Public services that have for years been creaking are now crumbling. The public is experiencing first-hand the consequences of successive governments’ short-term policy making – perhaps most starkly in the forced closure of more than 100 schools just days before the start of the new academic year in September 2023, for fear they may collapse. In the NHS, the elective waiting list reaches a new record high every time figures are published, industrial action by doctors is now into its eighth month and patients find it increasingly difficult to get an appointment with an ever-shrinking number of GPs.
Seven local authorities have issued a section 114 notice – effectively signalling ‘bankruptcy’ – in the last three years, compared to just one in the first three decades that the measure existed. Other councils have warned they may follow suit. In criminal courts, more than a quarter of the most serious cases take more than a year to be resolved. And prisons are at bursting point, with inmates routinely being held in police cells to deal with overcrowding and the justice minister even considering ‘renting’ cells in other countries.
All this is the result not just of the pandemic, clearly disruptive though that was, but also of decisions taken over the course of many years and different administrations. Public sector pay freezes and below-inflation pay rises in the 2010s fuelled dissatisfaction with pay that this year, amid high inflation, erupted into the worst public sector strikes for decades. Governments have underinvested in capital across all public services for more than half a century, leaving GP surgeries, hospitals, schools, courts and prisons that are not fit for purpose.
Cuts to local government funding at the start of the 2010s have forced local authorities to make their own cuts in response – usually falling on unprotected responsibilities like neighbourhood services. Even statutory services such as adult social care have become more closely rationed. Fragility has become a defining characteristic of today’s public services.
Whoever wins the next general election will face tough choices when it comes to public services. The current spending plans beyond the end of this spending review period, which runs to 31 March 2025, leave even the most well-funded services – general practice and hospitals – with little breathing room. The prospects for other services are bleak. If the next government sticks to current commitments, performance in some services, particularly the criminal justice system, will almost certainly deteriorate even further.
This report analyses the current state of nine public services – general practice, hospitals, adult social care, children’s social care, neighbourhood services, schools, police, criminal courts and prisons – and the comparative, and often interconnected, problems they face. It sets out the consequences of spending choices that this and the next government may take.
Performance in most services is still worse than before the pandemic – and much worse than in 2010
All the services covered in this report, with the sole exception of schools, were performing worse on the eve of the pandemic than a decade earlier. The situation was particularly dire in prisons, hospitals, general practice and adult social care. But they are performing even worse now. The situation is most severe in criminal courts and hospitals.
The crown court backlog is at a record high, reaching 64,709 cases in June 2023, compared to just 40,826 in March 2020. However, accounting for the greater complexity of cases in the backlog, which now includes a disproportionate number of jury trials, the ‘true backlog’ is now equivalent to 89,937 cases.
Hospitals are doing substantially worse on all major performance metrics. The elective waiting list continues to grow, reaching 7.8m in August 2023, up from 4.6m on the eve of the pandemic. And in 2022/23, little over half of those attending A&E were admitted, transferred or discharged within four hours (56.7%), compared to more than three quarters in 2019/20 (75.4%). This also compares unfavourably to a longstanding target of 95%, and even to a new target, announced in December 2022, of 76%.
Performance is worse in some services despite substantial spending and staffing increases. In hospitals there were approximately 13% more doctors and nurses in March 2023 as compared to March 2020, yet many areas of activity have not returned to pre-pandemic levels. Adult social care has also seen substantial spending increases in recent years, but these have largely been eaten up by higher costs to provide the same level of service, meaning that there has been little progress in reducing unmet and under-met need.
Public service performance has been weakened by underinvestment in capital
The pandemic is no longer having a meaningful direct impact on the performance of public services. But their ability to bounce back from the shock of Covid has been severely hampered by historic underinvestment in capital – that is, buildings, equipment and the like.
The UK has long invested less in its public services than other wealthy nations. Taking health as an example, since 1970 there have only been two years in which the UK did not spend below (often much below) the OECD average; today the NHS has half as many CT scanners per head of population as the OECD average. But even by these low standards, the decade before the pandemic saw particularly deep cuts to the capital spending of the departments overseeing the services covered in this report. The worst hit was the Ministry of Justice, where annual capital spending averaged less than half the real-terms spending in 2007/08.
Decades of underinvestment in capital has had a serious impact on the productivity of public services. Teachers, nurses, doctors and social workers find it much harder to do their jobs in crumbling and cramped buildings, when using old computers running out- of-date software or lacking the latest equipment. At times they cannot do their jobs at all: St Mary’s Hospital, one of four major trauma hospitals in London, reports that it is often unable to use its outpatient department because it is frequently flooded with sewage. 9 Neville S, ‘NHS capital investment cuts leave England’s hospitals crumbling’, Financial Times, 17 August 2023, retrieved 20 October 2023, www.ft.com/content/eff98439-44ba-43a3-b9af-3ce796002c24 Across hospitals, schools, criminal courts, prisons and the road network the maintenance backlog now totals £37bn.
Workforce problems are further damaging performance
The effectiveness of public services has been further weakened by the loss of experienced staff and high turnover. As the worst of the pandemic receded, there was an uptick in public service staff moving roles or leaving services entirely. The result was a record number of vacancies in the NHS, adult social care and children’s social care, and the highest prison officer leaving rate on record. Some of those trends have reverted to pre-pandemic levels, but other problems persist.
Experienced – and therefore often more productive – staff have left many services, to be replaced by inexperienced recruits. The proportion of prison officers with more than 10 years’ experience has never been lower. The proportion of registered nurses with less than five years’ experience rose from 19.3% in March 2019 to 25.5% in March 2023.
