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Decentralising the NHS could be a game-changer for the UK’s future health

Decentralising the NHS could be a game-changer for the UK’s future health

The NHS is a highly centralised organisation. During the Covid crisis, policy decisions have been made at the top and then passed down.  There has been little scope for showing initiative at a local level.

This dates back to when the NHS was set up in the late 1940s. Central planning was very fashionable at the time.

Yet as many have pointed out, no other Western health service has seen fit to copy the particular organisational structure of the NHS. There is, to varying degrees, more devolution of authority and decisions.

In normal times, the problems arising from a centralised, command-and-control system have become apparent over the years. Cancer survival rates, for example, are routinely lower in the UK than in other European health systems.

In a crisis, however, many economists and business school theorists have argued that a highly centralised structure works best. Decisive and coordinated action is needed, and this may be done more effectively from the centre.

There is a rival school of academic thought which takes a completely different view.

When a major shock such as a financial crisis occurs, decision makers face a highly uncertain environment. Local managers in a firm, for example, can understand their specific circumstances much better than can those in central headquarters. They are therefore better placed to make good decisions.

A timely paper in the American Economic Association’s Applied Economics journal examines the performance of firms during the Great Recession of 2008/9.

Nicholas Bloom of Stanford, along with his colleagues, analyse two large micro data sets of decentralisation in firms across ten developed economies.

Their conclusion is unequivocal. Companies which delegated more power from the central headquarters to local plant managers before the Great Recession happened outperformed their centralised counterparts.

The enhanced value of specific local knowledge during a crisis, when uncertainty is high, is seen as a key reason for the finding.

In the context of Covid and the NHS, the effectiveness with which the vaccination programme is being carried out appears to contradict this view.  But this did not need specific localised knowledge. It required the large-scale mobilisation of resources to deliver a very clear target.

Against this success, we can set the myriad failures of Public Health England. Its ability even to perform the basic task of collecting accurate data on the number of new cases has been brought into question.

Certainly, some local authorities embody the central planning mentality even more than PHE. But many could have used their local information about outbreaks to act much faster if the powers had been devolved to them. Local public health inspectorates, for example, have a lot of experience of practical tracking and tracing.

With decentralisation, different authorities would initially have tried different approaches. We would have had a natural experiment, as it were, into what sorts of things really worked. Successful tactics could then have been copied more widely.

One of the key lessons from the Covid crisis is the need to devolve powers within the outdated system of central planning on which the NHS is currently based.

As published in City AM Wednesday 20th January 2021
Image: CC0 1.0 Covid Vaccination via Rawpixel
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The Government scientists’ credibility is shot to pieces

The Government scientists’ credibility is shot to pieces

Imagine.  No, not the silly childish song by John Lennon.  Imagine there were no vaccines available.  What would Matt Hancock, the Secretary of State for Health, do?

He might ask people to pay more attention to the scientific advice.

But the plain fact is that the credibility of Chris Whitty, the chief medical officer, and Sir Patrick Vallance, the chief science officer, is shot to pieces.

They have cried wolf too many times and issued too many Project Fear-type projections for people to have any confidence in their pronouncements.

Without a vaccine, the government would have been forced to confront the single most damaging and destructive aspect of the whole pandemic.

Namely, the apparent inability of the ranks of epidemiologists and government scientists to understand the crucial need to alter behaviour, rather than to rely on lockdowns.

Lockdowns can only work in certain rather extreme circumstances.

They need to be harsh. They need to last for a couple of months. The country needs to seal its borders. And there needs to be a willingness to comply.

So-called “firebreak” lockdowns of a couple of weeks duration cannot work at all.

On average, Covid victims are infected for a couple of weeks. When a lockdown is imposed, many of  those infected at the time will be free of the disease when it ends. But not all. A small percentage will remain infectious.

More importantly, on day one of lockdown, other people will become infected, and still more on each subsequent day.  So a pool of infected people will emerge from lockdown, and the epidemic will spike up again.

Such is the deranged obsession with lockdowns that not only has the Labour leader, Sir Kier Starmer, been a strong enthusiast for firebreaks, they have been implemented in Wales and Northern Ireland.

But as a matter of simple logic, not opinion, they cannot work.

