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Public Services for All > Published by Stephen Henderson, July 13th 2011 at 4:29 pm

Ignore the Tory spin – pension liabilities and the NHS are affordable

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Today there has been a blizzard of reports on the future of public finances, from the Office for Budget Responsibility (OBR), the Treasury (the Whole of Government Accounts, pdf), and the Institute of Economic Affairs (Sharper Axes, Lower Taxes, pdf). In the firing line are public pensions and the NHS.

The OBR’s July 2011 Fiscal Sustainability report (pdf) looks long into the future (2060) and guesses at the likely proportions of GDP that might arise as the population becomes more elderly. The assumptions are based on current policies, not government proposals. Confirming earlier findings in the Hutton Report (pdf), they clearly predict the cost of public pensions will fall from 2% of GDP to 1.8% in 2030 and 1.4% in 2060 – without any of the current Hutton proposals.

In contrast the state pension paid to public and private sector employees is set to rise from 5.7% to 6.1% in 2030 and 7.9% in 2060. Public pensions really are sustainable.

Non-interest-spending-projections
The other major factors increasing are health and long-term care, which taken together increase from about 9.5% to 10% in 2030 and 11.8% in 2060. The British Medical Journal puts this into context today in an article from John Appleby, chief economist of the King’s Fund.

Perhaps unwisely given the far more modest predictions from the OBR shown above, Appleby accepts at face value the verdict of health secretary Andrew Lansley that:

“If things carry on unchanged, this would mean real terms health spending more than doubling to £230 billion… This is something we simply cannot afford.”

And yet even in this worst case scenario this would bring us to only just exceed the OECD average and fall far shy of health and long term care spending in the US.

Health-spending-as-a-percentage-of-GDP
Or rather it would if the OECD and US didn’t have an aging population that is likely to push up their health costs too. So apparently we simply can afford to carry on with the current NHS arrangements… if we choose to.

Elsewhere, the BBC headlines the OBR report with ‘Public sector pension liabilities top £1 trillion’, noting this is £332 billion higher than the year before.  A bit further down they notice that the OBR states  this “has nothing to do with changes in the size of prospective pension payments” – remember they will fall from 2% to 1.8% in 2030 – but is because the government has just changed the assumptions.

And in perfectly circular reasoning the right is now trumpeting the OBR report as supporting their changes.

Hopefully Evan Davis or some other even moderately numerate journalists will notice this perfidy and hold the government to account.

  • http://twitter.com/mardyoldgit/status/91167848851968000 Christine Pampling

    RT @leftfootfwd: Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/ahmad_noor/status/91174708577443840 Ahmad Noor

    Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/therightarticle/status/91176776901996544 Michael

    Ignore the Tory spin – pension liabilities and the NHS are affordable l Left Foot Forward – http://j.mp/ohc5fi

  • http://twitter.com/caer23/status/91177535332827136 Caer

    RT @TheRightArticle
    Ignore the Tory spin – pension liabilities and the NHS are affordable l Left Foot Forward – http://t.co/nRquTDV

  • http://twitter.com/davidmheathcote/status/91182656565428225 David Heathcote

    RT @leftfootfwd: Ignore the Tory spin – pension liabilities and the NHS are affordable http://t.co/20sgy9Q

  • http://twitter.com/wkrussell/status/91194049725333506 Wendy Russell

    Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/jimhenderson/status/91195044828151810 Jim Henderson

    Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/malarky67/status/91204782827642880 StephenH

    RT @leftfootfwd: Ignore the Tory spin – pension liabilities and the NHS are affordable http://t.co/CBA6KML

  • Alan W

    These kind of statistics are so speculative as to be almost worthless.

    As Stephanie Flanders points out on the BBC website, even minor changes to key assumptions could produce radically different results, either plunging the country further into the red, or showing it to be in perfect inter-generational fiscal health.

    Frankly when it comes to any economic projections for the year 2060, I’ll take them with an entire dumper truck’s worth of salt.

  • StephenHenderson

    Alan W: I pretty much agree with you…Incidentally I teach a statistical modelling course in which I tediously drum into my students the dangers of over- extrapolation

    Yet the present government, right-wing think tanks and their pet-media are doing their best to present such projections in a light that will scare the public into supporting precipitous and ideological cuts. ‘There Is No Alternative” writ large.

