Our free and fearless press is today telling the world that Theresa May is to pledge billions more in spending for the NHS. Furthermore, the right-leaning part of it - for which read most papers - is proclaiming this to be a “Brexit dividend”. All that money that formerly went to those ghastly Eurocrats is now coming home. Hurrah for Empress Treeza!
Well, I hate to be a party pooper, but while the more credulous pundits have lapped up the spending claims, as well as that of a “Brexit dividend”, those watching the PM give the world her carefully scripted and rehearsed good news in a set-piece interview for The Andy Marr Show™ would be best advised to err on the side of caution, although they won’t.
Theresa May was unequivocal when it came to how her proclaimed 3.4% funding increase for the NHS would be funded: “We’ve got to find that money … that will come through the Brexit dividend”. That dividend would have to stump up £20 billion a year, maybe significantly more. But those praising the PM to the rafters should stop and think first.
Here is what the FT - derided by those on the Europhobic right because it keeps reminding them of reality - has told readers: “Treasury officials dismiss the idea that a significant Brexit dividend will override the painful arithmetic for the public finances stemming from a mediocre outlook for the UK economy”. And there is more.
“Paul Johnson, former chief microeconomist at the Treasury and now director of the Institute for Fiscal Studies, a think-tank, said: ‘There is no Brexit dividend. Payments to the EU will fall [after Brexit], but tax revenues will fall more as a result of Brexit … That is the official position of the government, which has accepted the Office for Budget Responsibility’s forecast that the public finances are likely to be weakened to the tune of £15 billion a year as a result of the [Brexit] referendum vote’”.
Johnson put the choice bluntly: more money for the NHS could be found by “taxing more or borrowing more … You can’t pay for it from an imaginary [Brexit] dividend”. This conclusion is shared by ITV Political Editor Robert Peston. This is his take.
“The idea of a Brexit dividend, as articulated by the PM today, is dubious. UK growth has slowed significantly since the Brexit vote, at a time when global growth has significantly accelerated. If this does not represent a Brexit drag on growth, it is very difficult to know what it is. And UK growth is forecast, even by the government, to limp along at 1 to 1.5% for years to come, a cut of roughly a third from pre-Brexit forecasts”
And his conclusion? “Our net contribution to the EU budget, after money we get back from the EU in various forms, is nearer £150m a week than the £350m that was on the bus. So even if you believe the reduction in UK economic growth is temporary and that there really will be a Brexit dividend, the PM’s promise of £600m extra in cash for the NHS in 2023/24 still means our taxes and government borrowing are set to rise by £450m a week”.
So let’s get real: there isn’t going to be a Brexit dividend, and even if such a thing were to materialise, it would not prevent significant tax rises to pay for the Tories’ announcement.
Why do so many people swallow the propaganda without considering all of that? Another case of You Might Wish To Ask That, I Couldn’t Possibly Comment.