Gordon Hector

The Office for Budget Responsibility put out its annual Fiscal Sustainabilty report yesterday. It’s got three graphs which are a wee bit scary. Here’s the first graph, showing what proportion of taxes paid and state services used comes from which age group: Speaks for itself, really. We rely heavily on the middle-aged for taxes, and spend heavily on early and later years. Look in particular at the pink lines – that’s health and long term care. Now look at graph number two: Spot where the growth is. Note the percentages are the average increases each and every year, for the next 50 years. Put the two graphs together and you get graph number three: Decoded from OBR-speak, that’s a yawning budget deficit and an increasing national debt.

‘Making work pay’ – it’s the phrase du jour of welfare reform. It's not always clear, though, how it is actually achieved. One part of the equation is looking at how earnings, taxes and benefits interact at the lower end of the income scale. As people earn more, they’re entitled to fewer benefits, and have to start paying higher taxes. This creates what’s known as a ‘withdrawal rate’ – the percentage of any extra income lost to this combination. When people talk about the ‘poverty trap’ or work not paying, this is often what they’re referring to: because if people don’t get to keep much of the money, their incentive to earn more is weak.

There was much to commend in Chris Skidmore’s article in the Telegraph earlier this week, calling for a radical approach to public services. But there’s one bit that’s worth dissecting: his idea that people in social housing might sell their homes to invest in shared equity, if they behave well. Here’s what he says: 'Any social housing tenant, under certain conditions of tenure and behaviour, would be able to sell their property and retain a proportion of the equity, reserved for investing in a shared equity programme, giving them a first step onto the housing ladder. The remaining equity would be used to build more affordable housing to meet demand.

Was the stooshie over health reforms inevitable? From much of the coverage, you'd think it was always going to end in tears, as people line up to criticise Lansley and rumours about Number 10's search for a dignified exit strategy (£) swirl around the Westminster village. But it didn't have to be like this. For a start, the basic idea is one that should be easy to sell to the public. Matthew Parris has pointed out (£) that people intuitively look to their GP as the route into healthcare. It shouldn't be hard to convince the public they should lead commissioning. It's been difficult mainly because the health professionals aren't on-side. This could have been largely avoided.