    Under such circumstances it is worthwhile to engage with such models if only to keep them honest.

  • http://twitter.com/chaostocosmos/status/91218979519082496 Pamela Heywood

    Ignore the Tory spin – pension liabilities and the NHS are affordable http://dlvr.it/b3jnX

  • Mr. Sensible

    The right never let the truth get in the way of their ideology…

    And nice to see that the IEA support getting rid of the NHS and overseas aid.

  • http://twitter.com/interuncut/status/91611489227649024 InternationalUNCUT

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/xBRenC7l

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    RT @leftfootfwd: Ignore the Tory spin – pension liabilities and the NHS are affordable http://t.co/sbuRg6g

  • http://twitter.com/falseecon/status/92154208102514688 False Economy

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/staffsunison/status/92155437805346816 Staffordshire UNISON

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/jameshaslam78/status/92155811509448705 James Haslam

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

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    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/evilc154/status/92157383937228801 Clive Burgess

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/blazerunner/status/92157550040072192 blazerunner

    RT @leftfootfwd Ignore the Tory spin – UK can afford pension liabilities and the NHS without savage Tory cuts http://bit.ly/pvG3E1

  • http://twitter.com/realsociology/status/92158582207946752 karl thompson

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/right_to_work/status/92158897032400896 Right To Work

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/primevalmudd/status/92159006788956160 Dave Plummer

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

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    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

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    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/martinstride/status/92159381965242368 Martin Stride

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/mrchristian99/status/92161607601369088 Simon Worthington

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/farfar20/status/92163381980696577 farfar

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/gorton19/status/92164401825722368 B.T

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/sandwellleader/status/92165447914487808 Cllr Darren Cooper

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/paul_trembath/status/92168833070153728 Paul Trembath

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/bob_lloyd/status/92170377962336256 Bob Lloyd

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/sheffuncut/status/92171834350505984 Bruno Bear

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

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    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/livingafloat/status/92198358004928512 Peter Underwood
  • http://twitter.com/hlcheathrow/status/92200989662257153 Jon Purdom/Paco Saez

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/staffsunison/status/92264058832695296 Staffordshire UNISON

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://twitter.com/blanchardspov/status/92318572700893184 Simon Blanchard

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/spsot/status/92509047923802112 Spir.Sotiropoulou

    RT @leftfootfwd Ignore the Tory spin – pension liabilities and the NHS are affordable: http://bit.ly/pvG3E1 writes Stephen Henderson

  • http://twitter.com/shezzle0/status/92871855102373888 Shez

    Ignore the Tory spin – pension liabilities and the NHS are affordable | Left Foot Forward http://fb.me/12YHodubs

  • http://alexmasterley.blogspot.com Alex

    The reason it is unaffordabvle is that government tax receipts are currently less than 40% of GDP so that 12-14% out of the future 41% or today’s 41% is not being “afforded”, but simply passed on as a bill for future generations to pay. That doesn’t work indefinitely.

  • http://liberalconspiracy.org/2011/07/27/how-we-could-pay-for-the-uks-demographic-time-bomb/ How the UK could pay for its demographic “time-bomb” | Liberal Conspiracy

    [...] the difference between the 2015 and 2060 OBR projections is less than the gap between UK and US spending on health care in [...]

  • http://www.leftfootforward.org/2011/09/dont-buy-the-right-wing-spin-public-sector-pension-costs-set-to-fall/ Don’t buy the right-wing spin: Public sector pension costs set to fall | Left Foot Forward

    [...] and again and again that it is not true. As reported by Stephen Henderson on Left Foot Forward in July: “The Office of Budget Responsibility’s July 2011 Fiscal Sustainability report (pdf) looks [...]

  • http://www.leftfootforward.org/2011/11/john-hutton-public-sector-pensions-lie/ Hutton repeats his big fat lie on public sector pensions | Left Foot Forward

    [...] already sustainable. We know this, because it is in Hutton’s own report, as Stephen Henderson wrote for this site in July: The Office of Budget Responsibility’s July 2011 Fiscal Sustainability [...]

  • http://www.leftfootforward.org/2011/11/four-myths-about-todays-strike-busted/ Four myths about today’s strike: Busted. | Left Foot Forward

    [...] Stephen Henderson wrote in July: The Office of Budget Responsibility’s July 2011 Fiscal Sustainability report (pdf) looks long [...]