The NHS is not investment, it is current spending

We'd like to leave aside our well known biases on the subjects of the European Union and the NHS and make a still important point. Brexit itself is going to make no difference at all to domestic policy: what will is the policies adopted once the UK is again free to adopt whichever policies it wishes. And the NHS, sure, we're not wholly in favour of the current form of the organisation and think the same provision can be done better. But leave those both aside and consider this statement:

Norman Lamb, the Liberal Democrat MP and former health minister, backed Hunt’s EU stance.

He said: “I don’t agree with Jeremy over the current funding of the NHS.

“I’ve been very clear that I’d like to see the government investing more in the NHS and social care. But we could not even have that debate if we vote to leave the European Union.

Spending upon the NHS is not investment. Yes, parts of such spending are: building a hospital which will still be there in 30 years' time is investment. But by far the vast majority of NHS spending is upon wages and consumables and is thus current spending. We could, of course, just dismiss this as being pedantry, a symptom of "investment" to a politician being public spending upon anything said politician approves of. But sadly the issue goes deeper than this.

It is not just an apocryphal story that the original founders thought that after the backlog of problems had been cured then spending upon the NHS would go down: they really did think that it was investment. Get over the hump of untreated disease and costs would decline even as tax revenues from the newly again healthy would rise. That could indeed have been described as investment: if it had actually happened. It didn't of course, that nascent NHS went from consuming 3 to 4% of GDP to the current 9 to 10% and more (all figures are a bit hazy as exactly what is NHS spending is a bit hazy).

We're not going to get to a proper and rational discussion on what amount should be spent on the health of the nation, nor how that should be raised nor allocated, until we get over that 70 year old delusion that health care spending is an investment. It isn't: it might be just, moral, necessary, better organised in another manner, just perfect the way it is. But it's most definitely current spending and must be recognised as such before we can have a proper discussion about it.

For example, the correct question is, at heart, how much of current production of the economy should be devoted to health care? No, not how much should we borrow to "invest" in it, but what portion of current income should be devoted to it? That's what that essential division into capital and current spending aids us in seeing: and given that that's what we must see before we decide thus we must see it. Further, the insistence upon seeing it as current spending aids us in viewing that "how much" question in its proper light: what other things are we not going to have as a result of having health care?

Or as an economist would put it about everything, there are always opportunity costs. Thus the true price of something is what we give up to get it. There is no cute let out by calling it investment and thus that is the correct lens through which to view health care spending whether it's done through the NHS or not. What won't we get as a result of more NHS and is more NHS worth more or less than what we must give up?

After all, we can only find the right answer if we ask the correct question in the first place.