The NHS will soon cost more than the GDP of New Zealand
Spending on health and social care will hit £200bn by the end of this parliament – more than the entire economy of New Zealand – as Britain heads towards being a £1.5 trillion state, says Emma Revell
New Zealand sounds, by all accounts, like a pretty sweet country. For a start, it is one of the most beautiful places on Earth. It exports some of the best lamb, rugby players and fantasy film trilogies we’ve ever seen. Average life expectancy for both men and women is in the 80s and GDP per capita is around $5,000 a year higher than the UK.
It also manages to run an entire government for less than the UK spends on the NHS.
Of course, New Zealand is home to fewer people than London. No one expects them to need to spend as much as we do on providing public services to an entire nation. But the news that total spending on health and social care is on track to hit £200bn by the end of this parliament – roughly the current GDP of our Kiwi friends or, if you prefer, Greece – hasn’t seemed to create even a moment’s pause.
Instead, there were cheers in the House of Commons when the Chancellor got to the single biggest item of spending in last week’s Budget. The NHS will receive an additional £22.6bn in day-to-day spending and £3.1bn in additional capital spending by 2025/26. When taking social care into account, that £200bn total will account for 17 per cent of day-to-day government spending and 10 per cent of capital expenditure.
No one on the Labour benches paused for a second to ask the most important question – is this working? All the NHS’ problems can be fixed by more money, say its pots-and-pan bashing, badge-clad defenders. The waiting lists, the strikes, the lack of integration with social care services, the failing maternity services and crumbling hospitals, of course more funding is required.
What they seem to ignore is that despite NHS funding having increased by over £70bn since 2016, productivity has stagnated. Wes Streeting isn’t set to reveal his plans for boosting it until the spring and the Health Department has been reduced to crowd-sourcing ideas from the general public.
That, sadly, isn’t even the half of it. Despite a strong suspicion that the UK is set to transition into less of a country and more of a floating health service with a couple of nuclear subs attached, the government does occasionally spend money on other things. So much money it is a struggle to even comprehend.
Back in 2021, colleagues at the Centre for Policy Studies raised the alarm that, based on spending projections, by 2025-26 state spending would hit £1 trillion. Just three short years later, as a result of this first Budget from Rachel Reeves, the state is set to spend an astonishing £1.5 trillion by 2029/30. A huge rise on an already gargantuan figure.
Labour have not abandoned their socialist instincts
Labour have, fairly predictably, not left their socialist instincts behind as they entered government. This is a party which wholeheartedly believes in the power of the state to fix what ails us. To that end, they have delivered a Budget in which smothers the private sector with taxes in order to prop up public services which are not capable of meeting current, never mind future demand. No reforms have been outlined – not to the health services, pensions liabilities, or any other area of significant state spending which could ensure value for money or a reduction in cost.
Labour love to present themselves as the party of equality and fairness. But where is the fairness in loading up our children, and generations not even born yet, with a bloated and inefficient state which will permeate every aspect of their lives and for which they will have to foot the bill?
Our Antipodean friends are already poaching our doctors to work in their health service and young entrepreneurial Brits who are giving up on Britain will surely be tempted by a move down under, where taxes are less onerous, earnings are generally higher and the health services are not completely dysfunctional.
The age of the super-state is here and Labour are taking a massive gamble that this spending splurge pays off.
Emma Revell is external affairs director at the Centre for Policy Studies