Sorry about this but we just can't afford any more government

This is a point that we’ve made before, a number of times. Britain hsa already got more government than Britain is willing to pay for. Therefore we cannot have any new government. No new plans for this or that - simply because we’ve already promised ourselves more than we’re willing to pay for.

The OBR is saying this now:

The Government must find more than £100bn to keep the UK’s debt mountain from spiralling out of control, the budget watchdog has warned, suggesting that steep tax rises or spending cuts are on the horizon.

The Office for Budget Responsibility (OBR) said pressures from an ageing population, surging debt interest and the shift to net zero meant Britain’s £2.5 trillion debt pile was on course to soar in the coming decades.

Debt is expected to surge from 100pc of GDP today to more than 300pc within 50 years without spending cuts or tax increases.

This is without anything new. Without “making child care affordable”, without “investing in the climate” and without, even, giving the NHS 4% more each year. This is just the totting up of what we’ve already promised ourselves. A pension in our dotage and all that.

We pointed this out 5 years ago and we did so before that too.

Or as we’ve been known to point out, we aren’t willing to pay for the welfare state we’ve already promised ourselves, let alone anything more or new.

The expansion of what government can do for us - or more likely, in our view, do to us - cannot continue simply because we’ve already spent more than all we’re willing to send to pay for it.

Sorry about that and all for those who have further grand plans. But you can’t have them - not unless you identify which bits of current spending you’re going to kill to make room for the new.

Resource constraints always are interesting, aren’t they?

Welcome to the Growth Commission

A welcome new initiative is the newly-formed “Growth Commission” that will analyze policy suggestions to assess their likely long-term impact on the UK’s GDP. This is useful because all too often policies are proposed without consideration of whether they will adversely affect the UK’s ability to grow its economy. Instead of cost-benefit analysis being performed, there is a tendency to consider only the benefits the new policy might bring, without looking at the costs it could impose.

The new Growth Commission aims to fill that gap, drawing on the work of more than a dozen expert economists. There was a similar, but not identical, initiative under the Presidency of George H Bush, and headed from the White House by his Vice-President, Dan Quayle. It was called the Council on Competitiveness, and its mission was to study every new initiative emerging from Congress and the bureaucracy, and to assess its likely impact on American competitiveness.

Well-meaning and possibly worthwhile initiatives would be set forward without any thought to the costs they might impose on American business, or how less competitive they might make it. The Vice-President’s Council on Competitiveness changed that because the initiatives would have to be examined before they could proceed, and changes were made and amendments inserted to lessen the impact on competitiveness that initiatives might otherwise make.

It met with strong criticism on with the American Left, largely because it kicked many of their costly proposals into the long grass. Some called it “the roach motel of congressional legislation.” This was because a popular series of TV ads at the time featured a box called a roach motel into which cockroaches were attracted by the scent, but once inside were killed by the poison. The voice of Muhammad Ali accompanied the ads saying, “They check in, but they don’t check out.” The same fate was alleged to happen to Congressional initiatives.

One difference is that the Growth commission will look at likely effects on growth, not just on competitiveness, although there is overlap. The big difference is that the Quayle Commission had real powers emanating from the Vice-President’s office. The Growth Commission is independent and outside of government and has no similar powers. While it is an immensely useful body to oversee what Departments and the bureaucracy are doing, it might be more effective if it were allowed to operate from within Downing Street, with direct access and input to decision makers.

If something's not worth repairing then it's not worth repairing

As with recycling - if it’s worth it, do it, if it’s not, don’t. Recycling ciopper into new plumbing fixtures works, makes a profit. Recycling concrete into hardcore works economically, recycling concrete back into cement does not (yes, it is possible) so don’t.

France will soon begin paying people to have their clothes and shoes repaired instead of throwing them away in a push to reduce waste.

From October, the French will be able to claim a “repair bonus” worth up to €25 (£21) for clothing alterations and shoe repairs as part of a government mission to divert textiles from landfills and fight fast fashion.

This is silly and we’re actually given the example of why it is:

For years, tailors have been fighting an uphill battle against fast-fashion brands, Mr Liotet said, pointing out that consumers are less likely to pay €10 to repair a torn shirt when they can buy a new one for €4.99.

Quite. Prices do contain the information about the resources required to make or do the thing. Repairing a shirt requires more resources than a new shirt. So, to save resources have a new shirt, don’t repair the old.

The problem here is that people have reified the concept of “saving resources” without ever bothering to think about the resources being saved. And the information is all there in prices - things that are more expensive require more resources.

