Thursday, October 1, 2020
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Mark Ellse: Here is the bill for Cameron’s modest pledge of three days of paid leave. £65 billion

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George Osborne’s ducking of a simple multiplication (What is 7 x 8?) and Ed Balls’s slowness in calculating 7 x 6 makes one wonder what the mathematical skills of our politicians really are. David Cameron’s latest promises seem even more worrying if one does the adding up.

Yesterday Mr Cameron promised, by 2020, an extra £8 billion for the NHS; by that he meant £8 billion a year. We note the careful words ‘by 2020’. This probably means not a lot extra this year and a steady rise in expenditure. Let’s guess that it means, over the next five years, an average extra of £4 billion per year, a total of £20 billion over the next five years.

Also, yesterday, Cameron promised 3 days of paid leave per year for public sector workers volunteering.

Public sector workers have generous holiday allowances. NHS staff have between 35 and 41 days per year, say an average of 38 days. Sickness absence rates in the NHS are high – 3.92 per cent last year – around 9 days. So a typical NHS member of staff works 213 days per year. With three days paid for volunteering, that brings the NHS working year down to 210 days.

The NHS payroll is £44 billion per year. The three days off for all NHS staff is going to cost the NHS £3 billion over the next five years, meaning that the Cameron increase of £20 billion is reduced to £17 billion. By gum, that was a quick way of spending a sixth of the extra money!

Across the whole public sector, the three paid volunteering days will cost £10 billion over the next five years.

If the larger private sector employers are compelled to match those three days of leave, that will be an bill of £20 billion for them. But here the situation is worse. If you take an extra £20 billion out of the private sector, the obvious thing that it will do is hit the profit. The immediate loser is the Treasury which will be £4 billion worse off in corporation tax.

When profits go down so do dividends to pension funds. Poorer pensioners, reliant on private pensions, will be worse off. The State will subsidise this loss through pensioner credits. Allow an extra £1 billion state expenditure.

The private sector is the wealth-generating sector of the economy. When profits are reduced, investment falls. And since investment, by its very nature, yields significantly more than the original investment, a loss of £10 billion investment represents a real loss to the economy of about three times as much as that over a decade.

So, with two little announcements, David Cameron committed his party to direct spending of £20 billion on the NHS, £10 billion across the public sector giving staff ‘volunteer time’; a £5 billion loss to the Treasury in corporation tax and pension credits and £30 billion taken out of the private sector economy.

Last year, in round figures, the government received £600 billion in revenues and spent £700 billion. With an annual deficit running at around £100 billion, David Cameron showed us yesterday, in a very few words, how to dispose of an extra £65 billion.

Who benefits most from the expenditure? It’s the Tory leadership, of course – provided that they are elected.

Who pays? Our children, of course. Our extra borrowing will need to be paid off by them. Don’t we call it Ski – spending the kid’s inheritance?

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Mark Ellse
Mark Ellse
Mark Ellse is a physicist and author. He is a former headmaster, independent school inspector and A level chief examiner.

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