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

Mr Smith goes to Oxford

On this day in 1740, no doubt full of trepidation and excitement, Adam Smith set off from his home in Kirkcaldy, on the east coast of Scotland, to take up the ‘Snell Exhibition’ scholarship in Balliol College, Oxford. His time in Oxford would teach him much — though it would by no means enhance the reputation of Oxford in general and Balliol College in particular.

At school in Kirkcaldy, Smith’s passion for books and learning, along with his extraordinary memory, became apparent. He went on to Glasgow University at the age of 14, and studied under the great moral philosopher Francis Hutcheson – libertarian, rationalist, utilitarian, plain speaker and thorn in the side of authority. Hutcheson seems to have infected Smith with some of the same.

Oxford and incentives

Smith excelled, as he had done at school, and won the scholarship to Balliol College, Oxford. In 1740, now just 17, he saddled up for the month-long horseback journey. If thriving, commercial Glasgow had been an eye-opener to a boy from backward Kirkcaldy, England seemed quite a different world again. He wrote of the grandness of its architecture and the fatness of its cattle, quite unlike the poor specimens of his native Scotland.

But the English university education system did not impress him. Indeed, it gave him an important lesson on the power of incentives, which he would catalogue acidly in his great 1776 work of economics, The Wealth Of Nations.

Oxford teachers were paid directly from large college endowments, not from students’ fees as they were in Glasgow. It hardly encouraged their interest in their students. “In the University of Oxford,” wrote Smith later, “the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching.”

Ouch. But it got worse.

College life, he observed was contrived “for the interest, or more properly speaking, for the ease of the masters.” There were disciplines aplenty on the students, but not on the teachers. In his words, “Where the masters, however, rarely perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs. No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as it well known wherever any such lectures are given.”

From this experience, Smith drew out a general principle of economics: “It is the interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does, or does not perform some very laborious duty, it is certainly his interest, at least as interest is vulgarly understood, either to neglect it altogether, or, if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that authority will permit.”

And institutes like a university, he noted, indulge each other’s laziness. They “are likely to make a common cause, to be all very indulgent to one another, and every man to consent that his neighbour may neglect his duty, provided he himself is allowed to neglect his own.”

Smith, then, learnt little from his Oxford teachers. Yet, thanks to Balliol’s world-class library and his own love of reading and learning, Smith was able to educate himself in the classics, literature, and other subjects. He left Oxford in 1746, before the expiry of his scholarship, to return to Kirkcaldy, where he began to write essays and articles that would make his reputation and launch his academic career — a career that would culminate with these insights on economic incentives and the cutting rebuke of the system that had so let him down.

The problem with socialist healthcare is that pretty soon you run out of everyone else's hospitals

A political party (shhh, no names!) is running a campaign based on how many babies the NHS has delivered. So, plugging my birth date into the calculator, something based upon census records, I find out that I’m the “10,723,296th BABY TO BE BORN ON THE NHS!” which is, I am sure we all agree, terribly exciting. Torbay General for the completists, out of Seaview in Strete.

Something else I know about the NHS. The first hospital to be actually built by the NHS opened in July 1963, the QE II one in Welwyn Garden City. So while I was indeed the 10.7 millionth baby delivered by the NHS that all happened 4 months before the NHS actually added, at all, to the medical infrastructure of the country.

For the creation of the NHS was simply the nationalisation, without compensation, of all medical facilities within the country. Which is, I think we can all agree, a little different from the idea generally put forward, which is that medical care only started with the NHS? Something that there is a familial memory of, given that the grandfather so interested in that first grandson was a GP, the grandmother equally interested a practice nurse.

But it is still interesting, isn’t it? These claims that the national debt was 200% of GDP when we started the NHS - so therefore we can achieve anything we want if we’re prepared to want it. The idea that it only used to cost 1% of GDP in fact.

Well, yes, but the problem with socialist medicine is that eventually you run out of other peoples’ hospitals.

The BMA says drink driving should be brought to the European standard. But which one?

Chris Snowdon has the BMA right here:

“The BMA’s new president, Ian Gilmore, is Britain’s leading temperance activist so he won’t mind if more pubs close, but he gives the game away when he says he wants the limit reduced to almost nothing.

