Concern ratings

Our assessment of the risks facing the performance of public services

As the preceding chapters show, all of the nine public service areas that we have covered in this report have made at least some efficiency gains over the past eight years. The public sector pay cap played a big role in that, but there is also evidence that services are getting more out of their staff.

However, our analysis also shows that pressures are building up in certain areas – particularly when it comes to recruiting and retaining staff – which will make it harder for services to sustain current levels of efficiency. In all cases, although to differing degrees, our analysis suggests that – despite making efficiencies – services have struggled to meet all the demands placed on them within their budgets.

In this chapter, we give our view of the extent of the risk to the performance of each of the nine public services.

How we have made our judgements

We summarise our conclusions in a ‘concern rating’ – with a coloured ‘rating’ for different elements of past performance and future risks. The boundaries between the different categories are not defined quantitatively: the data is not adequate to allow this. Instead, we have made qualitative judgements – the basis of which is outlined in Table 5.1 – which are informed by the quantitative analysis in this report.

In this chapter, we take each service in turn, summarising the analysis from the preceding chapters that has led us to make these judgements. We also introduce two new pieces of information to better assess risks for the future: how demand is likely to grow, and whether there are any credible plans in place to control spending.

Table 5.1: Methodology for concern ratings



2009/10 to 2017/18



Has demand risen faster than spending?

Green: Spending has risen in real terms at the same rate as or faster than demand.

Amber: Demand has risen somewhat faster than spending (0–10%).

Red: Demand has risen significantly faster than spending (>10%).

Grey: Insufficient information available to make a clear judgement.



Have efficiencies been made?

Green: Clear evidence of efficiency improvements in the service.

Amber: Mixed evidence of efficiency improvements.

Red: No efficiencies made – or efficiency has declined.

Grey: Insufficient information available to make a clear judgement.


Were those efficiencies enough to bridge the gap between growth in spending and demand?

Green: No signs of unmet demand, queuing or overspending.

Amber: Some evidence of unmet demand, queuing or overspending.

Red: Widespread evidence of unmet demand, queuing or overspending.

Grey: Insufficient information available to make a clear judgement.

Beyond 2018



How is demand likely to grow in future?

Green: Demand is likely to grow more slowly over the next eight years than it did over the past eight years.

Amber: Demand is likely to grow at the same rate as it did over the past eight years.

Red: Demand is likely to grow faster than it did over the past eight years.

Grey: Insufficient information available to make a clear judgement.


Can the service keep operating as efficiently as it did last year?

Green: No clear pressure as a result of economy/productivity drives.

Amber: Evidence of moderate pressure.

Red: Widespread pressures.

Grey: Insufficient information to make a clear judgement.





Are there credible plans in place to control spending?

Green: Plans in place to meaningfully control spending, with clear indications that their aims will be achieved and/or existing efficiency strategies have further to go.

Amber: Plans in place, with some indication that they will achieve their aims.

Red: No plans in place; or a plan in place with evidence that it will not achieve its aims – or no evidence that it will achieve its aims. Existing efficiency strategies cannot be pushed further.

Grey: Insufficient information available to make a clear judgement.


Our levels of concern across public services

Table 5.2: Concern ratings for nine public services

Table 5.2: Concern ratings for nine public services

Health and social care

General practice

General practice has become more efficient over the past eight years, dealing with a growing workload that was rising faster than spending across most of this period (although the recent cash boost from the General Practice Forward View has eased these pressures). Changes to working practices – such as the use of telephone consultations, and different types of staff – have supported this. These reforms could be pushed much further, particularly the use of online consultations.

But while there is much to be positive about, there are also issues that raise concern. Waiting times for appointments have been increasing, suggesting that the changes made have not quite been enough to allow GPs to keep up with demand in the same way as before. As with most of the services we have examined in this report, the pay increases for GPs announced this year will bring new financial pressures. Meanwhile, there are signs that the Government is struggling to recruit and retain the GPs it needs, as numbers continue to fall. Additionally, the Government’s manifesto commitment to extend opening hours has not been assessed for cost-effectiveness and may be more expensive to provide than existing services.[1]

GPs are likely to continue facing growing demand for their services, with demand likely to continue to grow at about the same rate as it did over the past few years.* Following the announcement of extra money for the NHS in June this year, GPs have more certainty about their future funding than many other services. There is also an explicit plan in place to manage demand and improve efficiency – the General Practice Forward View[2] – with some indications that it is on track to meet many of the targets.** However, GPs themselves are not optimistic about primary care reform plans.[3]


Hospitals have also clearly become more efficient over the past eight years – maintaining the clinical standard of care in the face of growing workloads. But these efforts have not been enough to allow them to keep up with the growing cost of care and demand for it – resulting in large financial deficits and longer waiting times for treatment.

