Are We Paying for the Government’s COVID Waste?
UK healthcare spending has burgeoned by £50 billion since the pandemic, the same figure as the Government’s mysterious fiscal ‘black hole’, reports Sam Bright
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The Government has this week signalled that it may limit public sector pay rises to just 2% – amid 10% inflation – as it tries to plug a supposed £50 billion ‘black hole’ in the public finances.
As the economist James Meadway has observed, this black hole is in large part a figment of the Government’s own imagination – based on its ambition for debt to be falling as a percentage of GDP by 2024/25. Paul Mason has also noted that the figure has jumped from £35 billion to £50 billion in recent weeks, caused he says by a ‘doom loop’ of low growth and therefore reduced Government revenues triggered by the spending cuts intended to pay for the black hole.
In any event, the Government seems determined not to change its debt rule, and to use a combination of tax cuts and austerity to plug the gap. A Government document released on Monday revealed an agreement between Rishi Sunak and his Chancellor Jeremy Hunt stating that it was “inevitable that everybody would need to contribute more in tax in the years ahead”.
As the country braces for another era of retrenched spending and higher taxes, the Government’s spending choices over recent years are therefore even more eligible for scrutiny.
Byline Times has analysed statistics produced by the Organisation for Economic Co-operation and Development (OECD), an alliance of developed countries around the world, showing that the UK has experienced in recent years the largest increase in healthcare spending of any comparable country, as a proportion of GDP.
From 2019 to 2020, the UK saw its healthcare spending rise from 9.9% of national GDP to 12% – a percentage increase of 21% – subsequently remaining at 11.9% of GDP in 2021.
This proportional increase in healthcare spending is larger than any other major developed nation, the second largest increase being Spain, at 17.6%. The increase in the USA was 12.5%, in France 9.9%, and in Germany 9.4%.
These OECD figures are reliant on two factors: the reduction in GDP suffered by individual nations, and raw increases in healthcare spending. On both metrics, Britain performed poorly.
The UK’s spending on healthcare has jumped markedly over the last few years, from £225.2 billion in 2019 to £257.6 billion in 2020 and £277 billion in 2021, according to the Office for National Statistics (ONS). This increase is more than £50 billion – equivalent to the Government’s supposed fiscal ‘black hole’.
This can partly attributed to the Government’s mishandling of the pandemic, which left the UK with one of the worst COVID death rates in the developed world. More than 206,000 people have now died in the UK with COVID on their death certificate. The Government’s record of locking down the country too late and opening up too soon pushed the NHS to breaking point, contributing to a treatment backlog that has now produced record health waiting lists.
Nor did the Government’s policies protect the economy, as it had hoped. The UK had the largest decline in GDP among the G7 in 2020 (-11.0%), and by September this year it was the only country in the G7 with a smaller economy than in early 2020.
Australia, by contrast, which had a tougher policy on COVID lockdowns, only saw its healthcare spending increase by 3.9% of GDP from 2019 to 2020.
The Final Scorecard
Moreover, the UK has stood in an internationally unique position, in its waste of taxpayer money during the pandemic.
This was particularly the case in relation to personal protective equipment (PPE), as has been extensively reported by Byline Times.
The National Audit Office, the Government’s independent spending watchdog, reported in November 2020 how the UK’s PPE stockpile had been eroded prior to the pandemic due to the austerity policies of the Conservative Party. In addition, when the pandemic hit, officials were slow to realise the danger – believing that existing stockpiles of equipment would be sufficient.
It only struck officials and ministers at the last minute, when the virus was surging towards Britain, that the Government’s stockpile contained enough PPE for just two weeks. As a result, the Government embarked on a desperate scramble for equipment – paying £10 billion over the odds, according to the NAO.
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A Department of Health and Social Care spokesperson partially confirmed this account to Byline Times – saying that: “We acted swiftly to procure PPE at the height of the pandemic, competing in an overheated global market where demand massively outstripped supply. This resulted in greatly inflated prices for goods where we had to pay the global market rate for all PPE.”
A further NAO report in March 2022 further compounded this story – explaining that 3.6 billion items of PPE, equivalent to 11% of all PPE procured by the Government, were not suitable for front-line services, at a cost of £2.9 billion.
At the time of the report, the Government was spending an estimated £7 million-a-month on storing the billions of items that it did not need or could not use.
The UK awarded a staggering £46.7 billion in private sector contracts during the pandemic, with its largest output being the ‘test and trace’ system – its budget standing at £37 billion and the total value of contracts awarded reaching some £23 billion.
While it is difficult to make international comparisons – with false stories circulating about Germany only having spent £48 million on its programme – it seems clear that the UK spent considerably more than comparable countries. The House of Commons Public Accounts Committee stated in March 2021 that there was “still no clear evidence” of the scheme’s overall effectiveness and “it’s not clear whether its contribution to reducing infection levels… can justify its unimaginable costs”.
As Byline Times revealed, at its peak, the test and trace programme was spending more than £2 million a day on private sector consultants.
Another flagship example of Government overspending was the Nightingale hospitals – designed as emergency spillover facilities if regular hospitals were overrun with COVID patients. Ultimately, only a few patients were ever treated in the Nightingale facilities, at a total cost of £532 million. The £66 million Nightingale facility in Birmingham, for instance, had not admitted a single patient as of April 2021 – not long before it was decommissioned.
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However, this wasn’t necessarily because of the Government’s success in managing the NHS during the pandemic, as ministers have claimed. Healthcare insiders suggested to Byline Times that the Government ultimately didn’t use the Nightingale hospitals because safety reports indicated that such a concentration of oxygen in a single location would be a major fire hazard.
“This Conservative Government wasted billions of pounds of public money ignoring good qualified British businesses and filling the coffers of their Tory cronies during the COVID pandemic,” Florence Eshalomi, Labour’s Shadow Cabinet Office Minister, told Byline Times.
Indeed, some £3 billion in COVID contracts were awarded to firms with ties to the Conservative Party, as revealed by Byline Times and The Citizens. These firms have so far seen their finances improve by £325.5 million, since the awarding of these deals.
“While the Tories use public cash with reckless abandon, Labour will treat taxpayers’ money with the respect and care it deserves with our Office of Value for Money,” Eshalomi added.
The DHSC spokesperson said: “Our priority throughout the pandemic has been saving lives – we have delivered over 23.2 billion items of PPE to frontline staff to keep them safe and we built the largest testing industry in UK history from scratch and at pace.
“Having too much PPE was preferable to having too little in the face of an unpredictable and dangerous virus, given this was essential to keep our NHS open and protect as many people as possible.”