“This would not just stop people drinking anything before they drive, it would discourage them from drinking in the evening if they were going to drive in the morning.

“It is an anti-alcohol policy, not a road safety policy.”

But let us take the proposal seriously for a moment:

The British Medical Association (BMA) on Tuesday voted formally to lobby the government to bring England and Wales in line with the European average, with senior members describing the current threshold as “scandalous”.

But in line with which European standard? Yes, the drink drive limit in most of Europe is lower. The rate of deaths per billion miles driven - the only useful measure here - is higher in most of Europe than it is in the UK. No, really, page 53 here. Actually, by that only useful standard - for what else is a useful measure other than the number of deaths compared to the amount of travel? - the UK is about half the EU 17 average. So, umm, why isn’t everyone else having to follow our standards? You know, the efficient ones? The standards that actually achieve the task at hand?

Actually, we know what’s happening here. The doctors - as with so many people, so many times - are only looking at the one part of the system. The blood alcohol level. Britain’s punishments for breaching our (agreed, higher) limit are positively bloodcurdling compared to some of the penalties elsewhere. In fact, a lot of those 02 and 0.5 limits elsewhere are simple and mere fines - significant punishments like suspension of licence kick in with “aggravated” drink diving, at the same or higher rates than the UK’s limit.

It’s also true that you’re much more likely to get caught on the British roads than in many other places.

Finally, there’s the fact that the current limit is socially supported. There is zero sympathy for anyone caught under the current limits. If two pints at lunchtime mean you can get caught driving home at the end of the day then that societal support will vanish.

We have a system that works, the moving parts work together to give us, depending upon which measurement you choose, the third or fourth lowest drink driving death rate in Europe. As with any complex system fiddle with one part of it at the cost of possibly destroying the entire machine. #

The current British system works - why would we want to change it?

To disagree with William Hague on something we actually know about

Hague says that Britain really should oppose deep sea mining:

Deep down beneath the waves, in nodules below the seabed, minerals such as cobalt and nickel can be found in abundance.

No, that’s “on” the seabed.

And in the “black smokers”, the deep vents on the ocean floor often associated with the earliest origins of life, copper can be found in large quantities.

No, mining the smokers is not the suggestion. The entire point of such smokers being that as the fissures in the crust expand - the smokers being the little pinholes - then what used to be the site of a smoker becomes not one. The copper suggestion is to mine where there used to be one, not where there is. As that’s where the deposits are, where they used to be.

But far more than this the assumption is being made - certainly the impression is being given by Hague - that some vast area of the seabed is to be disturbed. Which is simply nonsense. The seabed is 3.618×10*8 km2. That’s, umm, a lot. As with surface mining the idea is to mine some hundreds of square kilometres, perhaps even thousands. Which is, when we’re talking about 10*8 quantities of km2, pretty much nothing.

Even the economics, let alone the environmental point, is wrong:

An unnecessarily weak stance is not only bad for the environment but not even in our national interest. No British company has developed deep-sea mining technology.

There’s a definite absurdity in claiming that cheaper nickel, copper, cobalt and manganese will not be beneficial to Britain or the British people. Consumer benefits do in fact count, you know?

Even the environmental damages are grossly overdone:

According to the review commissioned by the government which reported two years ago, “a 20-year mining operation may discharge an estimated 100,000 tonnes of sediment”, which would settle over millions of square kilometres on the sea floor.

Umm, OK, so 100,000 tonnes over millions of km2. Say, just for the ease of the maths, 10 million km2? That’s 10kg (no, really, ten kilos) of sediment to be spread across each square kilometre of seabed.

We’ve lived in flats dustier than that and not just as a student either. In fact, that complaint is piffle. For it’s one hundredth of a gramme of sediment per square metre. Most damaging I’m sure we’ll all agree.

Mine the abyssal deeps and get on with it - whatever Billy Hague has to say about it.

