Short-term policy making has trapped public services in a ‘doom loop’

Policy makers have repeatedly prioritised short-term issues in public services at the expense of difficult decisions that would benefit services in the long run. Public services, and the public they serve, are now experiencing  the consequences of that short-term thinking.

Nowhere is this more evident than in capital spending. The UK government has underinvested in public services’ capital for decades, prioritising day-to-day spending over investment that would now be contributing to higher service productivity. But even by the low standard of previous governments, the 2010s were particularly bad. No department we cover in Performance Tracker exceeded 2007/08 capital spending in the years between 2011/12 and 2017/18. The result is crumbling schools, NHS computers that don’t turn on, and not enough prison cells to house prisoners.

It isn’t just spending where short-termism reigns. Government policy making is erratic and unpredictable. In the last few years, the government has: announced and then delayed adult social care reform; put NHS integrated care systems (ICSs) on a statutory footing before cutting their management budgets by 30% eight months later; and launched a schools white paper in March 2022 before dropping the subsequent Schools Bill in December that year. This uncertainty makes it impossible for public service leaders to plan or implement performance-enhancing reforms.

On staff, successive governments have allowed working conditions to deteriorate while holding down real-terms pay. The pandemic was the final straw for many, and there was a spate of staff movement both within and out of public services. That followed a decade in which many experienced staff across public services such as the police and prisons were made redundant following government policy to bring down staff numbers. The result is that staff are now less experienced on average than before the pandemic, contributing to lower service productivity.

Many staff groups – including teachers, nurses, ambulance workers, barristers, civil servants, junior doctors and consultants – deemed the situation untenable and voted to strike, making pandemic recovery more difficult again. The government has resolved some of this industrial action (though, crucially for hospital performance, not with junior doctors and consultants), but Performance Tracker 2023 finds that the government’s approach likely extended strikes’ duration and so their level of disruption.

For years, the government has prioritised short-term decisions and pushed problems into the future. The result is a ‘doom loop’ where perpetual crises in public services put more pressure on staff and focus government attention on getting through the next news cycle, rather than prudent longer term thinking.

Current spending plans will likely mean further declines in performance

When it was first announced, the 2021 spending review (which runs until the end of 2024/25) looked relatively generous. But higher than forecast inflation and pay deals has gradually eroded that generosity. The government topped up some services – the NHS, schools, and adult social care – at the 2022 autumn statement, leaving the rest to make do with cash settlements that are now worth far less than in 2021. We forecast that of the nine public services we cover, only police has sufficient funding to return to pre-pandemic performance levels by the end of this spending review period. Even then, that is only because of a relatively high settlement in the three years before 2021.

The outlook for the next spending review is worse. Both parties have committed to plans which see resource spending rise by 1% in real terms per year. Given commitments on the NHS Long term workforce plan, defence spending and foreign aid, that implies average cuts of 1.2% per year in real terms for other public services.

A change in approach will be needed to fix public services

Fixing the problems laid out in this year’s Performance Tracker will not be easy and will take time. Whoever forms the next government could be tempted to ape the approach of the 2010s: holding down budgets, freezing pay, and pushing for ‘efficiency savings’. That would be a mistake. After a decade of budgetary constraint, there is no more meaningful fat to trim in public services.

That does not mean that service performance and productivity cannot improve. But it will require a new approach to realise those gains, and often upfront investment in areas such as capital, staff training, management capacity, or a shift to preventative spending. The report recommends four steps any government serious about addressing the decline in public services should make:

• A new multi-year budget for each public service that is sufficient to enable politically sustainable performance levels without emergency top-ups.
• A long-term capital programme, which addresses the UK’s historic and comparative lack of investment in public sector buildings, equipment and IT.
• A stable long-term policy agenda with clear political and official leadership, which addresses the unsustainable levels of churn among ministers, officials and policy makers.
• An improved approach to public services’ workforces, including on setting pay, workforce planning and enhancing working conditions, to reset the relationship with public service staff and resolve recruitment and retention problems.