News just in - freer markets work

Pew is not one of those right wing and free market organisations over in the US. We’d put it, in British terms, somewhere between the Labour Party and Novara Media - that range between wrong but not mad and wrong but….well, you understand.

They have just found out that:

Pew has examined several jurisdictions that updated their zoning codes to allow more housing and found that this flexibility helped these jurisdictions add new housing stock faster than new households were being formed. And while rent remains detrimentally high in many communities throughout the country, this research shows that communities updating their zoning laws in this manner kept rent growth to less than 7 percent over the most recent six-year period, even as rents rose by 31 percent nationally.

The solution to rising rents, to the price of housing more generally, is to build more housing.

Note that the US doesn’t have anything - not of any size - even vaguely comparable to council or social housing. Not since they reformed HUD they don’t - they have Section 8 vouchers, akin to our Housing Benefit. The finding here is that building more housing - of any kind - moderates the price of housing.

As, obviously is going to be true, increasing supply does that. Even if half this country is adamant that it won’t.

But, there we have it. If we liberate planning so that more houses are built then the price of housing will moderate. So, why don’t we liberate planning?

Blow up the Town and Country Planning Act 1947 and successors. Proper blow up, kablooie.

Let’s house the nation, eh?

Well, here's the problem about economic growth

Perhaps we should get really basic here. Economic growth is the new things we do. Can be doing old things in a newer and more efficient manner which frees up resources to then do other things as well. Can be doing something entirely new. But growth simply is those new and additional things.

The rate of growth is therefore the speed at which we do those new things.

The boss of National Grid has complained that it takes a decade to build a new power line in an attack on planning red tape.

John Pettigrew, the company’s chief executive, said that Britain’s planning rules add seven years of delays to the construction time for cables.

A planning system which triples the time necessary to do something new therefore slows economic growth.

We are observant enough to note that there are many complaining about the speed of economic growth in the Britain of today. If we’ve a planning system that is a soul-sucking leech on the potential speed of economic growth then this could, we submit, be part of the problem.

Our suggestion would therefore be to kill the Town and Country Planning Act 1947 and successors. Proper blow up, kablooie. We’d also insist that anyone who does not adopt this approach is not being serious about the slowdown in economic growth.

Well?

Well, yes, this is how competition works

The general lesson here:

Rail fares could be cut in half under government plans to allow trains to compete on the same lines, a leading rail body has said.

Rail Partners, which represents private rail firms, suggested passengers could see huge reductions of between 15 and 50 per cent in ticket costs if the Government pushes ahead with its plan to increase the number of open access operators.

This is simply how competition works. What limits the amount that Heinz can try to charge for baked beans is what others are willing to sell baked beans for. What limits the margin Sainsburys can charge on Heinz baked beans is the margin Morrisons, Waitrose, the Co Op and others are willing to accept on Heinz baked beans. And everyone is limited in what they can charge by the existence of those hundreds and thousands of substitutes that exist for baked beans (although not, of course, on a proper breakfast).

How much we can be charged for a rail ticket depends upon all those substitutes - the price of a car journey, cycling, the bus, just not going and so on. Adding in also that direct competition, someone else offering the same journey but in a different steel tube, at a different price, will indeed reduce prices to consumers.

Which would be good - consumers are made better off and that’s the aim of our having even a civilisation, let alone an economy. Lower prices would, we expect, also entice some of those journeys by car, foot, cycle and just not going onto the substitute of the train ride. Which would, we assume, please the environmentalists.

So, umm, yes. The interesting thing is therefore seeing what excuses are to be given for why it shouldn't be done, isn’t it?

The privileges of liberty and the sanctity of the individual went out and whipped butt.

Harry Wallop has a lovely piece about bananas. The point we’d lift from it being:

Keeping track of all the bananas comes down to barcodes on the outside of the boxes and a warehouse that operates, Hopkins says, with “relentless focus”. He deciphers the code on one box, which is destined for Iceland supermarket and has come from Colombia. “I can see that it was harvested on March 27 at 10am,” he says. “We have 3D warehouses, so I can tell which container, which ship it came in, who drove the forklift truck and which supermarket it will end up at.”

This is, of course, planning to the nth degree. Bananas crop 52 weeks a year, demand varies little. The entire system faces little variance in either supply or demand and the process is really just about the efficiency with which the transport can be arranged. Profit margins are tiny - 1 to 2% of turnover sorts of levels.