We'd really suggest Nick Timothy doesn't take Michael Lind seriously

One of those little things we hope not to see in a newspaper column:

That story is recounted in Hell to Pay, a brilliant new book by Michael Lind about how the suppression of wages is driving economic, social and political crises in America. The idea that we are paid what we deserve – and that the decline in mid-skilled, mid-paid jobs simply reflects the high-tech, globalised economy in which we live – derives from free market theory. But it is, Lind argues, utter nonsense.

Lind and “brilliant” isn’t quite how we’d put it. For we always recall Paul Kurgman’s comments upon the economic commentary of Michael Lind:

One of America's new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an article in Harper's about international trade, which contained the following remarkable passage:

"Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for US-based corporations." (Lind 1994: )

What is so remarkable about this passage? It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue.

More specifically: the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a whole the increase was only 13 percent. The 13 percent decline in real wages was true only for production workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent. And even that remaining gap turns out to be a statistical quirk: it is entirely due to a difference in the price indexes used to deflate business output and consumption (probably reflecting overstatement of both productivity growth and consumer price inflation). When the same price index is used, the increases in productivity and compensation have been almost exactly equal. But then how could it be otherwise? Any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U.S. national income has been quite stable in recent decades, and actually rose slightly over the period Lind describes.

The question here is not why Lind got these numbers wrong. It takes considerable experience to know where to look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance. The question is, instead, why Mr. Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. The short answer in this case is surely that Mr. Lind, who is always looking for ways to enhance his enfant terrible status, saw this as a perfect opportunity. Free trade is a sacred cow of economists, who are well-known to be boring, stuffy types; what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine? (It seems not to have occurred to him that there might be a reason other than ideological rigidity that the striking fact he thought he knew has not been noticed by economists).

Matters have not improved over the decades.

The most important point of ignorance here is though that no one really did go out and design or even build globalisation. Yes, obviously, there were spouting from politicians but when, and of what, isn’t that true? Tariffs came down a bit.

But the real drivers were cheap transport, cheap telecoms and cheap travel. Barriers to trade are not just the tariffs or quotas imposed by governments. They’re also the barriers imposed by the physical cost of trading. All of which have collapsed in these past few decades.

We saw this before in history too - after the Civil War the US raised tariffs considerably. The ocean going steamship lowered physical costs by more than the rise in tariffs - total trade costs fell and we can prove this by noting the falling differences in prices of tradeable goods between the US and Europe over this period.

Everyone loves the gravity model of trade these days and very few note that it talks about economic distance, not geographic. Those plummeting transport, travel and telecoms costs meant that economic distance also plummeted over the past 50 years. Therefore everywhere was becoming closer in that economic distance and so trade should increase. QED.

In order to stop this - if anyone wanted to be that stupid - tariffs would have to be raised, viciously and violently, to cover the reduction in those other costs.

It isn’t true that anyone went out and designed globalisation - they just didn’t stop it. And thank the Lord Above for that one, eh?

Oh, and, obviously, don’t take Michael Lind seriously on the subject of trade.

We have a suggestion for the Liz Truss Growth Commission

Of course, at times like this everyone brings out their own bugbears for a good trot around the paddock.

Liz Truss will launch a new international task force to revive flagging economic growth in the West.

The former prime minister has convened the non-partisan group, which is being called The Growth Commission, to investigate the causes of sluggish growth.

The commission, which is to be chaired by Douglas McWilliams, the leading economist, will also analyse the impact different policy decisions have on GDP per capita.

Our particular bee in the bonnet is counting. It’s vital to recall that like so many economic numbers GDP is a proxy. And reifying proxies doesn’t work - because it loses sight of the fact that it is a proxy.

Yes, we all know the standard critiques of GDP, it doesn’t count household work, includes cleaning up pollution as growth and so on. But the real biggie is that it doesn’t include the consumer surplus. A useful definition of the consumer surplus (one to horrify actual economists but one that works all the same) is the amount we are richer that doesn’t get included in GDP.

If the relationship is stable - say, the consumer surplus is equal to 100% of GDP, always - then there’s no problem. GDP still works as a proxy. If that relationship changes, which we would insist it is doing, then GDP becomes an ever worse measure of societal income and wealth.

