In the NHS, Sunak and his colleagues seem unable to grasp Economics 101: Pay More | Larry Elliott Economics Editor

BSo I became the meeting place of the global elite, Davos It was known as a place where those suffering from tuberculosis were treated. Thomas Mann set his story ‘The Magic Mountain’ in a sanatorium in a small Swiss town and his connections to Davos’ literary past seldom seem more appropriate than now, with the global economy in rehab after a three-year illness that has yet to be cured. There have been many setbacks since the beginning of the Covid-19 pandemic.

The first two weeks of 2023 saw a modest improvement in the short-term outlook, but that does not mean that the long-term issues have been resolved. The structural problems facing the global economy—weak investment, poor productivity, the climate emergency, growing inequality, and political fragmentation—are still with us.

Klaus Schwab, the man who has run Davos since the early 1970s, said last week that it was time to “develop a long-term construction perspective and shape the future in a more sustainable, inclusive and resilient way”. And he is right. This is really the challenge.

But getting out of a crisis mentality is not easy, especially in a country like the UK, which has made a virtue of preoccupation with it, and where the long-term consequences of the short-term can clearly be seen.

Neither Rishi Sunak nor Jeremy Hunt will be at Davos and it’s not hard to see why. The UK economy has done a little better (or more accurately a little less bad) than expected, but they have a country in crisis to deal with at home.

the NHS About to collapse. In the early 1980s Lindsay Anderson directed Britannia Hospital, a dark comedy in which an underfunded hospital surrounded by striking staff was a satire on the early years of Thatcherism. Forty years later, the film visually looks eerily haunting.

Excess deaths – a measure of how many more people are dying than usual – in the UK it’s at its highest level in 50 years, apart from the pandemic. Ambulance waiting times in England are the highest ever, as are figures waiting at A&E for more than 12 hours. There are more than seven million people on hospital waiting lists in England. Meanwhile, a study conducted by Dr King’s Fund The think tank found last year that the job opening rate for nurses was 12%.

It’s currently fashionable to say the NHS’s problems really have nothing to do with money, but this argument doesn’t add up. Of course, the NHS could be managed better, but so could a lot of other organisations. Certainly, there are other models of healthcare that the UK can learn from. But the reason it’s so hard to attract nursing staff is that a senior nurse’s pay has fallen in real terms by 10% since 2010.

The reason hospitals falter under the pressure of soaring winter demand is that a decade of austerity is taking its toll. The average increase in spending on the NHS since its creation was in 1948 to 2010 3.7% annually. In the years between 2001 and 2010, the average increase in real spending was 7% and waiting lists were getting lower. Since then it has been 1.4% and listings have been rising again.

Not only wages have been cut. The UK allocates 0.3% of national income to health capital spending – new hospitals and the equipment that goes into them – which is half the level of other high-income countries. The notion that the NHS is a bottomless pit into which governments left and right have randomly dumped endless amounts of taxpayer money is detestable. The generous funding of Tony Blair and Gordon Brown had an impact. Less generous spending adjustments also had an effect.

It’s been a similar story with welfare. More than a decade ago, the coalition government commissioned A.J Report From Sir Andrew Delnoe who concluded that the system was not fit for purpose and required further funding, either from individuals or from the state. The report was never acted upon, resulting in half a million people waiting for help, more than 150,000 vacancies and hospital beds occupied by people who should be in care homes. Again, the solution seems simple: get a plan and make the necessary long-term investment. Economics 101 says that if you are understaffed, the solution is to pay more.

Government ministers seem strangely unable to grasp this essential point, which means the NHS will remain in crisis – or on the brink – no matter what sticking plaster solution the Treasury comes up with in response to a chronic funding crisis. An aging population and advances in medical treatment mean the need for real-term increases of 3-4% annually to meet the rising costs of care. The fact that health was treated less severely than other parts of the public sector is neither here nor there. Other services — the justice system, for example — have been stricter since 2010, but are less visible.

Sonak knows there is a problem. The public has yet to fully trust the Conservatives with the NHS and remains attached to the idea of ​​a free service at the point of use, even if a few currently describe health care as the envy of the world. Stopping the NHS crisis from being the first item in the news is vital to the Prime Minister. There isn’t a lot of good news right now, but what is there is being swamped by an avoidable crisis that took 10 years in the making.

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