The BMA is wrong about the pandemic and “austerity”


Society and Culture
Housing and Planning
In response to the ongoing Covid Inquiry, the British Medical Association (BMA) continues to peddle the old canard that “austerity” is to blame for the UK’s poor performance during the pandemic.

Prof Phil Banfield, the BMA’s Chair of Council, said the other day:

“I have seen first-hand the damage wrought by years of austerity and a failure to prioritise the nation’s health. The UK was severely on the back foot when COVID took hold, and this proved disastrous […]

[F]ailure to ensure the NHS was properly staffed and resourced in the decade leading up to the pandemic, meant that when it did arrive, there was no capacity to meet the tsunami of demand. […] There’s no doubt that both staff and patients were put in harm’s way because of this historic understaffing and under-resourcing. […]

Between 2016 and 2019, Public Health England’s budget was cut 12%. […] Governments ground down and pulled apart public health systems until they were threadbare”.

BMA President Prof Martin McKee added:

“The removal of the social safety net, the cutting and reallocating of public health budgets, the underfunding of public services – all of this had its greatest impact on the most disadvantaged. […]

Austerity left the poorest exposed to the worst of this catastrophe.”

The idea is not new. Back in March 2020, when the first lockdown had just been announced, Guardian columnist Polly Toynbee had already reached her verdict:

“The result [of austerity] was an incapacitated public realm, naked in the blast of this epidemic. It wasn’t just the NHS and social care that were left unprepared, but every service crippled by cuts: public health, police, local government, the army and Whitehall – all denuded. 

Surely this time the lesson is well and truly learned? Don’t shrink the state […] when nothing else stands between the people and penury or even death.” 

This interpretation quickly became one of the conventional Covid wisdoms that I addressed in my IEA paper Viral Myths: Why we risk learning the wrong lessons from the pandemic, published in February 2021.

Around that time, the situation was certainly grim. The UK’s cumulative excess mortality rate had climbed to above 1,600 deaths per million inhabitants. This was not unique: the situation in Italy, Spain and Belgium was similarly bad. But it was at the higher end of the spectrum in Europe, about twice the French and three times the German rate. Meanwhile Singapore, South Korea, Taiwan, Japan, Australia and New Zealand still recorded no excess deaths at all, and Hong Kong no more than what could be expected during a bad flu outbreak.

However, as I argued at the time, there was no obvious relationship either way between public spending levels before Covid broke out, and subsequent Covid performance. In Singapore, Taiwan and Hong Kong, public spending stood at less than a quarter of GDP; in South Korea, it stood at less than a third, and in Australia, New Zealand and Japan, it stood at around 40%,  almost identical to UK levels. Meanwhile in Italy, public spending accounted for almost half of GDP, and in Belgium, it accounted for more than half.

In other words, some of the best performing countries/regions were at the small-state end of the spectrum, while some of the worst-performing ones were at the big-state end. Of course, other things equal, an institution with a big budget can do more than an institution with a small budget. But if the Singaporean state can manage with less than 15% of GDP, while the Belgian state can still fail with more than 50% of GDP, “austerity” cannot be the main issue.

None of this is hugely surprising if we look at what the best performers actually did to become the best performers. Their responses centred on various combinations of travel restrictions, and test-trace-isolate-quarantine (TTIQ) systems. These measures require administrative capacity, but they do not necessarily have to cost huge amounts of money. For an effective pandemic response, a public sector of Belgian proportions is neither necessary, nor sufficient.

The “big story” I found in the Viral Myths paper was precisely the absence of a big story – and no such story has emerged in the meantime either. If you tried to read a vindication of your political worldview into the pandemic, you were probably kidding yourself. (And I said the same thing to people on my side of the ideological spectrum, who were looking for negative correlations between economic freedom scores and Covid death rates.)

So much for overall pandemic management. But surely, once attempts to contain Covid outbreaks had failed, and the virus was running rampant – it does matter whether your healthcare system was generously or miserly funded?

Again, other things equal, of course the answer has to be “Yes”. But there are plenty of other things going on. The BMA points out that the UK’s hospital capacity was far below Germany’s. This is true, but not especially relevant, given that Germany never really used all that extra capacity. For as long as it mattered (i.e. before most high-risk individuals were fully vaccinated), Germany had consistently lower infection rates than the UK.

A better comparison would be with the Netherlands, or with Israel, where, throughout 2020 and until quite late in 2021, Covid infection rates were about the same as the UK’s, or higher. In the Netherlands, pre-Covid healthcare spending was about the same as in the UK (around 10% of GDP), and in Israel, it was quite a bit lower than that. Yet the Dutch excess mortality rate was quite consistently more than a third below the UK’s, and the Israeli rate was less than half that. In other words, there are health systems which faced similar (or greater) challenges with similar (or fewer) financial resources, and which outperformed the NHS. Thus, blaming the UK’s problems on “austerity” and “underfunding” is lazy, even if it guarantees applause and attention.

The BMA’s response is just the latest example of “Coronformation Bias”, the phenomenon I documented in Viral Myths. Plenty of people have tried to read a vindication of their own policy preferences into the pandemic, none of them convincingly so. The truth is more mundane: a pandemic is (hopefully!) a once-in-a-lifetime event, which is extremely unusual in lots of ways. It therefore tells us very little about how our economy, our healthcare system, or our public finances should be run in “normal” times.


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Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).