Performance Tracker 2025: Summary

This was not a new state of affairs. For most of the preceding decade and a half, Conservative-led governments had focused increasingly on the most acute day-to-day needs, doing so in large part by cutting investment in staff, buildings, equipment and preventative services.

The aim was to balance the books but, rather than bring stability, this first created, and then exacerbated, a series of interlinked failures. Demand for acute services rose and became more complex – in part due to those cuts in early intervention, meaning many people’s first interaction with public services came when their needs were more difficult to manage. A series of unrealistic budgets were consistently busted, with services often relying on ‘emergency’ (though in reality by the end of the 2010s ‘routine’) top-up funding to avoid complete collapse.

Unquestionably these challenges were aggravated by the pandemic. But they were largely caused by government decision making.

Fixing problems of this scale was never going to be a single-term project – but the government has initiated some reforms in its first year and a bit that should address the root causes of at least some of the performance problems outlined in this report. Overall, however, progress has been undermined by poor preparation before the general election and lack of co-ordination across government since.

Ultimately, the buck for these failures stops with the prime minister. Keir Starmer must urgently get a grip if Labour is to enter the next election having delivered tangible improvements to the services upon which the public depends.

About Public Services Performance Tracker

Public Services Performance Tracker is the Institute for Government’s annual assessment of the state of England’s public services.^* Since our first tracker in 2017, we have used 2010 as the baseline for comparisons (where the data allows) as that year marked the end of the last Labour administration and the beginning of a period of Conservative-led governments.

Producing this year’s report in the autumn of 2025 means we now have sufficient data to form a baseline against which this government can be judged in the year since it became the first Labour administration in a decade and a half. This edition provides a comprehensive assessment of the state of public services at the time of the election, as well as assessing the decisions made by the Starmer government since.

_{*    England and Wales for police, criminal courts and prisons.}

The Labour government’s inheritance

Labour inherited stretched services and undeliverable spending plans

Public services had been on a funding rollercoaster since the last time Labour was in power. By the summer of 2024, spending on most services had returned to and indeed exceeded levels seen at the beginning of the coalition government in 2010, but many were still recovering from deep cuts in the first half of that decade.^* The most severe reductions were in local government, criminal courts and prisons, all of which saw spending cut by between a fifth and a quarter in real terms.

Despite later funding increases, some services, including police and criminal courts, were still spending less in 2024 than in 2010. All services had to stretch their budgets to meet rising demand and address the lingering impacts of the pandemic.

Capital budgets – used for things like buildings, maintenance or IT equipment – were cut particularly steeply in the first years of the coalition across the five key public services departments that we look at. Capital spending was then increased in DHSC, MoJ and the Home Office but by the time of 2024 election MHCLG and DfE were both managing capital budgets far smaller than before the 2008 financial crisis. The consequent inability to invest for such a prolonged period had severely damaged the long-term productivity of public services.

Spending had become more weighted towards acute services, as Conservative-led governments and local authorities made deep cuts to preventative programmes. This created a negative spending spiral in which cuts to preventative services fed increased acute demand and political pressure to fund acute services, leaving governments to contemplate still more cuts to preventative services.

The last of this series of governments, Rishi Sunak’s, left the incoming Labour administration with vague and undeliverable spending plans from April 2025 onwards. These implied deep cuts to unprotected areas of spending that no government could have implemented – practically or politically.

_{*    All changes in spending are real terms unless otherwise stated.}

Public sector workforces were stable but inexperienced and lacked back-office support

Labour inherited a public services workforce that had grown substantially in the preceding years. There had been particularly big increases in numbers of doctors and nurses working in hospitals, and direct patient care staff – such as pharmacists and physiotherapists – working in primary care. The number of police officers and operational prison staff had also risen, though faster rises in demand meant there were still fewer of these staff per capita and per prisoner respectively than in 2010. Staff turnover had largely stabilised across public services but some workforces, particularly in criminal justice, had become less experienced. More than half of band 3–5 prison officers had less than five years’ experience in 2023/24, compared to less than a quarter in 2009/10.

While numbers of front-line staff had increased, this had not been matched in a rise in back-office staff. While the employment of managers, analysts and other support staff has often been (unhelpfully and disingenuously) characterised by ministers
as wasteful, they play a critical role in the effective delivery of services, bringing specialist skills to back-office roles and freeing up front-line staff to focus on public facing work.

