Our correspondent deplores the advent of 'magic money tree economic theory'
On my way home recently I listened to the BBC news on the radio and caught the coverage of Prime Minister’s questions. Jeremy Corbyn was railing against the 1% government-imposed pay cap in the NHS and other public services (not forgetting that we’ve had an imposed pay cut). Theresa May’s response was scathing. “There isn’t a magic money tree,” she retorted, “that we can get money from whenever we need it.”
It’s true; there isn’t. Surprise, surprise! All the money that the government spends on any item of expenditure comes from somewhere else – from taxation. Taxation on sales, taxation on businesses and taxation on individuals. That’s pretty much it. The money tree analogy is very clever. It sounds like common sense and diverts our attention away from areas where the government is vulnerable.
The truth is, it’s all about choice. In particular, the financial choices that all governments have to make: how much should be raised in tax, and, equally important, how the money is spent.
According to Dr Mark Porter, head of the BMA, the NHS is ‘running on fumes.’ We all know that. But the NHS isn’t running on fumes because of some divine ordinance. It’s running on fumes because it’s government policy that it should run on fumes. We have been sold the lie of austerity.
We have been told that, as a nation, we need to live within our means. Mrs May said she was most concerned to help people who were ‘just about managing.’ But the biggest impact of austerity measures is on public services, which, as we all know, are hanging on by the skin of their teeth.
The people most adversely affected by austerity are those very same ‘just about managing’ people who depend on public services, and who are also hanging on by the skin of their teeth.
According to magic money tree economic theory, there simply isn’t enough cash in the pot to give the NHS what it needs, but there is enough to reduce the rate of corporation tax for big companies that make billions in profits, and there’s clearly enough that it’s unnecessary to pursue multi-national companies who avoid tax by various means of accounting jiggery-pokery, transferring profits outside the UK to reduce their tax liability.
Amazingly, there’s even enough cash in the pot to inject an additional £1bn into the economy of Northern Ireland. It’s illuminating that such an enormous sum can be found to serve a political imperative but can’t be found for the NHS.
A cynic might observe that Mrs May’s majority seems more important to her than the health of the people of Britain. Calculated decisions Back to Dr Porter: he says that ministers wilfully ignore the pleas of the [medical] profession. He’s wrong. These decisions aren’t wilful – they’re calculated. They’re part of the slow, grinding, and sustained assault on the NHS that began under Andrew Lansley back in 2010. Dr Porter adds that austerity in the NHS is the result of explicit political choice. He’s damned right about that.
And yet, staggeringly large sums of money can be found if the political will is there. I’m talking about the money for Northern Ireland again. A billion pounds! I can’t even imagine that much money. You might think a million pounds is a lot of money. A billion is mind-boggling. Think of it this way: if you saved £350 every working day of the year (not including interest) it would take 11 years to get a million. It would take 11,000 years to save a billion.
Regions of deprivation
Now, not for one minute do I think that the money is not needed in Northern Ireland. Of course it is, but there are other regions of deprivation in the UK where sums like that are needed every bit as much (parts of Wales and Scotland, for example, the north-east of England, and so on). But they won’t receive any extra because their MPs won’t shore up Mrs May’s government, and, besides, as she said, there is no such thing as a magic money tree.
But if the money isn’t coming from a magic money tree, where is it coming from? A billion is a lot of money; it has to come from somewhere. Are more taxes being collected? No. So it has to be coming from the finite pot of money that that nice Mr Hammond (the Chancellor, not the one who crashed the car) keeps in a cupboard in 11 Downing Street for when the government needs it. If a billion is taken out for the DUP deal, there’s a billion less for somebody else.
I think it’s grotesque. Theresa May does not have a mandate from the British people, yet the deal with the DUP will allow her to act as if she did. It’s not what I voted for, nor, I suspect, the vast majority of the British public. Did you vote for it? What this looks like is a political party using a very large amount of taxpayers’ money to keep itself in power, money that could be and should be invested in public services for all of us.