In June 2018 the Prime Minister Theresa May announced an additional £20 billion a year for the NHS by 2023/24 (with the NHS budget now set to grow by an average of 3.4% a year in real terms over the next five years). But further efficiencies in hospitals will still need to be made to help meet expected further increases in demand, especially if the Government wants waiting times to improve. A national reform plan is due to be published with the Autumn Budget. It is vital that this plan is published before the end of the year so that individual hospital trusts can begin to work out their own strategies for the next 10 years. 

Adult social care

Adult social care is one of the two services that raise greatest concern. It is difficult to judge whether or not adult social care has become more efficient over recent years because so much of adult social care provision is outsourced. But it is clear that any efficiencies made have not been enough to allow the service to keep up with demand. Despite improvements, people are still waiting longer for services than they were in 2010, and unpaid care also appears to be filling some of the gap.

Local authorities have tried to manage financial pressures in social care by squeezing the fees they pay to providers – but this squeeze is reaching unsustainable levels. The Competition and Markets Authority estimates that local authorities are paying approximately 10% below the total cost[4] of care home places.[5] Meanwhile, demand pressures on adult social care are set to intensify further.*** If the Government is not going to increase spending in line with that demand, it will need to support local authorities to find new ways of controlling spending. But there are currently no such plans.

The Department of Health and Social Care’s principal reform to adult social care since 2010 – the creation of the Better Care Fund to improve the integration of health and care services – is not on track to make savings.[6] So far it has been used primarily as a cash injection to stabilise the market for private social care providers. This new investment has not been matched by any explicit plans to control demand.

The Department’s flagship social care reform green paper, originally due to be published in the summer of 2017, has been delayed until the autumn of this year. If, as the Government has indicated, the paper includes plans to introduce a cap on individuals’ liability to meet their own social care costs,[7] it is likely to increase public spending on adult social care. This may improve access to publicly funded social care and increase public satisfaction with the service but it would not help to control public spending – in fact, it would do the opposite.

*    Changes to the country’s demographic profile over the next eight years (falling numbers of children, and growing numbers of older people – particularly men), coupled with predictions that there will continue to be steady growth in the share of people living with multiple chronic conditions, mean that demand on GPs is likely to grow at around the same rate as it has over the past eight years.

**    For example, the target that 5,000 non-GP staff be recruited has nearly been met already; but GP numbers are falling despite the Government’s target to recruit an additional 5,000 by 2020.

***    According to projections commissioned by the Department of Health and Social Care in 2015, between 2015 and 2025 the number of older people unable to perform at least one activity of daily living will increase by 30% and the number of working-age adults with learning disabilities using publicly funded care will increase by 30%. See Wittenberg R, Bo H, Projections of Demand for and Costs of Social Care for Older People and Younger Adults in England, 2015 to 2035, London School of Economics, 2015,, p. 6.


Children and young people

Children’s social care

Spending on children’s social care has been protected compared with other services controlled by local authorities. But the rise in demand has still outstripped spending increases. Local authorities appear to have managed this primarily by increasing productivity, asking social workers to do more.

However, these efforts have not been not enough to allow services to keep up with demand: children’s social care departments have consistently spent more than their budgets over the past eight years. Now, the number of vacancies for social workers is growing, and staff turnover is rising, indicating that attempts to find greater efficiencies through increasing workloads would jeopardise quality. Signs of strain are already emerging: notably the increase in the number of children who are repeatedly put on a child protection plan, after their problems had supposedly been resolved.

There are many factors that influence demand on children’s social care – from risk- averse behaviour among professionals, to the availability of early intervention services, to child poverty rates – but the way these interact is unclear. That makes it very hard to estimate how demand for children’s social care will change in the coming years, although there is no reason to believe it will fall.

At the moment, the Department for Education’s key reforms* in children’s social care are designed to improve the quality of social work rather than control spending.[8] Raising standards could improve retention – thus reducing spending on agency workers – but there are limited indications to date that the current reforms will do so. The Department’s Innovation Programme has funded some pilot projects designed to reduce demand since 2014, some of which have shown early successes,[9] but only the What Works Centre for Children’s Social Care is explicitly looking at how to reduce demand for acute services, which will only start piloting trials after 2020.[10] Right now, it is unclear how the Government expects local authorities to manage demand for children’s social care in the coming years.


Schools have in many ways fared the best out of all the services we have looked at in this report. For most of the period since 2009/10, spending rose broadly in line with pupil numbers – although there has been a 4% drop in per-pupil spending in real terms since 2014/15.