To construct a ludicrous example. Someone invents the black box which provides power at zero cost. OK, we’re all vastly richer because power is now free (to continue with the example being ludicrous, no distribution costs etc etc - power finally too cheap to meter). But at the same time GDP has fallen - fallen by the amount we used to pay for power but now don’t. The consumer surplus has soared - hey, free power! - and GDP has fallen.

Don’t reify the proxy.

This is, of course, also Hal Varian’s point, “GDP doesn’t deal well with free”.

Now to give a non-ludicrous example. WhatsApp (at least did at one point in time) carries no advertising, makes no charge. The output associated with WhatsApp is zero in GDP. The costs, the couple of hundred engineers at Facebook that work on it, they’re still there, counted properly. So, labour costs but no output, WhatsApp appears in the GDP accounts as a fall in productivity. Yet some billion people are gaining some or all of their telecoms, for free. The consumer surplus has soared. To the extent that folk use WhatsApp instead of metered phone calls GDP falls. And the whole is measured as lower productivity, us getting poorer per hour of labour put in.

Any real examination of growth needs to deal with this problem. Much of the growth in the modern economy is digital, is free at the point of use. The consumer surplus of all of this is very large, entirely out of proportion with the usual rule of thumb that the consumer surplus and GDP about equal each other. That is, we’re getting vastly richer and not counting the fact that we are doing so.

If we’re really going to examine the counting of growth then we need to really examine the counting of growth.

There is also an obvious corollary to this. If ever more of the growth is turning up not as GDP - where we measure the distribution - but as the consumer surplus - where we don’t measure the distribution - then all claims about the inequality of society are wrong.

Think on it. You, me, Granny, Zuckerberg and that peasant on the paddy in Pakistan all have exactly the same access to WhatsApp - and therefore telecoms - at exactly the same price of nothing. And yet there are people claiming that society is becoming more unequal, are there?

Paying the staff to have more babies doesn't work

At least, paying the staff to have more babies so that there will then be more customers for the business at some future date doesn’t work:

The Chinese company behind Skyscanner and Trip.com will hand its employees £5,000 if they have more children in an effort to turn around the country’s plummeting birth rate.

James Liang, Trip.com group company’s founder and chairman, announced that staff will receive an annual cash bonus of RMB 10,000 (£1,090) for every newborn until they reach the age of five.

It’s possible to view this the same way many view Ford’s introduction of the $5 a day wage. That - incorrect - view is that the wage meant that the workers could buy the products they made. As we’ve pointed out before (and elsewhere) this doesn’t work even as a piece of basic arithmetic, let alone a business proposition.

Where this might well work is that it reduces the turnover of staff - as with Ford - or even attracts more and better staff to the company.

As long as everyone understands what’s going on here of course we think it’s fine. Not for any other reason than that markets work. Folk get to try out stuff. That which works others will copy and we’ll all get richer. That which doesn’t dies on the vine and again we all get richer by not making that mistake.

We’ve absolutely no idea whether staff bonuses for ‘avin’ a babbie is a good idea or not. We are absolutely certain that the decision making system on the subject is already in place - markets.

British Lithium - we'd just like to note, again, how lovely free market capitalism is

One of those little stories that bolsters our faith in the basic underpinning of our society - that free market capitalism. This:

French miner Imerys to help develop UK’s largest lithium deposit

Note what we’re not praising - the FT’s reporting nor understanding. Imerys owns the deposit. It is allowing someone to have a go at exploiting it. But, you know, they got the name of the metal right.

Lithium is often found in granites and the like. Granites can, sometimes, weather down into clays - kaolins, kaolinites maybe (yes, our lack of really detailed knowledge will shock geologists but this is part of the overall point here). China Clay is a form of such weathered down granite. So, it’s possible that the China clay pits of Cornwall might have lithium in them. You know, maybe?

Ah:

The granites of South-West England are a potential source of lithium which is generally found within the mica mineral, zinnwaldite. It is mainly found in the central and western end of the St. Austell granite. When kaolin extraction occurs in these areas a mica-rich waste product is produced which is currently disposed of in tailings storage facilities. In this study a tailings sample containing 0.84% Li2O…

0.84%, if someone else has already done the grinding the rock down to get it out, is pretty good for an Li source (1.3, maybe 1.4%, is something that you’re willing to grind down the rock to get, like all those spodumene mines).