The same logic applies to all but the most rigorous and lengthy lockdowns.  Unless there is a fundamental shift in behaviour, the virus will simply spread again once lockdown is lifted.

A policy of successive lockdowns may very well change behaviour.  But for the worse.  With each one, the willingness to comply is reduced.

This is exactly what has been happening in the working class areas of the UK – the central belt in Scotland, the old mining valleys in Wales, whole swathes of the North and the East End plus its Essex and Kent extensions.

It is in these areas that infection rates have gone through the roof, even when lockdowns were in place. It is not that the rules were insufficiently strict. It is that people have paid less and less attention to them.

Government scientists appear to have no idea about life in these areas.  It is not an easy one.

People get a lot of pleasure from socialising with friends and family, who typically live close by. The longer the restrictions last, the greater the incentive to ignore them.

Imagine we had epidemiologists and health bureaucrats who understood that behaviour must change if a virus is to be contained.

Imagine we had politicians who were not in thrall to pseudo-science. At Christmas, is this too much to imagine?

As published in City AM Wednesday 24th December 2020
Image: Lockdown in Glasgow by Jxseph14 via Wikimedia  CC BY-SA 4.0
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Economics has a lesson for Remainers and lockdown-lovers who refuse to let facts change their minds

Economics has a lesson for Remainers and lockdown-lovers who refuse to let facts change their minds

Christmas is a time to be charitable.

So let’s spare a thought for those who fought against the referendum result.

Unlike the great unwashed, who simply didn’t understand the issues they were voting on, they had all been expensively educated at the right sort of schools and universities.

From the time the vote took place in 2016 right up until the day of Boris Johnson’s decisive victory in the election a year ago, a ruthless campaign was waged to nullify the vote.

How smart do they look now, all those Amber Rudds, Dominic Grieves, Gina Millers and Jo Swinsons?

They could have accepted the result and voted through one of the many versions of a deal proposed by Theresa May. Most of these involved a close and ongoing alignment with the EU.

Instead, they will end up with an arrangement which is the stuff of their nightmares.

Spare a thought, too, at this festive time for the hapless first minister of Wales, Mark Drakeford.

Towards the end of October, he placed Wales in a short “fire-break” lockdown to try to reduce its high infection rate. Sections of supermarkets were cordoned off by government diktat because they sold “non-essential”  items.

The seven-day moving average of daily new cases did indeed fall in Wales from around 300 per 100,000 to well under 200. But within a month of lifting the fire-break, it had risen even higher, to some 350. In the old mining valleys of South Wales, the new case rate is now 600 and rising.

Drakeford did what any self-respecting Corbynite would. He blamed the electorate.

On 10 December, speaking on BBC Breakfast, he remarked: “Not everybody has been willing to abide by the restrictions that are still necessary. We have seen people having house parties, people inviting large numbers of people back to their own houses when that is absolutely not allowed within our rules.”

His words recall the leaflets put out by the old East German Communist government in June 1953, after the workers’ uprising had been brutally suppressed by Soviet tanks. The people, they declared, had forfeited the confidence of the government. It could only be regained by “increased work quotas”.

The Welsh government followed the advice of experts in epidemiology, for whom no lockdown appears to be sufficiently strict.

But these experts did not anticipate that lockdown would make ordinary people less, rather than more, likely to behave in ways the experts deem appropriate.

These two vignettes — lockdown and the anti-Brexit movement — illustrate fundamental principles expounded by Friedrich Hayek and Herbert Simon, both Nobel laureates in economics.

They stressed the need to recognise the highly tentative, uncertain and experimental nature of successful decision-making. It is an evolutionary process, rather than one which can be optimised.

Good policy proceeds by trial and error. Rather than try and find the best possible solution — such as overturning the Brexit result — choose one which seems reasonably satisfactory.

Another key point is that failures need to be abandoned quickly. Lockdowns no longer seem to work, but experts continue to be fixated by them.

The works of Hayek and Simon should fill the stockings of Remainers and epidemiologists alike this Christmas.

As published in City AM Wednesday 16th December 2020
Image: EU flag mask by Ivan Bandura via Wikimedia CC BY 3.0
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Hurrah for a vaccine — but was lockdown actually worth it?

Hurrah for a vaccine — but was lockdown actually worth it?

The development of the vaccines has changed many things.