Overall, schools have become more productive: there are more pupils per teacher, and pupil attainment has been on an upward trend – particularly at primary school level. The public sector pay cap helped to limit cost pressures from wages, and new pay increases announced this year have been largely funded from elsewhere in the Department for Education budget up to 2019/20.

While our assessment of the past eight years is broadly positive, we have some concerns about the future. In the coming years, demand pressures will move from primary schools to secondary schools, as children of the mid-2000s’ baby boom grow older. Teacher recruitment and retention issues are particularly acute at secondary school level and suggest that the sector may struggle if further efficiency drives involve increasing workloads.

The Department for Education has an evolving strategy[11] for supporting schools to make savings, including providing financial management consultancy to them, negotiating new national procurement ‘deals’ and creating a new website for vacancies to be advertised free of charge. Theoretically, all of these efforts could prove helpful, but it is too early to say whether they will ultimately be enough to allow schools to manage their cost pressures. The increase in school financial deficits that has occurred in recent years – even at the time when per-pupil spending was rising – suggests that schools are not managing their finances in the way the Department for Education expects.

*    The Putting Children First reforms aim to establish an independent regulator for social workers, and raise standards through new professional development programmes, and assessment and accreditation.


Neighbourhood services

Neighbourhood services have faced the steepest spending cuts of any of the services covered in this report. The evidence we have suggests that services have not been cut back and they have not deteriorated in quality on anything like the same scale as other services. This indicates that efficiencies have been made.

But there is insufficient data to judge the scale or source of those efficiencies accurately. For many neighbourhood services (such as community centres, tourism, museums and support for the arts) there is no data at all on service inputs or outputs. This means that central government (let alone outside observers) cannot accurately assess how far these efficiencies have bridged the gap between spending and demand, and how much further they could be pushed.

This is a real problem. Local authorities are democratically accountable for delivering services that meet residents’ expectations, but the financial context in which they operate is heavily controlled by Whitehall. Central government needs a detailed understanding of the consequences of these financial decisions to judge what a reasonable level of funding is for the local tier of government.

Most of the pertinent data is already collected by local authorities. We are not advocating for further heavy reporting burdens to be placed on local government by Whitehall. It would be better for local authorities to come together and agree to adhere to common standards in the way they collect, store and publish the data they generate and use themselves as part of their day-to-day business. Then it could be aggregated to create a national picture. Central government should support these efforts – so that it can develop its own understanding of local efficiency efforts, and where key service pressure points are emerging.

Law and order

The police

The police service has managed steep spending and staff cuts over the past eight years, while being faced with rising demand in at least some areas. However, the absence of good information on the ‘non-crime’ issues that the police deal with, such as helping people in a mental health crisis, means that we cannot say exactly how overall demands have changed.

The data suggests that the police service initially managed to meet the demands placed on it. But warning signs have emerged in more recent years, which suggest that the police service is now struggling to meet demand while also maintaining the quality of the service. The proportion of offences that result in a charge has been declining, as has victim satisfaction with the way the police have handled crimes. Her Majesty’s Inspector of Constabulary and Fire & Rescue Services (HMICFRS) has reported that a quarter of forces are struggling to deal with 999 calls in a timely way. Police financial reserves are also starting to be depleted.

Both the National Audit Office and HMICFRS have noted that there are clear opportunities for savings through collaboration between individual police forces: sharing back-office services and particular specialist units such as firearms and surveillance.[12] However, the Home Office has played little role in making this happen, leaving the onus on individual police and crime commissioners and on the forces themselves.

A four-year investment pot – the Police Transformation Fund – was established in 2016/17 to fund reform projects designed to improve police performance.[13] But it is too early to tell what the return on investment of these projects will be or whether they will be able to be scaled up. Meanwhile, an existing reform programme – the Emergency Services Mobile Communications Programme, originally intended to save £1 million (m) a day by 2017 – has been rated ‘red’ (‘unachievable’) by the Infrastructure and Projects Authority.[14]

Criminal courts

The courts system overall has managed some of the steepest spending cuts in comparison with other services examined in this report (23% in real terms since 2010/11). Although demand has fallen, the increasing complexity of cases means that it has not fallen as quickly as spending. Her Majesty’s Courts and Tribunals Service (HMCTS) has begun to pursue an extensive programme of reforms to streamline the operation of the courts.

