Context, Context, Context

Context, context, context…. Without context, the data means nothing. Since the election campaigns started, irrespective of who you support, the data that has been put into the public domain either directly by politicians or news papers has fascinated me. It's very rare that any of the numbers that are put out are actually put in context of any other number, yet this is how we all comprehend the size and scale of things.

My favourite one, is the "￡20bn extra for the NHS" type headlines. Without the context of how much the government puts into the NHS every year anyway, the number just seems big…. As the average salary in the UK is approx ￡25k, then ￡20bn by comparison is A LOT of money! Loads of money! Surely that's enough to sort out the NHS right? But if you put that in context of the ￡130bn annual budget for the NHS, then you see that it's not as big a number as you thought.

So, in an attempt to understand some of the topics that came up in the election - primarily the NHS - I thought I'd do some research myself to understand the context of some of the issues.

#1- My misconception - The USA healthcare system is awful as you have to pay for it yourself and the government contributes nothing….

So, the stats for the UK vs USA are as follows (all normalised in USD):

• UK GDP - $2.6TN
• US GDP - $19.4TN
• UK tax take - $780BN
• US tax take - $3.3TN

NHS spend is $170BN, equivalent to 21% of the tax take

US federal health spend of $1.1TN is 33% of the tax take.

• Population of USA: 327M
• Population of UK: 66.4M

Average government spend per head: 

• USA: $3,364
• UK: $2,560

Yet, in the UK, we get an entirely free healthcare service. Interesting isn't it….

#2 - The NHS is underfunded

I thought I'd take a look at NHS funding in 1980 vs 2018 and use the population as a yardstick to measure it by.

In 1980:

• The NHS budget was approximately ￡40BN
• The UK population was 55M

In 2018:

• The NHS budget was approximately ￡130BN
• The UK population was 65M

So, if we reverse engineer the numbers, and assume that the spending per head in 1980 was ￡727 per head. If the population in 1980 was 65m (as it is in 2018) the total NHS spend would have needed to be ￡47BN to offer the same level of service.

Now, many other things come into effect here and it's not a linear progression on cost to deliver the same level of service, I'm just using it as a yard stick.

If you plug ￡47BN into and inflation calculator and say - If I had ￡47BN in 1980 what would it be worth in 2018 - the answer is ￡198BN… That's ￡70bn behind where it is today.

If you factor in that that's ￡70BN EVERY year that it's behind, there are a lot of large capital infrastructure projects that could have been implemented with that money. 

Again, the context is pretty interesting.

#3 - Population is increasing and putting strain on housing, NHS and other public services

As we've seen from #2 - the population of the UK has increased by approximately 10m between 1980 and 2018.

There are 3 factors which add to this - 1: births, 2: better health and extended life spans, 3: immigration.

On average between 2015 and 2019, the net UK population increase was 400k each year. Immigration accounts for 250k of that, and the rest was down to births.

Again - so what - without context, that number doesn't mean much. I've also been guilty of comparing it against large numbers such as "the population of London" which is about 10m.

However, I think a better number that puts it in context is:

The entire population of Gloucestershire is 600k…. That means that every 18 months, the UK population is growing be the entire population of Gloucestershire….

Again, the context makes it more easy to understand the scale.

This is a bit of a left field article for me, but it's something that I've really enjoyed researching and now feel that I much better understand some of the numbers and issues that are being thrown around.