If it weren’t all so serious it would actually be amusing the contortions the Remoaners tie themselves into concerning Brexit. Absolutely anything is grist to their mill, even out and out arrant nonsense. As with this idea that a little stockpiling of medicines is going to cost us all £2 billion. It’s as if these people have never heard of the most basic underlying points concerning cash flow, inventory costs and all that detailed and complex business stuff.
Well, OK, given that it’s a Labour MP complaining, perhaps they haven’t.
No-deal Brexit: Plan to maintain medicine supplies ‘could cost £2bn’
Now agreed, I’m an horrendous extremist on this issue. £2 billion each would be a cheap price to be free of Brussels as far as I’m concerned. But it’s still worth having a look at these assumptions here:
The health secretary’s plan to set aside six weeks’ worth of vital medicines to avoid supply disruptions in the event of a no-deal Brexit could cost up to £2bn, campaign group Best for Britain warns today.
Matt Hancock wrote to healthcare providers last week, saying the government would set in motion plans to “ensure the UK has an additional six weeks’ supply of medicines in case imports from the EU through certain routes are affected”.
Data collated by thinktank the King’s Fund earlier this year suggested the total drugs bill for the NHS in 2016-17 was £17.4bn.
Best for Britain suggests that could make the cost of the temporary stockpile – which would presumably then be run down over future months – £2bn.
Owen Smith, the former shadow Northern Ireland secretary and a supporter of Best for Britain, said: “I don’t remember anyone warning that Brexit would mean we’d have to stockpile drugs or that this would cost the NHS and taxpayers up to £2bn. Maybe they should have slapped that on the side of the bus.
“Every day it seems as though there is another hidden cost being revealed.”
What is not being suggested is that Britain buy £2 billion worth of drugs to tide us over that 6 week period around Brexit and then we burn them if they’re not used. Instead, the suggestion is that we increase inventory by that £2 billion just in case. Once Brexit has happened, new transport, licence, arrangements are in place, we’ll run down that stock again and be running on our usual level. The actual cost to us all is therefore not the £2 billion, it’s the cost of financing that £2 billion.
Let’s say we’ve got to finance it for 2 months. Just because we’ve got to make some sort of assumption. OK, how much does it cost government to borrow for a couple of months? In nominal terms looks like half a percent per annum. Something a little under 0.1% therefore to cover our two months. Not £2 billion, not £200 million, not £20 million but £2 million. £2 million in government accounts being a rounding error. And a reasonable enough insurance premium one might think. We do, after all, think that the statistical value of a life is around £2 million, save more than one life and we’ve profit on the deal.
Or we could look at real borrowing costs and note that the Treasury makes a profit when it borrows. What we pay back, including the interest, is worth less than what we take in the first place. Increasing the NHS stock of drugs is therefore profitable.
Owen Smith is therefore severely mistaken. Or lying through his teeth. Ah, no, we call that second “doing politics” don’t we? But then that’s how we’re being informed of the perils of Brexit, isn’t it? By with the woefully or wilfully misinformed.