Cowper’s Cut: Politics, game theory and Belgian lessons

Parliamentary politics matters hugely to the NHS: it sets the Budget. This means that trying to understand what’s happening in politics is important. Since the 2015 general election, trying to understand what is happening in British politics has been a lot harder. (A quick “key points” summary follows in the appendix below.)

Opinion polls suggest that there is little sign of either the Conservative or Labour party establishing any kind of decisive lead which would point towards a clear majority whenever the next general election comes.

It feels as if the rather modest talents running these two main parties have got themselves into something between a stalemate (very stale) and a political remake of The Prisoner’s Dilemma: a classic of game theory.

Game theory - “the study of mathematical models of conflict and co-operation between intelligent rational decision makers” - is underpinned by the Nash equilibrium: the concept that  “one cannot predict the result of the choices of multiple decision makers if one analyses those decisions in isolation. Instead, one must ask what each player would do, taking into account the decision making of the others”.

Meanwhile, the immense practical difficulties of moving anywhere close to a deal with the EU (which takes just under half of all UK exports) mean that to all public sector intents and purposes, the government has stopped doing things.

Doing nothing is always an option

This may be no bad thing. The creation of the NHS Commissioning Board in the Lansley reforms offshored the operational and strategic leadership of the NHS to a far greater degree than is true in education, police, the military or prisons. And its leader Simon Stevens, the Sun King of Skipton House, is a more skilled political operator than is evident in any of the main Westminster political parties.

The NHS doesn’t lack for strategy. The Five Year Forward View remains a decent strategic aspiration. It’s not clear that we have a theory of change and an operational “how to do it” plan. 

But change also needs money. 

The slow economic growth (this recovery is the slowest in the UK’s history) is not allowing chancellor “Spreadsheet” Phil and his Treasury Munchkins to loosen the purse strings significantly.

This isn’t a durable solution. Prime minister Theresa May knows it, Philip Hammond knows it and the Cabinet knows it. But the only thing that’s currently on offer is hints and rumours about action on NHS funding.

What is quite interesting is that serious consideration is clearly being given to tax rises to pay for higher public spending.

We will have to wait until June to see what the relevant questions in this year’s British Social Attitudes Survey say, but last year’s data indicated a rise in public willingness to see the government going further with tax, spending and redistribution. If that remains the case, it will indicate a trend.

You can’t spend hints

There is a slightly pressing problem, however. While the NHS is not as efficient as it could possibly be, there is little serious doubt that rising pressure from rising demand means the service needs some more money immediately. (There is a workforce crisis, which won’t be solved overnight – and current attitudes to immigration don’t help. Double running costs and capital are also badly needed if we are to see services improved significantly.)

The problem with hints and indications from ministers is that even if they’re recurrent, you can’t actually spend them.

“Things fall apart; the centre cannot hold”

It appears that centrist and broadly liberal politics are out of vogue in politics. The effects of globalisation and the global financial crisis on voters’ sense of security and stability seem to have brought snake oil retailers back into mainstream politics. This is being fuelled by “fake news”, or as it’s more appropriately called, “blatant political lying”.

This isn’t universally true: President Emmanuel Macron appears to be holding up in France, and his party En Marche didn’t even exist two years ago. As Alexandre Dumas is rumoured to have said (though no one has found the quote), “all generalisations are dangerous, even this one”.

We shall wait and see how the right wing of the Conservative party, which is driving Brexit (which Mrs May opposed) and the left wing of Jeremy Corbyn’s version of the Labour party survive protracted contact with reality. Political punditry is a mug’s game – but hey: I’m clearly a mug – so I will observe that I think both of these experiments will end in political tears.

The opportunity cost of austerity

Just as there is a cost to funding the public sector adequately and safely, there is a cost to not doing so. Mrs May’s speech to her party’s spring conference at the weekend had a fascinating section about nine minutes in.

The key lines are “everyone in this party cares deeply about public services… we know how much we care about our vital public services, and we know we have a strong record of delivery in government. So we might think the public’s doubts about us are unfair, but they are a political reality we must face up to.

