Are there really green shoots?

Philip Hammond adopted an upbeat note in his spring statement yesterday, but is the news really that good? What concerned me is that the forecast growth rate is around the 1.5 per cent level when historically I would have expected 2 to 2.5 per cent in the UK. We do not know what the Brexit settlement will be and how it will impact on the economy and there are wild variations in the forecasts of the GDP effects, but I would expect growth to be lower than otherwise would have been the case.

Paul Johnson of the Institute for Fiscal Studies tweeted, 'Growth standards dreadful compared with what we thought in March 2016, dreadful by historical standards and dreadful compared with most of the rest of the world.'

The Chancellor is going to have find more money for health and social care in the autumn budget. Local authorities have experienced a 49 per cent cut in real terms and an increasing number are in a situation where they are going to only be able to provide statutory services. However, the forecast reduction in the budget deficit is less than some analysts had been anticipating.

The Treasury dislikes hypothecated taxes, but is there a case for an increase in income tax to be devoted to health and social care? As someone who already pays a five figure sum in income tax each year, I would accept that.

Ten years after the financial crisis people have seen their standard of living stagnate or decline and public services under pressure. Ultimately, as Bagheot pointed out in The Economist this week, this undermines trust in democracy.

Coalition Government 'shows emotional intelligence'

The Constitution Unit at UCL has been carrying out an intensive interview-based study of the Coalition Government. They report that 'In Whitehall officials report that both parties have developed a lot of emotional intelligence and worked hard to develop effective relationships, in a welcome contrast from the Blair/Brown years.'

In Parliament, the Coalition 'has behaved no differently from any other majority government, taking Parliament for granted ... The coalition may have less flexibility to accommodate Parliament because its legislative proposals are already a carefully constructed coalition compromise which they dare not unpick.'

The Unit finds that 'The Lib Dems have had a lot of influence on coalition policy, but struggle to demonstrate it.' This finding is confirmed by another piece of research which has just been published which I hope to comment on subsequently.

A mid-term review of the coalition agreement is due to start this summer and finish in September 2012. This will be an opportunity for discontented backbenchers in both coalition parties to express their views. Conservative backbenchers have been upset recently by what they see as Lib Dem triumphalism over changes to the NHS reforms.

Many Conservative backbenchers on the right of the party think that cuts in the defence and law and order budgets have gone too far and would be prepared to cut the NHS budget (and/or introduce an element of charging).

The NHS dilemma

Two generalisations can be made about the NHS. All governments seem to think that organisational restructuring is the answer to its problems. And at the first whiff of the word 'reform' the medical profession is up in arms.

Andrew Lansley has come up with a technocratic reform of the NHS which is so complex that it is said that you can see it from outer space. Of course, the slogan 'Defend the Primary Care Trusts' is unlikely to get many people excited. But concerns that local hospitals might be made unviable by transferring business to the private sector is a more potent fear.

The underlying problems that the NHS faces are an ageing population; ever more costly medical technology and treatments; and an increase in the numbers of chronically ill. The Government is expanding NHS spending in real terms but at a much slower rate than before. This will make it difficult for the NHS to keep up with these challenges.

It is unlikely that the Lansley reform will fix these fundamental problems and there will be substantial transition costs. David Cameron is clearly concerned and he has reason to be.

Ring fencing the NHS

The British Medical Association, the doctors' trade union, has complained that 'haphazard' cuts are harming the National Health Service: Cuts This announcement comes on the eve of their conference, but also when Conservative backbenchers are starting to complain about 'ring fencing' the NHS in the Comprehensive Spending Review.

If one does that, and also tries to keep cuts in defence and education down to ten per cent, that means that some departments could have to cut expenditure by a third in real terms which is very dificult to achieve without, for example, drastically cutting environmental protection services.

Some cuts could hit the NHS directly, for example cutting back on social care for the elderly could make it more difficult to get them out of hospital, leading to bed blocking. Warwickshire County Council is already proposing increases of fees for some services delivered to the home of 1,000 per cent, admittedly from a very low and hopelessly uneconomic base level.