It has even influenced the opinion of the Prince of Lockdown himself, health secretary Matt Hancock. Life, he pronounced at the weekend, would be back to normal by the spring and the “blasted regulations” abolished.

But one thing has remained constant: the government’s continued refusal to publish a proper cost-benefit analysis of lockdowns.

A perfectly standard methodology exists to do this. It is used not just by our own National Institute for Health Care and Excellence (NICE), but across the western world.

In essence, this involves placing a monetary value on a human life.

Many may see this as a sinister and macabre thing to even ask. But it is, regrettably, something which has to be done.

To illustrate this, imagine a purely hypothetical scenario. Two people suffer from a very rare disease from which they will die within a month. Only one dose of the cure exists, but it is guaranteed to save the life of whichever gets it. One of the patients is 100, and the other is an otherwise healthy 20-year-old.

Who should get the medicine? For most, this choice would be obvious.

This is the quandary in its most basic and understandable form. Of course, people in health systems have to make much more complex decisions on which drugs should be bought and how many people can get a particular treatment all the time.

The key concept is what is known in the jargon as “quality-adjusted life years” (QALYs). Analysts then consider how many of these QALYs would be saved were a given amount of money spent in a particular way.

Like many policy-oriented metrics developed by economists (GDP, for example), the concept of QALYs is not without its critics. But, again like GDP, it is a useful and practical tool. We need a way to determine whether it is worth spending the money available on a particular course of action, and the only way to do that is with a metric to measure benefits against costs.

Armed with the concept of QALYs, it is easy to see why estimates of the benefits of lockdown do not yield huge numbers.

Many of those who have died from Covid-19 are very old — the average age of a coronavirus victim in the UK is over 80. Around 95 per cent of people who have died of Covid have had some serious underlying health condition, so the quality of their remaining life was not high.

In contrast, the costs of lockdown are massive, and impact everyone in the country. Just for starters, Rishi Sunak presented a plausible estimate of a loss of output in 2020 of over £200bn — nearly £3,000 per man, woman and child in the UK.

That is to say nothing of the economic impact of missed education, long-term unemployment, and negative mental health effects caused by lockdown policies.

The government refuses to crunch the numbers. But economists and medics have done it for them using the same approach that the NHS already relies on.

In June, David Miles of Imperial College, a former member of the Monetary Policy Committee, concluded that “the costs of continuing severe restrictions in the UK are so great relative to likely benefits that a substantial easing in restrictions is now warranted”.  In October, Barry McCormick, a former chief economist at the Department of Health, also showed that the benefits of lockdowns are greatly exceeded by the costs they create.

Hopefully the health secretary is correct and the problem will soon vanish as the vaccine is rolled out. But the government must be kept under pressure at every stage of the reviews of both Tiers themselves and the restriction system as a whole.

A well-established methodology, already used in our health service, shows the costs of lockdown far outweigh the benefits.

As published in City AM Wednesday 9th December 2020
Image: Nightingale Hospital  CC BY-SA 2.0 via Wikimedia 
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Economics lessons from history: Don’t expect a post-Covid boom

Economics lessons from history: Don’t expect a post-Covid boom

Just over 200 years ago, the finances of the British government looked even more parlous than they do today.

Since the mid-1790s, the country had been engaged in a titanic struggle with Napoleon’s France.

To pay for the conflict, the government had borrowed on a massive scale. The cumulative financial deficit — the difference between income from taxes and what the government spends — in the 20 years from 1795 amounted to over 2 trillion pounds in the prices of 2020.

Between 1812 and 1814 alone the state ran up a deficit of almost £500bn at today’s prices.

The current projection by the Office of Budget Responsibility for the year of the pandemic, 2020, is some £370bn, after years of much lower deficits. So we find ourselves in a similar position.

David Ricardo, at the time a multi-millionaire MP and a titan of economic thought, tried to answer the question: how should the war be paid for?

Obviously, one way to pay off the cumulative deficits would have been to raise taxes, exactly as Rishi Sunak is contemplating today. The other was to borrow by issuing government bonds, again what is happening now.

Ricardo argued that whichever of the two were used, in whatever combination, the impact on the economy would be the same.

When the government runs a deficit, spending power is injected into the economy. But an increase in taxes cancels this out.

But what if the government simply finances the debt by issuing bonds?

