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NHS spending spree is just another May fudge

One would think Theresa May had enough Brexit-related fights on her hands without provoking another one – but that is exactly what Downing Street is doing by belligerently insisting that an illusory “Brexit dividend” will contribute to higher NHS costs.

The governments own fiscal watchdog, the Office for Budget Responsibility (OBR), yesterday became the latest respected body of economists to shoot down the governments silly and needless spin. “Our provisional analysis suggests Brexit is more likely to weaken than strengthen the public finances overall,” the OBRs latest fiscal report said.

The report added that while there should be some savings from lower contributions to the EU, “it is unclear how much will be available after payments towards the agreed withdrawal settlement and other Brexit-related spending commitments”.

Read more: Budget watchdog warns on "unsustainable" public finances outlook

So why does this matter? To some extent it is little more than a frivolous sideshow to the much more significant political questions surrounding Brexit. However, it also reminds us that politicians, when pledging higher spending commitments, must not be allowed to get away with inventing ways in which these commitments will be covered.

The outlook for the UKs public finances remains bleak, with the national debt forecast to exceed 100 per cent of GDP by the late 2030s before soaring over 200 per cent two decades later. Such long-term projections are extremely uncertain, of course, but they act as a stark reminder of the impending strains placed on health and social care services.

And in the short run, the OBR warns us that the outlook has already become “less favourable” since last years evaluation. Dealing with the UKs demographic timebomb will be tough. Rapidly faster economic growth would help, but looks unlikely – and beware Labours deluded ultra-Keynesians who seem to assume that all government spending is stimulative with a massive multiplier effect.

Read more: Turn the NHS from a public sector problem into a private sector opportunity

A huge increase in the number of working-age people would also help, but political realities prevent this coming from migration.

Thus we are left with the prospect of tax hikes, spending cuts, or unsustainable levels of borrowing. Each are electorally unpopular, but its time politicians were honest about the challenges ahead, and respected voters enough to give us a blunt assessment of how they would deal with the problem – especially when pledging an extra £20bn a year to the NHS.

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