Not sure that really helps. Local authorities will probably be increasing council taxes to the max anyway to make up for the money they have lost due to cuts in their funding from central government over the last decade. No additional money has been made available for social care, so again, where local authorities have a separate tax for this, we can expect an increase.
Given the importance on getting people spending money to help the economy to recover, making them pay higher taxes isn’t going to help that.
If Central government need to borrow more money this year to pay the wage increase, then they should just do it.
Just to add, I think I read that the average cost to nurses from wage freezes over the last decade is something like £7k. That’s not including the impact to changes on their pensions which may be costing them something like £20k? (if it has been changed in line with other public sector pensions?).
Within the last decade, the government cut or removed completely the bursary to cover the costs of training to become a nurse. Pay rises are calculated using CPI but student loans are still I think calculated using RPI which is usually a much higher figure.
The UK is facing another problem, not just nursing pay. Much of our health staff are ageing and are looking at retiring in a few years time. With regards to doctors, this is further complicated by their pensions. As high earners, they have naturally built up significant sized pension pots, Over the last decade, the government has reduced significantly the amount which you can pay into your pension without it becoming taxable (and I don’t think they have the option not to pay into the pension). The current budget has just seen this figure frozen for another 5 years, Ageing doctors are unlikely to want to continue working if their pension contributions are going to go towards more tax.
We don’t though, not really. Politicians mangle the message comparing it to a mortgage or credit card debt. But it’s not like that.
It’s a bit more of a difficult concept.
We don’t pay the debt off, we simply service it. Look back through history and Chancellor’s have rarely paid the debt down. If they have it’s been for a very short period.
The key thing is interest rates. If all governments do is service the debt the 1% increase can have quite the effect. But they are still historically low levels. It is likely cheaper borrowing today, then it will be borrowing tomorrow. If the interest rates go up because the economy is doing well and growing. That’s not a bad thing.
If we use the house owning analogy. Debt is a good thing.
You could go down road 1. Pay off the debt of the house. Minimal investment making house better as all your money is going to the bank.
Or you could go down route 2. Take the position you are not going to pay off the debt. Instead upgrade the kitchen and bathroom. Raise the value and leverage that to then buy a bigger better house. Perhaps with a bigger mortgage.
After 20 years. Person 1 might have £300,000 house fully paid off. Person 2 might have £1m house, still with £300,000 debt.
During bad times and when interest rates are at historic lows that’s when you need to be investing.
One of those areas that need greatest investment is the NHS. Given shocking state is was in, need be able to respond to after shocks of Covid (backlog of treatment) to deal with long Covid and to derisk the effects of a third wave (perhaps one where vaccine is not effective).
No, this is fundamentally a political decision not an economic one. I am sure if you went through the list of items the government is spending on you would quite comfortably find items that you would think are less important than higher wages for nurses.
Sticking to the economics, Governments usually don’t pay off debt (Richard Murphy has calculated that the UK has paid approximately 1.7p of debt back for each £ it has borrowed since the 1940’s). Instead, what governments do is grow their economies faster than the cost of the debt. For example, if your economy grows at 2% a year, and inflation runs at 1.5% but you borrow at 1% the debt pile won’t be a problem.
Average length of this governments debt schedule is 14 years. Despite the ballooning total of debt issued over the last 12 months, the cost to service it has actually fallen because we are retiring debt with interest costs of say 4% + with debt costing virtually nothing (some of it is negative i.e investors have effectively paid the government to buy the debt). 75% of the debt issued in the last year is held by the Bank of England. Essentially the interest payments accruing on that debt go back to the government. There is no risk of inflation rising to a dangerous level from the pay increase in the current situation (which may in some situations be a valid concern when debt financing wages). Nor should there be any fears of the government not being able to sell its debt to investors (or that debt costs would increase in order to sell)
Then there is the spending on the nurses wages itself. About 1/3rd probably comes back as taxes, national insurance payments and pension contributions. The rest will be spent and circulate within the economy (the multiplier effect @Noo_Noo & @Mascot have spoken about before) which helps give the economy a further push and leading to increased revenues for the government down the road.
This last point is a key factor as to why in the last decade the government struggled to get the economy growing at rates more in line with previous periods, why it continually missed its own deadlines for balancing its budgets and why it eventually changed its measure of success on the level of debt.
That’s my point I guess. There are things that to my mind should be a lower priority. To my mind the governments primary function is to look after its citizens. There is an argument that this isn’t the case with this government and that they have little motivation in providing services that help achieve that.
Cutting NHS budget at a time when the opposite is needed to both address the backlog and as you rightly point out de risk is indefensible IMO.
And I’d bet Boris will be willing to spunk £50m on feasibility and pre planning on a tunnel or bridge to Ireland.
As much as I wonder why a monarchy structure is still necessary in current times in my personal opinion but a personality like Meghan Markle does not inspire alot of credibility too in my opinion. Its like asking a vegetarian to choose between eating chicken or duck.
I think I might enjoy all the responses from all the Royalist pundits and the like over the next few days. You know, the crowd that think the Royals can do no wrong, even Andrew.
When she talks of ‘The Firm’, is she referencing the Royal Household? I don’t know enough, or have ever cared enough, to understand the structure of the departments that make up of the non-family side of the business.
The Firm has always been a euphemism for the establishment surrounding the Royal Family. I think Royal Household might be too far a stretch, it’s more the Royal Family themselves and their private secretaries and security apparatus.
A parent at my kids’ school was, briefly, the lead on the Northern Ireland/Ireland part of the Brexit negotiations. He’d had enough after six months and became William and Kate’s private secretary. I bet he was hoping for a quieter more easy life! Haha.
I haven’t yet seen the interview but there’s always more than one side to every story.
A close friend of mine, who sadly passed away a couple of years ago, was both Harry’s SP (with him in Afghanistan) and then with House of York (Eugenie). I’d imagine more stories to tell about the second family!
