Britain can’t afford to pay the doctors’ Danegeld
Continued strike action is unsustainable and unfair to taxpayers and patients, given the UK’s financial constraints, ballooning pension liabilities, and already generous public investment in their training and benefits, says Maxwell Marlow
To borrow from the great Dane, Hamlet, something is very rotten in the state of England. As I set about thinking up policies to get Britain building again, it’s a phrase I keep returning to. But there’s another Nordic phrase which has reared its head this week.
“Never pay the Danegeld, for the Dane always returns” has been a favourite of anti-strike figureheads. Harking back to Anglo-Saxon England, taxes were levied on the English to pay as tribute to the Vikings in the North in order for them not to attack. As any economist will tell you, people respond to incentives, so the Danes kept coming back for ‘geld’ and the attacks continued. History is repeating itself, but this time with the NHS.
Junior Doctors, or Resident Doctors as they’re officially known, have received two above-average pay rises since Labour took office this time last year. An average increase of 5.4 per cent this year (plus £750) on top of a pay package last year.
Junior doctors are not ungrateful – they do an incredibly hard job after years in medical school. The government though cannot pay the spurious, RPI-based 29.2 per cent demand. Now these Danes are back for more, but this time the chief they must face-down is a very fed-up Wes Streeting.
Critics of the strike (of which I am one) have highlighted that junior doctors receive far more in pay than they realise. In the first instance, vaunted NHS pensions are eyewateringly expensive. Junior doctors pay 6.5 per cent into the scheme while the NHS contributes a whopping 23.7 per cent. Long-term, this scheme is wildly unsustainable with liabilities running over £840bn.
It’s not just pensions that are a problem. Junior doctors also receive incredibly expensive, specialised training at the taxpayer’s expense (with most student loans written off), which can be exported to other countries such as the US, Australia and New Zealand. This generosity and the socialist nature of the NHS is why junior doctors are not paid on parity with other countries, and is exactly why these workers are looking to leave.
Treasury says no
It is easy to say “just front-load the very generous pension payments”. This is a point that has been made in a number of publications, including the Spectator, and the Telegraph. The problem is that the Treasury will not allow this to happen.
In a classic case of ‘Treasury Brain’, Wes Streeting and NHS patients are caught between an unstoppable (union) force and an immovable (institutional) object. Frontloading pension payments would move returns beyond the scorecard period, and massively increase costs materially in the short-term. At a baseline, the BMA’s request exceeds £1bn a year in additional pay, and does not include bonuses and compensation for unsocial hours and overtime. This is £1bn a government faced with a £18bn blackhole in the finances does not have.
So there is more trouble ahead. If the government can’t shift pension contributions to meet pay demands then the aforementioned £840bn in current liabilities to the taxpayer will balloon even further. Future taxpayers will suffer from more striking junior doctors, an economy which cannot grow, and a tax-burden being levied on a shrinking pool of younger workers.
Britain’s broke – we all know it. But junior Doctors must realise that their strike action is deeply unfair – both for the patients who will suffer and the taxpayers who have to stump up the cost today and far in the future.
Do they deserve a pay rise? Yes, of course. Can they have one? The answer is a pretty simple ‘no’.
Maxwell Marlow is director of public affairs at the Adam Smith Institute