Reality Check: Does debt interest cost more than NHS pay?

  • 8 September 2017
  • From the section Health

Theresa May saying: We now have to pay more on debt interest than on NHS pay

The claim: We pay more on debt interest than on NHS pay.

Reality Check verdict: If you use the Office for Budget Responsibility’s headline figure for debt interest then we actually spend more on NHS pay.

With nurses demonstrating in Parliament Square against the pay cap this week, Prime Minister Theresa May was asked by Labour leader Jeremy Corbyn about whether public sector workers could be paid more.

She replied by blaming the last Labour government for the amount of debt the country has, saying: “As a result of the decisions the Labour Party took in government we now have to pay more on debt interest than on NHS pay.”

Reality Check asked Downing Street for the figures to back this up and were told that in 2016-17 debt interest costs were expected to have been £49.1bn while NHS staff costs the same year were £48.1bn.

Let’s look at those figures in turn.

The debt interest costs figure comes from the Office for Budget Responsibility’s (OBR) economic and fiscal outlook from the time of the Budget in March.

The tricky thing with this figure is that the OBR comes up with two numbers depending on whether or not you count what’s known as the Asset Purchase Facility (APF).

As part of its attempts to stimulate the economy, the Bank of England has bought a large amount of UK government bonds.

The government has to pay interest on those bonds, so it makes interest payments to the Bank of England.

But once a quarter, the Bank of England returns those interest payments to the government.

The OBR’s headline figure doesn’t count the money which has been returned as part of government spending. In 2016-17 it was £36.0bn.

The one used by Theresa May ignores the fact the money was returned to government coffers, so totals £49.1bn.

Image copyright
EPA

The figure for NHS pay is a surprisingly difficult one to give a definitive answer to.

The number Downing Street gave comes from the Department of Health annual report and accounts.

The figure of £48.1bn is for all permanently employed staff of the departmental group, which means it includes people working full-time for the NHS in England as well as those working for the Department of Health and arm’s length bodies such as Public Health England. It includes employer national insurance contributions and pension contributions.

It does not include anyone working for the NHS in Scotland, Wales or Northern Ireland because staff there are paid by the devolved administrations.

It also does not include anyone employed via an agency, on a temporary contract, or most staff working in GP surgeries.

We asked NHS Digital to come up with a figure for only the salaries of NHS England staff and they gave us the remarkably precise figure of £39,450,395,739.60, i.e. about £39.5bn.

NHS Digital warns that the figure is lower than it should be because it excludes data for two hospital trusts and also does not include maternity pay or sick pay. As with the Department of Health figures, it also does not include figures for the NHS outside England or for GP practices.

But even this figure is higher than the amount spent on debt interest when the APF is taken into account.


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