Imerys took over English China Clay, therefore owns all those slag piles (maybe gangue pits, again, the technical language slightly escapes us) where that lithium enriched zinnwaldite sits unloved and awaiting attention.

So, what next? The statist (we’d possibly say Mazzo) idea is that government then plans everything and so - but that’s ludicrous. It is true that government is feeding some cash into this but that’s also ludicrous. Because there is no way, no way at all, that this potential source of lithium is not going to be explored given that the lithium price is $50,000 a tonne and the like. We can also prove that. There are two - at least - companies quoted on the London Stock Exchange (Zinnwald Lithium, European Metals) that have raised private sector money to extract lithium from zinnwaldite under the village of, umm, Zinnwald. The same sort of mica - hey, it’s even got the same name! - which is sitting there as waste in the old China clay pits.

Well, yes, that’s an exploration that’s going to happen then, isn’t it?

But here’s our real point here. So, we all decide that EVs are the very thing. This means much more lithium is required. So, what happens then? Well, there used to be two methods of gaining lithium. Extraction from salt brines and mining spodumene. Mineral reserves around the world were of those two that were already licensed, already proven to be profitable at then current prices. Mineral resources were those that we were pretty sure could be so but hadn’t bothered to fully prove.

At which point some say we can’t have EVs because mineral reserves weren’t enough. Or, the slightly more awake, that resources weren’t.

Umm, well, yes. We’ve seen one list of 200 companies looking for traditional - brines and spodumene - lithium sources. Yes, they’re finding them. But there’s more than that. As with Cornish Lithium there’s the idea of extraction from geothermal waters. Or, here, from mica in the wastes of old processes - or as in Germany/Czechia, from new mining of that same mineral. That is, we’re not just finding new deposits of those old minerals, we’re working out new minerals to get our target from.

And how has this happened? Well, the price of lithium changed. So every geologist, capitalist and general wide boy started to think about how to produce more lithium. Ain’t free market capitalism great? And this really does work. In fact it is working.

Because what’s really happening here at British Lithium. The change in price has meant people are going looking for that change that slipped down the back of the sofa. We’ve known for decades the lithium is there, it just needs that push of the price change to do something about it.

‘Ere, Jethro, there might be money at the bottom o’ that slurry pit. Best be we look.

It’s a hell of a system, isn't it?

The water companies and environmental insolvency

Another day and there’s another Professor Richard Murphy report. This one is “Cut the Crap” and it suffers from the usual problem, it’s by Professor Richard Murphy. The claim that it’s by the Corporate Accountability Network shouldn’t be taken seriously - other than Professor Murphy there’s no input from anyone other than the Fat Controller figurine on the model railway set.

The claim, as laid out by The Guardian:

England’s water companies are “environmentally insolvent” because they do not have the financial means to raise the £260bn needed to deal with their sewage spillages, academic research has found.

The report, by Prof Richard Murphy of the Corporate Accountability Network and Sheffield University, recommends nationalisation without compensation and raising the necessary funds through government ISAs for the public and higher charges for heavy water users.

Even in just that brief summation we can see the usual Professor Murphy problem - as the report has been written entirely solo no external checks on basic logic have been made. The claim is made that the current system cannot finance the required charges. Therefore the system must be done away with. Then the suggestion is that more finance be made available. But if more finance must be made available then doesn’t that mean that the current system could manage the finance - after all, more finance is to be made available?

In more detail the report - sorry, Professor Murphy - looks at England and shrieks in horror at what is found. Without then doing the most basic of logical checks - OK, so what about other, similar systems? Like, say, Scotland where exactly the same problems of Victorian infrastructure and rising population are to be found? With that interesting difference that the water there is done by an already nationalised company.

Well, the informed will know why Professor Murphy doesn’t make that comparison. Because the situation in Scotland with sewage overflow is worse - they’re even worse at monitoring it let alone preventing it. Given that state owned is worse than capitalist therefore it cannot be true that nationalisation is the answer - despite that being the preconceived conclusion that Professor Murphy desires to work toward.

