Quick note nn this idea that the NHS Pay Review Body's recommendations on pay increases were reasonable at the time they were made, but were overtaken by adverse events such as the invasion of Ukraine etc...
...worth noting this paragraph below from the body's report when it was published in July - it was explicitly working on Bank of England projections of a 10% inflation rate in 2022... gov.uk/government/pub…
...so members must have been aware they were recommending a real terms pay cut for NHS staff.
It's possible some of the initial submissions/analysis assumed a lower inflation peak, but by the time the recommendations were *formally* made the picture on price rises was clear.
...ICYMI our #Newsnight explainer on how the Pay Review Bodies work here:
Are we potentially facing "Austerity 2.0" in the #AutumnStatement because of the fallout from the #MiniBudget?
Or is it because of economic forces beyond the UK, such as the energy crisis and rising *global* interest rates?
Explanatory chart thread 🧵...1/
...To attempt an answer, go back to the last set of official forecasts we had from the @OBR_UK back in March.
The government was then projected to be borrowing around £32bn in 2026-27 (the final year of the forecast period) and to be *meeting* its fiscal rules...2/
...The @resfoundation (similar to other forecasters) now expects borrowing in that year to be around £90bn and for the government to *break* its fiscal rules.
So what’s driving that £58bn projected increase in borrowing?...3/
The media is awash with talk of a “fiscal hole” that needs to be filled with tax rises/spending cuts in next week's #AutumnStatement.
But what is this "fiscal hole" & how worried should we be about it?
A thread... 🧵1/
...The first thing to stress is that it’s NOT some kind of hard financial limit on government spending or borrowing, which, if breached, means disastrous things automatically happen...2/
...Rather, it’s a measure of how far off course the government is from meeting its own fiscal rules, the main plank of which has been to have the national debt falling as a share of the overall economy in three years' time, implying the financial year 2025-26...3/
No final decisions yet taken but #Newsnight understands it will likely...
- Target debt falling as share of GDP in 5 years' time (not 3 years, as per existing rule)...
...
- Cuts to departmental spending likely to be pencilled in for *after* the current Spending Review period ends in 2024/25 - though no compensation for departments for higher inflation *in* Spending Review period so de facto real terms cuts...
...
- Despite backdating of spending cuts, will still be significant fiscal consolidation in next 2 years aswell
- Real terms cuts to benefits not ruled out, ditto suspension of triple lock
- Capital spending cuts (infrastructure) still in play...