The years before the election saw the worst public sector strikes in a generation, as teachers, doctors and even nurses staged national walkouts, the latter for the first time in the English NHS’s history. Most of these disputes had been settled by the Sunak government, meaning the incoming Labour administration benefited from some stability, at least at a surface level, in industrial relations. However, even with those settlements, key public services staff groups were still earning substantially less in than in 2010 – setting the scene for further rounds of strike action.

Performance was worse in all services than before the pandemic – and much worse than 2010

The Covid pandemic brought with it a generational disruption to all public services. Lockdowns, social distancing and higher rates of staff sickness dramatically reduced what most services could deliver. Under the Sunak government, as the worst effects of the crisis receded and the election approached, activity increased and in most cases had exceeded pre-pandemic levels (that is, as recorded in March 2019).

However, recovery in performance was much more sluggish. As a result, all services were still performing worse when Labour took over than they had been before the pandemic, and all but schools were doing substantially worse than when the party was last in power. Perhaps most concerningly for a government that campaigned with a pledge to reduce inequalities, the gaps between the best and worst performing public services across the country had grown, with those operating in more deprived communities generally seeing the biggest drops in quality and access.

Poor performance partly reflected growing demand, both in volume and complexity, but much of this demand was ‘failure demand’, meaning that it was the result of public services failing to provide effective support at the first opportunity. Cuts to some services increased the demand on and reduced the apparent productivity of others.

More broadly, Labour inherited structures and systems of governing that impeded the efficient and effective delivery of public services, including short-term, inconsistent, siloed and highly prescriptive funding and policy making. This led to duplication of effort and expenditure by services and worse outcomes for those who used them.

Decisions made since the 2024 election

The Labour government increased day-to-day spending in 2024/25 and 2025/26, but is banking on reforms later in the parliament

Whichever party won the 2024 general election would have found it necessary to increase spending above that implied by the undeliverable plans set out by the Sunak government. But the spending increases announced at the autumn budget 2024 were genuinely substantial, with day-to-day spending in 2024/25 and 2025/26 set to grow by 3.5% and 4.3% respectively. The increases announced in day-to-day spending were one of the biggest in more than two decades.

However, Labour’s plan is for day-to-day spending to increase more slowly in the second half of this parliament, growing by an average of just 1.3% between 2025/26 and 2028/29. Overall, we expect spending to outpace demand in most services across the whole parliament and 2025/26–2028/29. However, above-inflation cost pressures will mean budgets will feel tight as we approach the next election. This means the government will need its public service reforms to be a success if it wants to see meaningfully better performance by the next election.

The government has also committed to higher capital spending. For public services, the level of departmental capital spending will be higher than in the 2010s, but the increase is less generous than for other parts of government such as defence. This spending should, however, go further thanks to some welcome changes made by the Starmer government to address the previous weaknesses in the allocation, planning and delivery of capital spending in public services.

Likewise, the government has provided public services with greater funding certainty, which will enable them to plan more effectively and make timely investments that will improve their productivity. Labour has also given front-line providers greater flexibility and autonomy over how they spend their budgets. These are positive changes that the Institute for Government and others have long called for and will support the government’s ambitions to integrate services, improve outcomes through a focus on prevention and devolve power to local areas.

The government’s goals could be undermined by industrial action and changes to immigration rules

The government has set some ambitious public service goals. Achieving these will be dependent on a sufficiently large and motivated workforce. To this end, the Starmer government moved quickly to improve industrial relations. Within a month of taking office, it had accepted the recommendations of the pay review bodies (PRBs) for pay rises in 2024/25 and concluded a separate agreement with the BMA to bring an end to long-running resident (formerly junior) doctor strikes.

However, despite the government subsequently accepting the PRB recommendations for 2025/26, which again exceeded inflation, this was not enough to avert further strikes from BMA members, with other unions also considering their options.

Immigration changes could be another flashpoint. Extensive international recruitment has been one important way that public services have squared the circle of the need for more staff with tight budgets in recent years. There are practical, political and moral risks with this and the Starmer government is sensibly trying to reduce reliance on this route. However, the speed at which it is trying to make this transition – particularly in adult social care, where it announced the termination of the visa route for new adult social care workers – could exacerbate staffing problems in the short term.

Labour also appears to be continuing the approach of cutting back-office staff, in the words of Starmer’s foreword to the 10 Year Health Plan to “slash unnecessary bureaucracy”. This is not and has never obviously been a silver bullet, and could mean that rather than freeing up front-line staff it will instead force them to spend more of their time on administrative tasks.