The NHS does face the problems of an ageing population, an expanding medical technology frontier that drives up costs and rising patient expectations. Howver, here are a few suggestions:

1. Mrs Thatcher famously said 'we have dealt with the opticians' (or words to that effect, I don't have the transcript in front of me). I went my first eye test last week and it was free. Should that be the case for someone who is not poor? I was also interested to read on the back of the form that I was given that I could get a voucher towards my spectacles if I was a prisoner on leave.

2. Should prescriptions for free for everyone who is elderly? Or should the better off be at least asked to pay for a season ticket of £100 or so a year?

3. Anyone who was talked to GPs infornally will know that patients make considerable differential use of the service regardless of their state of health. Should charging be introduced, again with exemptions? Of course, that would really hit at the idea of a NHS free at the point of use and need and would probably be too politically controversial.

The Conservative pledge on the NHS was politically expedient. But does it make for good policy? Vince Cable didn't think it made economic and political sense and the former Labour health minister doesn't think it makes sense now.

Fiscal Nimbyism

It's becoming evident that the public response to the proposed cuts in public expenditure is what is called 'Fiscal Nimbyism': I'm in favour of cuts, provided they don't affect me. It is also reminiscent of an old joke about the British: they want Swedish public services and American taxes.

Whilst one can understand the electoral pressures that lead the National Health Service to be treated as a sacred cow, it is questionable whether it is sensible to fence off a fifth of the budget in this way. Of course, there will be cuts in the NHS: the so-called 'efficiency savings' will see to that.

But isn't it time to have a more fundamental debate about how we deliver health care that gets beyond complaining about the number of administrators?

Dave has a wobble

Much talk in the press, e.g. the pink 'un, over Dave Cameron's 'wobble' over tax relief for married couples. This is the sort of item that attracts the attention of the 24/7 news agenda: who has made a gaffe, how have they made it, and what's the recovery strategy. 24 hours of point scoring between the main parties (with Nick Clegg getting his oar in by saying the Lib Dems can't be bought cheaply) and I am already getting tired of it. What must less interested voters think?

The Conservatives clearly think they are on to a winner with Dave and the NHS. Posters are going up round the country with Dave looking serious and reassuring and making his pledge to increase NHS spending in real terms (which means cuts of up to 20 per cent elsewhere). Interestingly, there is no mention of the Conservatives on the poster, but that adds up when Dave is running ahead of his party in the ratings.

On a more serious note, I do have a serious concerns about the Conservative plan to 'repoliticise' decisions on the NHS by involving ministers more. NICE has been the subject of considerable criticism, some of it justified, and it is, of course, a quango. But the reason for setting it up was to get away from a NHS agenda driven by the pharamecutical industry and pressure groups. Indeed, research shows that there are often close links between patient groups and companies selling drugs.

The pressures on the NHS are immense: an ageing population, continually improving technology, constantly rising patient expectations. Some day we are going to have to think the unthinkable and consider whether some services will have to be charged for. Politically, of course, that's a very difficult nettle to grasp, especially in an election campiagn.

In practice, it has already happened with dental treatment. You can find a NHS dentist, but it's not easy. Private dentists don't come cheap. In many ways, it's not a good model for the future. But someday someone is going to have to face up to the dilemmas. The electorate may demand that the NHS is treated as sacrosant and I'm sure it's good electoral politics. But is it good policy?

The NHS

An off message MEP has caused a few problems for Dave Cameron, although I thought Andrew Lansley retrieved the situation well on Radio 5 this morning by emphasising that the Conservatives wanted an equitable health service (always difficult to achieve in practice whoever forms the government) but also one that was more responsive to its clients.

The MEP who started the storm has set out his views here: NHS

Whatever the merits of Singapore style health accounts, they would represent a fundamental change in the current NHS. How 'centralised' or 'statist' it is is a matter for debate, but I don't think it is helpful to Conservatives to have questions raised about their commitment to the NHS which, for all its shortcomings, has broad popular support.

Obama's efforts to provide health care for 47 million Americans has provoked a visceral debate in the US. This is really not about socialism or a Soviet model but trying to fix a situation where the US spends twice as much as a share of GDP on health than then UK does, but without achieving significantly better outcomes.

But Fox news is keen to get any Brit to contribute to their narrative of the situation. Don't let evidence stand in the way of an ideological claim.