Ricardo believed the private sector would act rationally. People would anticipate that in the future, taxes would have to go up anyway to pay off the debt. As a result, they would save more and spend less now to be able to pay these taxes in the future.

This is a key idea in modern macroeconomics, known as “Ricardian equivalence”. The two methods of financing a deficit — taxes and issuing bonds — are equivalent in their impact on total spending in an economy. They cancel out the effect of any government spending in excess of its receipts from taxation.

It sounds a bizarre concept. But the experience of the financial crisis of the late 2000s provides support for the idea.

In America, net private saving in the years prior to the crisis was some $700–800bn. In 2009, following a massive increase in the federal deficit, it rose to over $1,200bn, and has been even higher ever since.

The esoteric concept of Ricardian equivalence is of great practical importance in the current pandemic-induced economic recession.

This year has seen what is effectively forced savings. People have not been able to get out and spend in the usual way. Once the vaccines are in place, we might expect a spending splurge.

But if Ricardo’s idea holds true, people will simply keep their savings squirrelled away to meet the anticipated increase in taxes. The economy will not boom.

The next couple of years will prove to be an interesting natural experiment to test Ricardo’s proposition. Much more tangibly and practically, if it holds, rises in unemployment will prove difficult to reverse.

As published in City AM Wednesday 2nd December 2020
Image: Coins sign via pxfuel
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Want people to get the Covid vaccine? Pay them

Want people to get the Covid vaccine? Pay them

The vaccines seem to be coming thick and fast.

The task now is to ensure that enough people get them to keep the virus under control.

The first issue is one of logistics. The track record of the UK’s health bureaucracy during the crisis has not been good. But the NHS does have experience of administering millions of flu jabs every year, and the process seems to work well.

The real challenge is how to persuade enough people to come forward and be vaccinated.

There is clearly a section of the population, revealed on social media, which will never agree to it. Some believe that the vaccine is a sinister plot by a tight-knit cabal to control the world.

True believers in such conspiracy theories are probably relatively small in number. The problem will be if they succeed in undermining the science behind the strategy of vaccination and manage to convince others.

Here, members of SAGE getting on TV to urge vaccination are a liability. They are almost doing the anti-vaxxers work for them.

The credibility of these scientists is being shot to pieces. The 1960s avant-garde artist Andy Warhol is currently enjoying a revival. He once memorably pronounced “in the future, everyone will be famous for 15 minutes”.

The huge numbers of hitherto totally obscure academics on SAGE and its various sub-committees are living proof of the accuracy of Warhol’s prediction.  They fall over themselves to appear in the media with ever more gloom-laden predictions, most of which are rapidly exposed as being wrong.

This is a serious problem for the government.

Local GPs do seem to still have a high level of credibility and trust with the public. These doctors should be the ones promoting the message of vaccination. Government scientists and SAGE members, who have become figures of controversy, should simply keep quiet.

Even so, there may be many individuals who carry out a simple cost-benefit analysis for themselves. Virtually no one under 40 in reasonable health, for example, has died of Covid-19.  If the vaccine has unpleasant side effects, they may decide not to have it.

Incentives need to be put in place. There are externalities involved: if I refuse to have a vaccination, I can infect others. That means vaccination cannot simply be left to individual self-interest.

Some negative incentives seem obvious. For example, anyone who refuses the vaccine could be excluded from treatment if he or she caught the disease. Fines or even prison could be applied in vaccine refusers who are shown to have spread Covid.

But such measures would create the wrong sort of climate.

The best incentives in the current circumstances are positive ones. The idea being floated of a “vaccine passport” that would enable immunised people to experience more freedom in their day-to-day lives might work, though it would immediately create a market in forgeries.

But there is a much simpler way: people should be paid when they get vaccinated.

This would not have to be a vast amount from the government’s perspective. Even £25 per jab would amount to a drop in the ocean in the overall context of what has been spent on Covid. A cash incentive would particularly motivate poorer areas where health in general is a real problem.

Thus we solve the vaccine conundrum not with more doom-mongering scientists on TV, but by delegating the task of persuasion to a local level via GPs, and backing it up with real cash incentives. That is how we will beat Covid-19.

As published in City AM Wednesday 25th November 2020
Image: Vaccine by Pixabay
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