This is exactly what a planned economy should be good at - planned economic activity. That is the justification for the entire idea, that planning is more efficient than the chaos of mere markets.

But to offer a second PJ O’Rourke quote:

“For all the meddling the Communist bloc countries have done in banana republics, they still never seem to be able to get their hands on any actual bananas.”

Which gives us our lesson for the day. Planned economies aren’t even any good at planning. At which point the Hell with them really, there’s no other rational response, is there?

How excellent about deep sea mining - we should do more of this

The Guardian is becoming increasingly hysterical about deep sea mining. Articles here and here. To add to that Billy Hague piece we critiqued here. The demand is that there should be a pause, everyone should have more time to think this through and so on. Or, as it might also be put, hit the issue into the long grass where it can be strangled by ignoring it. Note, not issuing the rules for a licence would achieve the goal of not ever issuing a licence, after all.

The particular and specific issue here is the set up. An exploitation licence - as opposed to an exploration one - is, in effect, a shall issue licence. Two years after someone says well, what are the rules here, can we have a licence please, that exploitation licence must be issued. Or at least the rules for one must be. Note “must”. It is not possible to argue for more time, greater consideration and then lose the issue in the bureaucracy.

Which is exactly why the issue is coming to a head here. Either those rules, that licence, gets issued or the reason why not has to be published and defended. With, obviously, the opportunity for court action and so on against any refusal.

To go from that general to the very particular. One of us recently applied for a holiday let licence in one of the minor continental countries. The expectation was that this would take months, if not years, as the desire to not issue them - already well known and telegraphed - meant lost paperwork and echoes of Kafka. Except the national government had changed the rules. If the licence was not denied within 7 days then it was automatically issued. Indeed it came through, via email, 7 days later, within minutes in fact of the filing time (not just date) plus 168 hours.

We think this idea should be more generally applied. In fact, not generally, but universally. Every licence, every permission, for everything, becomes a shall issue one. There is a specific time period, 7 days sounds good, in which the bureaucracy can say no. Can say no while pointing to the specific law they are saying no under, the reason why, in a form that can then be used in a court to test the power of the bureaucracy to do that. Failure to issue such a denial within those 7 days means that the licence is automatically granted. One granted it is not appealable.

This applies to pylons across the countryside, fracking plants, planning permissions for housing, everything.

We insist that the planning bureaucracy micturate or get off the pot. That phrase can be modified for less family friendly conversations.

Note that this doesn’t stop planning. It does though stop delay in planning. So, everyone should support it, right?

So, obviously, delay installing solar for 5 years then

The logical outcome of this is that we should delay installing any solar for 5 years:

Solar power cells have raced past the key milestone of 30% energy efficiency, after innovations by multiple research groups around the world. The feat makes this a “revolutionary” year, according to one expert, and could accelerate the rollout of solar power.

…

The breakthrough is adding a layer of perovskite, another semiconductor, on top of the silicon layer. This captures blue light from the visible spectrum, while the silicon captures red light, boosting the total light captured overall. With more energy absorbed per cell, the cost of solar electricity is even cheaper, and deployment can proceed faster to help keep global heating under control.

The perovskite-silicon “tandem” cells have been under research for about a decade, but recent technical improvements have now pushed them past the 30% milestone. Experts said that if the scaling-up of production of the tandem cells proceeds smoothly, they could be commercially available within five years, about the same time silicon-only cells reach their maximum efficiency.

The technical stuff there is correct too. But if solar is about to get very much better - which it is - then the correct response is to stop installing this soon to be surpassed solar technology - installations do last 20 to 25 years after all - and instead wait and install the newer and better starting in 5 years’ time.

Actually, this has been true of solar for the past 25 years. Costs have been going down 20% a year. As Bjorn Lomborg predicted they would those couple of decades back. As Lomborg also pointed out assume that holds true and by the mid-2020s then solar would become the installation of choice. Why would anyone bother to install anything other than the cheapest alternative, after all?

The corollary of this is that everything we’ve spent upon subsidy up to now has been a complete and entire waste of money. Technologies do mature into being usable and cost effective - it’s simply spraying cash up against the wall to try and install them before that has happened.

Please do note our position here. We’re not against doing things to beat climate change, not in the slightest. We just keep insisting that we should be doing these things efficiently. For, as the Stern Review itself points out, humans do more of cheaper things, less of more expensive. Therefore attacking climate change inefficiently means we’ll do less attacking climate change. That might not be a good idea.

NHS at 75: Why I’m not celebrating.