“So as we carry on with delivering Brexit, and taking the action needed to build an economy fit for the future, we as a party and we as a government must mount a determined effort to win and keep the public’s trust in our management of public services.

“To do that, we must be unafraid to speak out clearly and passionately about our values as Conservatives and what motivates us in politics.

“While always defending our record in office, we also need to accept that our public services today do face real challenges, and we must be clear about what we are doing to help them. And we need to do something else: we need to win the argument that says it is only a strong economy that can provide the resources our public services. And it is only by continuing to reform our public services that we can achieve the improved results we all want.”

It is a fascinating marker of where politics is as we approach the spring of 2018 that the prime minister is having to talk about winning the public’s trust on public services.

The absence of new political ideas and initiatives is probably important just now, as the NHS has to stagger on until the autumn Budget for the next cash boost (unless the collapse of Brexit talks triggers a general election in the meantime).

Belgian lessons

The relative absence of a functioning government is not exactly a “black swan” event. Northern Ireland hasn’t had its devolved government for more than a year now. Indeed, Belgium managed to tick along happily enough for nearly two years without a government.

The question for NHS leaders is whether they have any headroom to be planning how best to spend the extra money that will have to come. The intense pressure throughout the system at the present time makes this feel and seem unlikely.

Just as running hospitals over 90 per cent capacity becomes inefficient, spending all of management time and resource on keeping the system just about upright (although creaking ever more loudly) diminishes the capacity and capability to consider, ahead of the time when extra money comes, what is the best way to spend it.

There are a lot of lessons to be learned from the 2000s NHS spending boost, both positively and negatively.

How the new money might come

There are a couple of general thoughts in and around government about how NHS funding should change.

Hypothecation (an NHS dedicated tax) is one. This has, as I previously noted, garnered the support of the former chief secretary to the Treasury Nick Macpherson. Meanwhile, as I also highlighted, the prime minister’s former advisor Nick Timothy called for a Royal Commission on NHS funding and five year funding settlements.

Are there any problems with these ideas? Of course.

Hypothecation has no magical properties. The ‘road fund licence’ (vehicle excise duty, AKA road tax) shows how hypothecation gets diluted and then broken.

Hypothecation may also raise what we could call the Churchill Dilemma: Winston Churchill opposed it, suggesting that “It will be only a step from this for them to claim in a few years the moral ownership of the roads their contributions have created”. Older readers may have heard people protesting about slow or denied NHS treatment by saying “but I’ve always paid my stamp!” (national insurance contributions were colloquially known as “the stamp”).

Five year funding settlements sound sensible, but there are potential risks here too. Firstly, it seems unlikely that we have abolished the business cycle and put “an end to boom and bust”, so to speak. The risks of a five year settlement could be both upside (that the economy could theoretically start roaring away and the NHS be left not sharing in the growth) and downside (that a financial crisis would leave a government unable to honour its five year commitment, if for example the International Monetary Fund had to step in again).

I still wonder whether there could be a way to asset lock and mutualise the NHS, and make every citizen and resident a shareholder. Shares would have to be non-voting to keep demagogues out; and non-tradeable, with no pertinent financial value. Some BBC licence fee equivalent could be the funding mechanism.

Appendix – on recent politics

The general election of 2015 saw the end of the Coalition and a Conservative majority for prime minister David Cameron. Mr Cameron decided he was going to resolve the issue of Euroscepticism within his own party, which had made the long trudge from the right wing fringes into the mainstream.

We then got the EU referendum (with its brilliantly successful bus-based NHS funding non sequitur slogan), and we still look set to leave the EU. Mr Cameron stood down; Messrs Gove and Johnson stabbed each other in the front, and Mrs May nipped through the middle to become a “strong and stable” prime minister.

Ahem.

Meanwhile, the Labour party’s electorate decided that after losing two successive general elections, the answer to their problems was moving significantly to the left under the leadership of Mr Corbyn.

In the 2017 general election campaign, Mr Corbyn and his party performed better than expected and Mrs May and hers fell apart in spectacular style. The British electorate made broadly the right choice (as it tends to), and removed the Conservative ruling majority while leaving Labour far short of one.