As the debate on the future of England’s A & E units opens, another on prescription costs has closed. The pharmaceutical industry has now agreed a five year deal with the health department. For the first time the overall cost of medicines will be capped.
While the cap might help public spending cuts, it may not augur well for the country’s economic health, says Dr Tony Hockley.
The agreement to cap the NHS drugs bill for branded medicines from 2014 may have consequences for the economy beyond the implied saving. Over the past 15 years the imposition of a price-cut of branded medicines has become the norm every five years, when the pharmaceutical price regulation scheme is renewed. But the result has been that Britain, from being one of the most supportive European markets for new medicines (at least in terms of price, not usage) has slowly drifted towards the bottom of the league table. Should that trouble us? Do arbitrary price controls affect the location of pharmaceutical innovation?
Friday 8th November: As the Bank of England leaves interest rates unchanged, Professor David B Smith considers the wider economic picture. After a decade of big government spending, the UK’s potential output has shrunk well below its previous trend. Lax monetary policy could, he warns, lead to stagflation. A gradual rise in interest rates would bring few shocks and it would benefit the economy. It would also be helpful if the house buyers of today are to avoid negative equity tomorrow. As Professor Smith writes:
The Bank of England’s decisions on 7th November to leave the Bank Rate and stock of Quantitative Easing (QE) unchanged came as no surprise. The Bank Rate freeze was in line with the Bank’s policy of ‘forward guidance’ (its stated position on the likely path for interest rates) and both announcements were exactly what the financial markets expected. This policy of ‘no change’ by Britain’s monetary authorities contrasts with the European Central Bank (ECB) decision, announced shortly afterward, to cut its key discount rate from ½ per cent to ¼ per cent. Recent UK economic indicators have been doing better while there is growing concern in Continental Europe that the Eurozone may be heading for deflation, with annual consumer price (CPI) inflation down to 0.7% in October compared with the 2.7% recorded in the UK in September.1
However we must not forget that one unintended side effect of the ‘big government’ policies implemented in Britain, the US and many peripheral Eurozone economies since 2000 has been to reduce sharply aggregate supply – the total amount of goods and services that the economy can produce at full employment. As a result the danger now is that a lax monetary policy is more likely to produce stagflation than the healthy low inflation growth desirable in Britain and other mature industrial nations.
Friday 25th October: As HMG announces a deal with the French company EDF to go ahead with the new nuclear power station at Hinkley Point with substantial Chinese investment, Dr Simon Taylor, University Lecturer in Finance at Cambridge, explains what lies behind the decision. Other alternatives might, he suggests, be a better bet for Britain. Dr Taylor writes:
On 21 October 2013 the British government confirmed at last that it had agreed with the French power company EDF (Electricité de France) the building of two European Pressurised Water (EPR) nuclear reactors at Hinkley Point, near Bristol. The 3,200MW reactors will contribute around 7 per cent of the UK’s power needs by 2023. The deal is controversial in a number of ways: it depends on a 35 year power price guarantee by the government to EDF; it also grants the project company a British government guarantee on the debt raised, for a fee; and there are many people who just don’t like nuclear or see it as competing against other low carbon power sources.
One theme picked up by the media, including the BBC’s prestigious Newsnight programme, was the fact that this project would be built and run by an international consortium, led by EDF but with a large minority investment from China. The Daily Telegraph described the deal as “a symbol of the UK’s lost power”. Where, the journalists asked, was the British component? The long, sorry story of the loss of British leadership in civil nuclear power after an early lead in 1956, is told in my book on the causes of the financial crisis at the privatised nuclear company, British Energy.
Friday 18th October: This week the government announced that it will introduce a maximum life sentence for the worst cases of human trafficking and exploitation. Here, the Solicitor General, Oliver Heald QC MP reflects on the problem, the obstacles to tackling human trafficking and modern slavery and how the government intends to bring more perpetrators to justice.
Human trafficking is the second largest organised crime in the world; it is an evil which threatens the liberties of millions – and constitutes a new form of slavery. At any given time the profits of traffickers worldwide are estimated in excess of £32 billion each year. The crime has its global and local aspects. The Coalition, which through its Human Trafficking Strategy of 2011, aims both to prevent trafficking activity and maintain effective care for victims, continues to review how to tackle the evil which threatens the liberties of millions and is a new form of slavery.
You might expect that a problem that had been ‘abolished’ such a long time ago would no longer trouble our society. Yet important as those achievements were, the ‘unconsenting’ are still enslaved today. The solutions to Human Trafficking must be global. This is where the Crown Prosecution Service (CPS), supported by the Foreign Office and Dept for International Development, is doing some very good work.
Friday 11th October: John Marenbon writes:
Michael Gove, the Secretary of State for Education, will not have missed the news from the latest OECD study that England's 16 to 24-year-olds are falling behind their Asian and European counterparts and have scored amongst the lowest results in literacy and numeracy. It is precisely such low achievement that the new national curriculum aims to to tackle. Indeed, the inclusion of Latin as a National Curriculum language at primary level will go some way to tackle poor literacy, since learning Latin improves standards in native and other languages. It is therefore bizarre that the national curriculum option for Latin is withdrawn, when pupils reach the secondary stage.
Education officials explain that pupils should not leave school unable to speak any modern language apart from their mother tongue. They imply the aim is a practical one: pupils need to be equipped with a living language if they are to converse for business or pleasure with other nationalities in languages such as French, Spanish, German or Italian.