Yesterday may have marked the NHS’s 75th birthday, but there was no reason to celebrate. Whilst children’s choirs sing happy birthday and the country raises a ‘cuppa’, I kept my party hat away. For, the system is no longer “fit for heroes”. The NHS does not work.

Waiting lists sit at a record high of 7.4 million, whilst median A&E wait time is a dangerous 3 hours 2 minutes. Ambulance services repeatedly miss their targets, causing half of those who need rapid treatment to die. Occupied beds sit at a worrying level of 92%, reducing overall capacity. And in December 2022, only 54.4% of cancer patients waited under 62 days for treatment, in contrast to the target of 85%. In short, the NHS is not just in crisis, it has essentially collapsed. The NHS is no longer the envy of the world, rather it is fast becoming a laughing stock. It is no wonder no other countries have followed suit in our system. Indeed, the only comparable systems were in the Soviet Union and Cuba, where hospitals were in a similarly dire state.

Why is there a crisis?

The left would have you believe that it is wholly situational. They blame the pandemic, Conservative “underfunding” (despite record spending) and Brexit. The system is not the problem they claim, rather poor governance and recent events have made it impossible for the NHS to act the way it should. This is plain wrong. The NHS is systematically flawed, and the only real solution is a complete overhaul of our healthcare system. 

Of its systemic flaws, none is more prevalent than its sheer size. The NHS is the fifth largest employer in the world and the largest state-owned employer in the free world. Its goliath size comes with challenges, one of which is management. Currently the NHS is managed top-down and with Trusts; policies, however, remain Westminster centred. The current system can be characterised by excessive bureaucracy and micro-management, held back by short-term political priorities. Indeed, there are more bureaucrats in the NHS then there are beds.

Socialists like to lecture us on the dangers of private monopolies. Yet, the NHS is the largest monopoly of them all. Monopolies are terrible for productivity and give the consumers no choice. Patients have little choice within the system. Many cannot choose their doctor’s surgeries. And patients are unable to see a specialist without a GP referral, which all too often involves further immense bureaucracy and long waiting times, such as waits up to seven years for an ADHD pre-assessment.

Meanwhile our infrastructure is constantly on red alert for the threat of strikes loom. The NHS can keep certain costs down, but it does this by suppressing wages and creating less than ideal working conditions. If we want our NHS to remain competitive and for the best doctors not to quadruple their income on fixed salaries at London’s new Cleveland Clinic, the NHS must radically change.

The alternative –

Simply more tax and spend won’t fix it. Sweeping structural change is needed.

Common rhetoric suggests there is but one alternative to the NHS: America’s bankrupting system. This is not the case. No rational individual would argue in favour of this, for it is mind-numbingly ineffective as a healthcare system. Other options exist which may be far more effective.

The government should pursue a competing social insurance scheme, similar to the Netherlands, Germany, and Switzerland, as we have proposed previously . This system will separate government from providers and patients. The government would have no direct management role, ending the health service’s known problem of limitless bureaucracy and unstable policy direction. In this system it would be compulsory for universal enrolment for social insurance, and insurers would be banned from refusing service. Premiums would be calculated by income, with the poorest paying nothing. This system would be fair, for it would be a one-tiered system where all receive the same (exceptionally high) level of care. And, crucially, all services would be free at the point of access, unless the consumers choose to pay in order to have lower premiums.

Short-term bandages –

Clearly in the current political climate the above is a stretch. Thus, it may be helpful to explore things we can do in the short term to make the crisis slightly less bad. This could be through outsourcing. Despite what Julia Grace Patterson or WeOwnIt would like you to believe, outsourcing does not mean privatisation. As Kristian Niemietz of the Institute of Economic Affairs puts it, it is a “failed conspiracy theory that never dies.” Outsourcing means hiring private firms to do certain jobs within the NHS, typically non-medical such as IT. And for all the fear-mongers out there, rest assured that it will continue to be free at the point of receipt. Let’s face it, private companies are likely to be better than NHS bureaucrats at delivering certain services. Remember that terrible NHS app? If this was outsourced to a tech firm rather than developed in house, maybe it would have been a success. 

Conclusions –

Our medical professionals are heroes. They do a stellar job, especially given the terrible environments they are made to work in. The system is letting them and their patients down. In the interim, more outsourcing should occur. In the long term, the government should completely overhaul our health system and replace it with a social insurance scheme. That way we will finally have a system “fit for heroes” as Attlee and Bevan envisaged. 

Oliver Ind is a Summer Intern at the Adam Smith Institute