Stephanie Boland
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Junior doctors on why they are on strike

We catch up with some junior doctors striking outside the Royal London Hospital in Whitechapel, East London.

Akhtar, GP registrar

Why are you on strike?

“The contract isn’t fair on junior doctors. Overall we get less pay and more hours, and more antisocial hours.”

Are you worried about the safety of your patients?

“Absolutely I’m worried. I’ve been working for the last four or five years. If you saw the amount of hours we do, we don’t get breaks often, we have to stay longer for handover; you always do more hours than are counted. We get exhausted after a 13-hour shift; sometimes we do five days of 12-hour shifts, and now we have to do seven days. It’ll affect me and I believe patients as well. At the end of the day, if you’re tired, it can affect your decision-making.”

Emily, paediatrics

Why are you on strike?

“Solidarity. We’ve got to stay together in this. It’s really unsafe and stretching services too far: what we have at the moment is a five-day schedule, and they want to stretch that to seven days without adding any other services like radiographers, porters or nurses. We’re not going to get the back-up, so we’re not going to be able to provide a very safe service.”

What about the government's offer of an 11 per cent payrise?

“I think that’s quite misleading. What they’re doing is cutting our pay for antisocial hours – that at the moment makes up about a third of our pay. It’s particularly going to affect the specialists who work the longest and most antisocial hours. They’re going to see the biggest cut. There’ll be a payrise for a small proportion of doctors, but only those working nine-to-five.”

“At paediatrics, we work a lot of antisocial hours and a lot of nights. It’s going to hit us really hard, as well as A&E and anaesthetists; these are the specialities that are really hard to recruit to anyway. With the pay cut as well, it’s going to be hard to recruit people.”

What would you say to the public, some of whom are affected by these strikes?

“It’s difficult to know what to believe in the media, and there’s a lot of spin from the government . . . but there’s a lot of information available about the contract changes. I think looking at it will show that they are actually unfair.

I know there’s a lot of criticism about us striking as well, but we don’t want to be on strike. It’s for the longer-term future of the NHS we’re doing it. We want to have an NHS for our grandchildren – and further.”

Santal, orthopedics

Why are you on strike?

“To support the junior doctors. I think the government proposals are unfair; the junior doctors are not asking for a hike in their wages. They’re just doing their work, and I think what Jeremy Hunt is proposing is unfair and totally unfair to the general public.”

How would you respond to Jeremy Hunt’s claims that he's offering you a payrise?

“That is an absolute con. He’s actually proposing a cut in the wages. As everyone knows, junior doctors work incredibly long hours; sometimes half their hours are antisocial, sometimes a third – it depends on the department. Because of that, there’s a banding of pay. He’s going to abolish that and change the weekend hours, so overall there’s going to be a big pay cut.

He’s fooling the public, trying to push these things through. We just want to be left alone.”

Is there a patient safety concern?

“Certainly. This is the starting step; if he follows this through there’s going to be an unfair working environment for doctors. They’re going to be tired and exhausted, and that’ll affect their care of the patients. It’s not going to be safe. We’re not just concerned with doctor’s pay, it’s about delivering safe healthcare.”

“I think if the public look at the figures for themselves, they’ll know the government is trying to mislead people.”

Tom, paediatrics

Why are you on strike?

“It’s really because Jeremy Hunt is trying to impose this new contract, which is unsafe for patients; that’s the point. And it’s unfair for us doctors, as well.”

Are hours and conditions a primary concern?

“It’s primarily about conditions and safety. Of course, it’s about money as well; we all have to do a job and support our families. But the main factor here is safety, and the longevity of the NHS. If things are going to carry on the way they are, they’re going to break the NHS.”

Nabil, trainee surgeon

Why are you on strike?

“It’s not about cash for us. It’s about safety, and about making sure that going forward as a professional body we feel able to do our job.

I’m quite a senior trainee now, and it’s about the medical students coming through. Only people who can afford to be doctors will go to medical school.

Do you want Tim Nice-But-Dim taking out your appendix? I don’t.”

What about the hours?

“As a surgical trainee, I choose to work really long hours. But no one should force me to do that, and getting forced to do that feels pretty miserable.”

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?