The government has stabilised crises but its first year has revealed a worrying lack of preparation in opposition

Ahead of the election Sue Gray, then chief of staff to Keir Starmer, had produced a ‘government risk register’, identifying the six most pressing issues that a new Labour government would face. ¹ Pickard J, Fisher L and Gross A, ‘Labour faces series of crises if elected, internal dossier warns’, Financial Times, 21 May 2024, www.ft.com/content/b95976ff-d861-4baf-a168-fd262b4e2f95  This included four areas covered by Public Services Performance Tracker: public sector pay negotiations, overcrowding in prisons, failing local authorities and an NHS funding shortfall. In each area, the government has in its first 16 months in office acted and brought a measure of stability.

The government also deserves credit for grasping the nettle on some of the most challenging long-term issues facing government, putting forward serious proposals for reform of local government finance, children’s social care and sentencing. Further proposals to address problems in SEND provision, homelessness and child poverty are expected in the coming months.

It has also established a positive cross-cutting vision for public service reform, setting out three principles that will underpin reforms: to integrate services, to focus on prevention, and to devolve power. This is welcome, but these principles could and should have been developed before the election, not a year later.

Likewise, Labour’s ‘missions’ approach could have been an effective way to address cross-cutting challenges facing public services. However, despite having published its five missions almost 18 months before the general election, it is apparent that Labour had not given sufficient thought in opposition to how these would work in practice. This failure to prepare has resulted in the spending review and departmental plans showing little evidence of cross-government working or a coherent approach to public services reform informed by the three principles.

The scale of the challenges in public services requires significant political capital to address. Ministers and civil servants recognise the value of taking a cross-government approach. But in the absence of clear planning in opposition and strong leadership on public service reform from the prime minister in office, there has been a lack of impetus for this to be put into practice. This means that the positive reforms ministers have introduced so far amount to less than the sum of their parts.

Such a daunting in-tray was always going to take more than one parliament for a new government to tackle and performance improvements in a year will inevitably be limited. Our assessment this year therefore focuses on the extent to which we think the government’s actions have addressed the underlying causes of poor performance in each public service. The greatest strides have been made on children’s social care, but for most services progress on the most important issues has been limited. On adult social care, the government has arguably gone backwards.

Recommendations

The Labour government has made less progress on public services than it should have done, even taking into account the scale of the job in hand. There are, however, still more than three years left in this parliament; time enough to make meaningful improvements to critical public services and to the lives of the people who use them. To ensure the government delivers more over the available 40 months ahead than it has over the past 16, we make the following recommendations:

1.    Establish a cross-cutting approach to public services

Public services are interdependent and the problems facing them cannot be fixed in isolation. Whether through re-energised missions or an alternative mechanism, the government should urgently establish a cross-cutting approach to addressing the public service failures identified in this report. For his government to prioritise and co-ordinate across departments effectively, the prime minister must be much more engaged than he has been to date.

2.    Operationalise and scale up public service reform plans

Labour has used its first year in office to do a lot of public service policy development but it must move quickly scale up its cross-cutting public services reform agenda. To this end it should: incorporate its reform principles into the government’s performance framework; make it easier for public services to share data with each other; put a broad ring-fence around preventative spending; and provide local and strategic authorities with more flexibility over how they raise revenue.

3.    Support services to use their capital budgets more effectively

Public services received smaller uplifts to their capital budgets at the spending review than other parts of government but the government should ensure these budgets are used effectively by: providing larger front-line service providers with rolling five-year capital budgets; streamlining capital approvals processes; reconsidering the delegated spending limits of departments; and encouraging a higher proportion of capital budgets to be spent on maintenance.

4.    Develop deliverable workforce plans

The government has set out some ambitious workforce goals but has provided little detail on how these will be met. It should publish comprehensive workforce strategies for all key public services, which include: delivery and funding plans for meeting recruitment targets; consideration of how to mitigate the undesirable knock-on effects on recruitment and retention of successful efforts in other services; plans for encouraging a greater proportion of those undertaking training to enter full-time employment in those roles; consideration of how to meet targets in light of plans to reduce net migration; and realistic strategies for retaining staff and reducing sickness absences.

5.    Fix data problems and gaps

Ministers, civil servants and front-line staff are much more likely to make good decisions if they have access to high-quality data. Unfortunately, serious problems with the quality and range of certain datasets means policy makers and practitioners alike are often flying blind. The government should address these data problems as a matter of urgency.