Posts Tagged ‘NHS’

“The elderly are more likely to vote than the young.” That was what CityAM said this morning, in response to Ed Balls’ idea of increasing the retirement age.

Actually, Mr Balls was talking about ring fencing. The government is trying to make cuts, but certain areas are protected, will never be breached – never as in cross my heart hope to die, never.

So the NHS is safe. Education is safe, and state pensions are safe.

But maybe ring fences are a bit too solid, and never is too long a time frame. Part of the problem with the NHS is that the pendulum has swung too far to the other way since the bad old days of the 1970s. Back then doctors and nurses were grossly underpaid. Today many GPs are more like traffic police. They direct patient traffic to different specialists, but how much of what they do could be handled by well trained, experienced nurses?

As for nurses, maybe the entry level is too high. A better career progression path, with senior nurses taking on many of the tasks that used to be carried out by doctors is a good idea, but at the bottom end, maybe we need more SEN type nurses. So perhaps the NHS should be not so much be ring fenced, as have a new ring of confidence via a complete re-think on how it operates.

The NHS also needs a re-think in terms of the imminent retirement of the baby boomer generation, otherwise we have a nasty problem coming.

Talking of baby boomers retiring, did you hear the one about savings? It was told by Scottish Widows, and the story goes like this: one in five Brits are not saving at all; 40 per cent are not saving enough.

Is it right? Well, sort of.

It is true that the UK sits on a fault on the demographic tectonic plates, and the impending earthquake could be far more significant than anything fracking might bring. As things currently stand, the UK is heading towards a disaster of enormous proportions as the baby boomers retire, and find there isn’t enough money in the pot.

But what the UK really needs is a more dynamic economy, with more entrepreneurism. Greater savings may help if the money saved is used to fund investment and in promoting entrepreneurism. If, on the other hand, greater savings mean money sloshing around and lying idle, promoting consumer credit and mortgages, and pushing up house prices, then the catastrophe that is the imminent retirement of the baby boomers will be far more catastrophic.

As for ring fencing state pensions, Ed Balls actually said that the idea of cutting money spent on stage pensions in some way was being considered, but probably the result will be a rise in retirement age, rather than less pension income for those who are retired.

And on the topic of the UK fiscal deficit and government borrowing, it seems there is a choice: carry on borrowing and risk creating a massive debt burden for the younger generation, or impose austerity and risk deepening the downturn, imposing a massive burden on the younger generation trying to build a career.

Mr Balls is as populist as any of the politicians, and no more likely to advance unpopular policies that are in the common good, than anyone else, but at least Ed Balls’ new plan tries to deal with one of the problems.

The baby boomer generation makes up a large chunk of the electorate, however, which means they want higher house prices, higher pensions, a lower retirement age, and none of this talk about fiscal stimulus, for that will lead to more debt, which is immoral because that will leave a debt for future generations to pay.

For more see, Baby boomers: The tyranny of the Baby Boomers 

© Investment & Business News 2013

Last year I did a list of each country’s national debt divided by population to see what the next generation might either pay interest on or pay back.

Examples in $1000 per head:

UK 26.5

Ireland 35

Germany 28

France 31

Spain 17.5

Italy 38

Japan 83

USA 29

Canada 37

Norway 39

Australia 11.5

So what you might say? As a percentage of GDP it’s not so much … well that’s got naff all to do with it too unless there is a current a/c surplus … if you cut someone’s hair it adds to GDP but it hardly pays the £26,500 you owe on top of the £10,000 on your credit card.

Obviously, in the UK, with the old folks about to fund the out of work young folks as well as the civil servants, NHS etc (biggest GDP earners presumably and therefore the biggest ‘so what’ in this whole sad tale) this black hole is here to stay for a long time.

To get away from the obvious side of the story let’s have a look at the other side of the loans – the £26,500 each and every one of us had borrowed on their behalf… someone is the lender and so they will either ask for it back one day or extend the loan forever and the borrowers (you) will pay the interest. As the banks already went bust then presumably the debt is met by bond issuance from each government … “wow government – must be safe” bonds of course.

So who owns the bonds? i.e who is hoping to get paid back?  As it’s not countries per se nor banks so much, it must be the pension funds and the pension funds have your money in trust for when you retire. So the money they are going to give to you one day is indirectly the money you already owe ? And in order to realise that money, the pension funds have to redeem the bonds so the government has to find the money to give the pension providers to give to you….. enough of that … the real truth is that the government bought votes by indirectly spending your pension fund over the past few decades. The government borrowed from the very people it was robbing at the time. Many pension plans will have to go pear-shaped… whose will be first?  Do you doubt this? In that case just tell me who is going to produce your £26,500?

Any thoughts out there?

Patrick O’Connormist is this week’s guest contributor to The Money Spy blog