that way. Hence, the claim that immigrants are not ruining the NHS is clearly valid.

Claim 5: 1 in 10 nursing posts are vacant and the nursing bursary has been scrapped

Reality: True. The nursing bursary was indeed scrapped at the start of the year – this means that there is a much-reduced incentive for people to train to become nurses as they will now have to pay £9,000 in tuition fees per year in order to do so. This is likely to lead to problems recruiting sufficient nurses in future. Notwithstanding that, there are also problems recruiting nurses now – the Royal College of Nursing suggests that 1 in 9 nursing posts are now vacant. This figure is actually marginally worse than that claimed (11% vacancy rate vs the 10% claimed).

Claim 6: Tens of thousands of sick patients waited on A&E trolleys this past winter

Reality: Likely to be true. Using data from Quality Watch (and a bit of approximation / extrapolation), roughly 6 million people attended A&E last winter. Of these, around 15% were not seen within the government target of four hours – i.e. about 900,000 people waited more than four hours in A&E. Now, it seems unlikely that all of these people waited on trolleys specifically, but even if only 10% of these people (i.e. 1.5% of all admittances to A&E) did then the “tens of thousands” figure would be accurate. Hence, this claim seems plausible.

Conclusion: As with most of these election video type things, the video contains some claims that are true, some that are likely to be true, and some that are demonstrably false. Does this mean that the Conservatives are the worst Party for the NHS? Who knows?! That’s for you to decide and take into account (if you want to) when you vote. But at least when doing so, you’ll now have a more complete set of facts when you do.

 

George Osborne: A solid, but not spectacular Chancellor

As announced last night, George Osborne is no longer Chancellor of the Exchequer. Plenty of articles have already been written regarding how he’ll be remembered and whatnot (see, for example, here), but what really matters in an evaluation of his performance as Chancellor is focusing on the long-term impact of his main policies.

Of course, the main focus of Osborne’s term as Chancellor was “austerity” (or, as it is described in technical terms, a “fiscal consolidation”). There is lots of debate as to whether austerity is harmful or is beneficial to growth in the short-run – for example, Alesina & Ardagna, and some parts of the IMF, find that fiscal consolidations actually increase short-term growth, whereas the likes of Guajardo et al. and other parts of the IMF believe that fiscal consolidations harm short-term growth.

However, what really matters in evaluating the impact of austerity is its likely affect on long-term growth. Here, none of the aforementioned studies have anything to say, but there are good reasons to believe that austerity is beneficial for long-term growth. For example, it seems plausible that the amount of time required for a country to re-establish any lost credibility (either with taxpayers or the central bank) that arises from running continually large fiscal deficits could be relatively high – convincing people that a country is now fiscally responsible is unlikely to be the matter of a few years’ work.

In other words, it is plausible that it could take longer than just a few years for people to change their opinion regarding a country’s fiscal responsibility, such that the full impact of fiscal consolidations are only likely to be felt far into the future. Moreover, even though a recent working paper (by Fata & Summers) suggest that fiscal consolidations hamper long-run growth, those papers are based on a methodology that is fundamentally flawed.) Hence, austerity per se could have been a good policy of Osborne’s.

However, Osborne erred when he cut government spending on investments and infrastructure. At a time of incredibly low interest rates, it would have made sense to borrow to invest in projects that would have reaped a return in the future – the costs of borrowing are low, while the expected future benefits of such investments are likely to be high (in terms of their impact on future growth and on future tax revenues). Therefore, Osborne’s focus on cutting all, rather than just day-to-day, spending was misguided. Just as misguided (for the same reasons, since it prevented Osborne from borrowing to invest in infrastructure) was his Fiscal Charter.

Similarly, protecting spending on the NHS and on international development meant that there was little incentive for those departments to find savings despite the fact that they, and the NHS in particular, is bloated and full of inefficiencies (witness the large NHS deficits). If those departments had not had their budgets protected, a more efficient and equitable distribution of the cuts to day-to-day spending could have been achieved (since if the NHS or development budgets had been cut slightly, then other departments’ budgets would not need decreasing as much). Likewise, the triple lock on pensions. So, another negative point for Osborne there.

On the other hand, Osborne did set up the Office of Budget Responsibility (OBR), which was undoubtedly a very good thing. Although not quite as dramatic as Labour granting the Bank of England (instrument) independence in 1997, this step was important since it enabled and promoted independent oversight of government forecasts and spending plans. Moreover, it added much-needed rigour to Treasury analysis, evaluation of government performance against fiscal targets etc. since those working in the Treasury know that people at the OBR will review and evaluate any plans and forecasts.

Getting on to some of the smaller issues, the pasty-tax debacle was also a negative point. Specifically, the introduction of the tax was actually a decent idea – it removed some of the myriad of exemptions that apply to VAT, thereby simplifying the tax system – but the subsequent reversal of the policy in the face of (relatively small) public backlash was weak and disappointing to see. Likewise, the introduction of the National Living Wage policy was a good idea, but restricting it to over 25s seems rather a cop-out, and instead the minimum wage should (and could easily) have been increased to the level of the NLW, thereby benefiting more people without substantially increasing businesses’ costs.

There are also things that Osborne couldn’t really do much about, but for which some might blame him anyway. The lack of productivity growth might be one, but that’s more the responsibility of other departments than it is the Treasury. Failing to meet, or continually adjusting, his fiscal targets could be another – but Osborne was hampered in meeting those because of sluggish growth in the global economy.

Overall, then, it seems as though there are plenty of things over which Osborne can be criticised (e.g. refusing to borrow to invest, protecting certain departments’ budgets), but equally there are plenty of policies he introduced that are worthy of praise (e.g. the OBR, consolidating day-to-day fiscal spending). As such, Osborne will most likely go down in history as fairly middle of the road – some good bits, some bad bits, but generally not outstanding in either category.