The muttering about capital, borrowings and dividends is an irrelevance. As Murphy says “ total investment exceeding £91.5 billion had taken place over this period.” which does seem like a fairly large amount. Given that the suggested new financing method is more borrowings (however tax privileged through ISAs) it cannot be that borrowing to invest is a problem. We cannot solve a problem of people borrowing to invest by then insisting that people borrow to invest.

But here’s the great gaping hole in the logic being used. Apparently, to make sure that the rivers are as clean as some campaigners would like would cost £260 billion. At which point everyone’s insolvent because they can’t raise £260 billion. But the correct response to £260 billion is that the rivers aren’t going to become as clean as some campaigners would like. As we’ve said about Feargal Sharkey and Surfers Against Sewage. The costings of the demands - whoever pays for them, however - are such that they’re a frivolous waste of societal resources.

There are, close enough, 25 million households in England. Rounding a bit both ways, this makes £260 billion a charge of £10,000 per household. The only people to pay this £10,000 are households - whether through tax or water charges makes no difference. In order to clean up sewage overflows enough that folk may swim in the river at Hebden Bridge every household must pay £500 a year for 20 years (before any finance charges, recall). The rational answer from households is that the Hebdenites can go use a swimming pool like everyone else.

This is not entirely frivolous either. Sure we’d all like a cleaner environment and we’d all, possibly, be willing to pay something to get it. But that much? For that little difference? Double everyone’s water bill, at least, to make a marginal improvement in the rivers?

Do note that not even Murphy claims this will solve all storm overflows. We already deal with 95%, perhaps 98%, of the crud and this £260 billion will only take that to perhaps 99%. There will still be sewage overflows even after this spending. So, will people be happy to be charged this much to make Feargal happy?

No, no they won’t and that’s nothing, at all, to do with the ownership structure of the industry. It’s that the target is wrong in and of itself.

Then there is this issue of nationalisation which is political posturing at best. The claim is that water companies currently constrained by how much they may charge cannot solve this problem. Therefore nationalise them and then lift the control on what may be charged. But if the amount to be charged is to rise - as Professor Murphy insists it will have to - then the water companies are not environmentally insolvent, the basis of his claim that they must be nationalised. Further, the nationalisation doesn’t change the basic fact that to meet the - too strict - targets then households must pay more. And to repeat, if charging more is the solution anyway then where’s the insolvency?

At which point we can become rational again rather than following the lacunae in Professor Murphy’s logic. Take the occasional sight of reality rather than remain inside the ideological blinkers.

We have two suggested systems here. Capitalist companies and a state owned water company. Either of those will, in order to meet those desired by some water standards, have to charge very much more than the current costs. OK. So, which of those two organisational structures should we use to deploy those greater funds to improve the water standards?

Presumably we should use whichever system is more efficient at deploying funds to cleaning up the water. Which means using the English system of capitalist companies. Because the English companies have cleaned up the water more than the Scottish state owned company since the reorganisation at the time of the English privatisation. At lower cost too. In fact, we have four organisational models to look to. England capitalist, Wales a cooperative, Scotland state owned corporate and NI remaining with local councils. In terms of the three interesting measures, price, water quality in the taps, water quality in the rivers, the greatest improvements have come in England, followed in this order by Wales, Scotland and NI.

The further away from a vibrant capitalism it gets the worse it gets that is. The solution therefore cannot be to abandon the vibrant capitalism, can it?

The conspiratorially minded will now start asking why Professor Murphy does not do that comparison with the other water systems of the Home Nations and we’d have to say no, don’t do that. There is no conspiracy here. Just the obvious reason. Comparisons across ownership structures are not made because everyone, even Professor Murphy, knows that such a comparison would hole the desired argument below the waterline. The Enmglish water companies are more efficient in the deployment of funds which is why they must never be compared with mutuals and state owned companies because that would destroy the argument to make them mutuals or state owned.

But then as we said at the beginning, we’ve another Professor Richard Murphy report here, the problem being that it’s a report by Professor Richard Murphy. Cut the crap, really.