Between 2010/11 and 2015/16 criminal courts struggled somewhat to keep up with new demand but since then they have managed to reduce waiting times and clear some of the backlog of cases, despite continued cuts to spending and the workforce. This suggests that courts are processing criminal cases more efficiently. But it does not tell us what has happened to the quality of justice dispensed in those trials or  people’s ability to access justice. These issues are harder to assess quantitatively, but anecdotally are of growing concern. New challenges lie ahead: in particular, government plans to increase the number of police detectives is likely to increase the volume of cases coming before the courts.[15]

It is widely acknowledged that there is scope for improving the efficiency with which courts operate.[16] There are 11 major projects under way for reform of the criminal courts,[17] which, together with reform plans for civil and family courts and tribunals, are expected to save £265m a year by 2023 – equal to around 14% of HMCTS’s current annual operational spending.

As our analysis demonstrates, reforms implemented so far appear to be having some success. But concerns have been raised about HMCTS’s ability to deliver all of the changes planned. The National Audit Office has highlighted that most of the savings claimed so far have come from reducing staff numbers, before changes to ways of working have been implemented.[18] The Infrastructure and Projects Authority has  given the whole HMCTS reform plan an ‘amber/red’ confidence rating, meaning successful delivery of the project is in doubt, with major risks or issues apparent in key areas.[19] However, given the scale of the ambition of these reforms, even an incomplete implementation is likely to make improvements to what is currently an inefficient labour-intensive, paper-based and outdated system.

At the same time, the success of any attempts to improve efficiency in the criminal courts will be undermined if government does not gain a better understanding of – and response to – the consequences of these changes for the quality of justice served in them.


The serious concerns that we have raised about prisons in previous editions of this report continue, despite spending and staff increases over the past year. The sharp deterioration in prison safety, which began in 2013/14, has continued to intensify, and prisoners appear to have less access to learning and development activities that might support them once they leave. Meanwhile, the most recent projections from the Ministry of Justice suggest that the prison population will rise 4% between 2018/19 and 2022/23 – faster than the 2% rise over the preceding five years.[20]

We think that the quality of prisons is very likely to improve next year. This is when we would expect to see the benefits of the recent 18% increase in the number of prison officers show up in decreasing prison violence and increased rehabilitative activity. The issue now has vigorous ministerial attention; prisons minister Rory Stewart told the BBC in August 2018 that if there were not discernible quality improvements in the 10 worst-performing prisons over the next year, he would resign.[21] His aspirations will be supported by new investments announced this year – a total of £40m for programmes designed to improve security, the quality of facilities and training for officers.

Plans for prison improvement, then, are largely based on extra spending. There is only one plan to control spending – but its success is far from assured and even if fully achieved would save only a small fraction of prisons’ running costs. The Prison Estate Transformation Programme is intended to save £80m a year by closing old prisons and opening larger, more modern ones (as well as adding extra capacity to existing prisons). That amounts to less than 3% of prisons’ annual budget – far less than the scale of the budget reductions imposed in the 2015 Spending Review. This means that, even if this reform was implemented perfectly, the savings it achieved would not be sufficient. But the Infrastructure and Projects Authority has given this project an ‘amber/red’ confidence rating, which means that successful delivery is ‘in doubt’.[22]

Public services have become more efficient – but further improvements will not come easily

Overall, this report shows that public services have become more efficient since 2009/10. But a lot of this has come from one source: the limits that central government has placed on increases in public sector pay. The two-year pay freeze that applied between 2011 and 2013 on its own was intended to save £3.3 billion (bn) compared with increasing pay in line with inflation.[23]

But the efficiency improvements made have not been sufficient to allow any of the services covered in this report to manage all of the demands on them within their set spending envelope. People are waiting longer for services – and not just in hospitals

– and many services are spending more than their budgets.

There is clearly scope for further efficiency improvements in public services. But with the 1% pay cap now eased, the array of tools available to government to control spending has shrunk. There are others, such as altering pension entitlements, which government has shown little appetite for recently. Further productivity drives – if not accompanied by changes in working practices – could risk intensifying the recruitment and retention issues that the new pay increases are designed in part to solve. This is a key challenge for government.

The country faces a national choice

Improvements are possible. But in the long term, no government can maintain public services of the current scope and nature without a large rise in tax.

Projections from the Office for Budget Responsibility in July 2018 show that if current spending were simply projected forward, spending on health, long-term care and pensions and pensioner benefits alone (along with debt interest payments) would equal tax receipts within 50 years.[24] That is, if the Government chose to keep those commitments on health, long-term care and payments to pensioners, it would have nothing left for any other form of public spending (without increasing borrowing).

The Government needs to address openly the big questions about the future of public services. This report shows that governments cannot continue for long to provide the same services by simply muddling through, with dollops of emergency cash. Tough decisions will have to be made: whether tax increases, or lower expectations of services, or more individual contributions, or radical service changes.

The Prime Minister and the Chancellor must start making these options explicit – about what public services cost and how that money would be raised. They need to begin telling people clearly that they face a national choice.