It's about politics, not finance

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The news of a huge boost to NHS spending is something to be welcomed for two reasons.  The first is that it is clearly badly-needed.  The NHS has been struggling for years, and at least part of the problem has been caused by government spending restrictions.  It’s not just a question of money, though, and simply diverting an arbitrarily-agreed extra lump of cash won’t necessarily be any sort of panacea, given that the sum has been arrived at more through political calculation than from any assessment of actual need.

But in some ways, the second reason for welcoming the extra cash is the more important, because it is the implicit recognition that so-called ‘austerity’ is – and always was – a political choice, not a financial necessity.  Nothing fundamental has changed in the UK economy – indeed, if anything, the economy has weakened since ‘austerity’ was introduced; yet suddenly the government declares that it can somehow find an extra £20bn a year for England with corresponding increases for the devolved administrations.  The simple truth is that if they can do this now they could have done it last year, or the year before – or indeed at any time since being elected.

The Prime Minister claims, of course, that this is the redirection of what she calls the ‘Brexit dividend’.  The idea that any such dividend exists has been well and truly debunked many times, including by an MP from her own party who described the claim, quite rightly, as ‘tosh’; and even if there were any such dividend, it would not become available until after the period in which the spending is to be increased.  She was, unsurprisingly, vague about where the money will actually come from, not because she doesn’t know, but because she doesn’t want to admit it.  It will inevitably come from a combination which involves taxation, borrowing and, of course, the ‘magic money tree’ which she knows exists but whose existence she continues to deny.  The same methods used for all government spending, in fact.

It’s not yet an explicit admission, but it’s certainly an implicit one – the government are publicly recognising that we can have the health service that we need; it’s solely a matter of political will.  Or, perhaps, in the Tory case, of political fear of the consequences of not doing something.