Other services are facing a full-blown workforce crisis. In children’s social care, workforce numbers are falling for the first time, resulting in a record vacancy rate. Huge problems exist in teacher training: around 30% fewer trainees started postgraduate teacher training in 2022–23 than the government thinks were needed, based on trends in pupil numbers and other factors.
In many cases – particularly adult social care, nursing, hospital doctors and GPs – the government is increasingly relying on international recruitment to fill vacancies. This gives the government less control over the future of the workforce, as it is unable to influence the number of staff trained overseas and is directly competing with other countries.
The government has struck deals with nurses, ambulance drivers, barristers and teachers during the recent months of industrial action, in a bid to assuage an increasingly dissatisfied workforce, but junior doctors and consultants remain on their picket lines. The strikes have, however, led to considerable service disruption: less than half of pupils attended school during the various teachers’ strikes, the backlog in crown courts rose by more than 8%, and the NHS rescheduled more than one million hospital appointments as a result. These are problems that these services can ill-afford as they struggle to address backlogs and performance issues exacerbated by the pandemic. The government’s approach to strikes – particularly its refusal to negotiate on pay for months – likely extended their duration and thus the level of disruption caused to public services.
Current spending plans will likely mean further declines in service performance
When it was first announced, the 2021 spending review looked generous, with spending rising more quickly over the course of its three years than any other spending review since 2004. But unexpectedly high inflation has eroded the real- terms value of that settlement. While additional funding has been provided to some services, the tightness of these spending plans means that most will not be able to return to pre-pandemic performance levels by the end of this spending review period in March 2025.
The situation after the end of the current spending review is worse still. The government’s spending plans from April 2025 onwards – which Labour has also committed to – are incredibly tight, with just 1% annual real-terms increases pencilled in. But taking account of government commitments on foreign aid and defence, and funding that would be required to deliver the NHS long-term workforce plan, the settlements for unprotected areas of public spending will be much less, averaging -1.2% per year in real terms. If these spending plans were implemented, then it is likely that all services covered in this report, other than children’s social care, would be performing worse in 2027/28 than on the eve of the pandemic.
Lord Gus O’Donnell, the former cabinet secretary, has described these spending plans as “totally unsustainable” 10 Dunton J, ‘Gus O’Donnell: Current spending plans are ‘totally unsustainable’, Civil Service World, 28 September 2023, https://www.civilserviceworld.com/news/article/former-cab-sec-says-matching-conservative- spending-commitments-wont-help-labour-at-next-election and whoever forms the next government will likely face huge public and political pressure to provide public services with more generous funding settlements.
Public service performance improvement is possible but requires a big change in government’s approach
Fixing the problems described in this report will take time and will not be easy. After a decade of sustained funding pressure, there is no meaningful fat to trim without damaging public service performance further. But higher standards could be achieved with existing funding and staffing levels – if services are reformed to work more productively. Such improvements will, however, require a different approach from government.
This report does not set out to produce an exhaustive list of solutions – that will involve political choices – but instead sets four commitments that any government serious about addressing the decline in public services must 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 setting pay, workforce planning and enhancing working conditions, to reset the relationship with public service staff and resolve recruitment and retention problems.
In the absence of serious action to improve public service productivity, the government risks getting stuck in a ‘doom loop’, with the perpetual state of crisis burning out staff and preventing services from taking the best long-term decisions. Escaping this will not be easy and whoever forms the next government will be hindered by the short-sighted decisions of its predecessors.
Hard decisions are necessary but, with a sustained change in approach, serious improvement to public service performance is possible. It will always have been better to start fixing these problems years ago – but the next best time is now.
|Performance on the eve of the pandemic vs 2009/10 12 Davies N, Fright M, Hoddinott S, Pope T and Nye P, ‘Performance Tracker 2022: Cross-service analysis’, in Davies N, Hoddinott S, Fright M, Nye P, Pope T, Shepley P and Richards G, Performance Tracker 2022: Public services after two years of Covid, Institute for Government, 2022, www.instituteforgovernment.org.uk/performance- tracker-2022/cross-service-analysis#footnoteref1_at56bks||
Much better: Service performance (scope, quality and efficiency) on the eve of the crisis was better than in 2010
Better: Service performance was somewhat better than in 2010
About the same: Service performance was about the same as in 2010
Worse: Service performance was somewhat worse than in 2010
Much worse: Service performance was much worse than in 2010
|Current performance vs 2019/20 performance||
Much better: Service performance (scope, quality – including backlogs – and efficiency) is the same or better than on the eve of the pandemic
Better: Service performance is somewhat better than on the eve of the pandemic
About the same: Service performance is about the same as on the eve of the pandemic
Worse: Service performance is somewhat worse than on the eve of the pandemic
Much worse: Service performance is much worse than on the eve of the pandemic
Funding adequate to return to pre-pandemic performance levels by the end of 2024/25
Yes: Accounting for cost pressures from pay and the latest inflation, it is likely that spending since 2019/20 is sufficient to enable the service to return to 2019/20 performance levels by April 2025
Maybe: It is finely balanced or uncertain that spending since 2019/20 is sufficient to enable the service to return to 2019/20 performance levels by April 2025
No: It is unlikely that spending since 2019/20 is sufficient to enable the service to return to 2019/20 performance levels by April 2025
|Funding adequate to maintain performance levels between the end of 2024/25 and 2027/28||
Yes: It is likely that implied government spending plans for 2025/26–2027/28 will be sufficient to maintain performance at April 2025 levels
Maybe: It is finely balanced or uncertain whether implied government spending plans for 2025/26–2027/28 will be sufficient to maintain performance at April 2025 levels
No: It is unlikely that implied government spending plans for 2025/26–2027/28 will be sufficient to maintain performance at April 2025 levels