Summary

Performance Tracker brings together more than 100 data series to provide a comprehensive picture of the performance of government in running key public services. Our analysis reveals the key decision points that the Chancellor faces in the run-up to his first Autumn Budget.

The era of tight spending controls, initiated under the Coalition Government, is far from over. The spending squeeze, which has seen government spending fall by around 1.7% in real terms since 2010* is set to continue into the next decade. The 2015 Spending Review set out plans for day-to-day spending to be £5.2 billion (bn) lower in real terms in 2019/20 than in 2015/16 (having fallen to £10.4bn lower the year before).

Performance Tracker sets out the context in which this will happen. The data show that some services – such as criminal courts and some neighbourhood services – are continuing to make efficiencies but there are pressures building up in others.

A lack of successful action to reform services and mitigate these pressures has created an imperative to act in certain services – particularly, as the analysis in this report will show, in prisons, hospitals, schools and adult social care. This is a poor state of affairs: no government should end up in such a situation, unless there is a natural disaster or similar unpredictable emergency. Ultimately, then, government needs to improve the way it makes spending decisions, to break out of a reactive cycle of crisis, cash, repeat.

The performance of public services

Health and social care

After an initial period of decline, spending on general practitioners (GPs) has increased by nearly 12% since 2010. Challenges remain: the Government is struggling with GP numbers, and demand pressures are rising as long-term conditions become more prevalent. New ways of working are emerging to face these challenges but there are signs that more patients are facing difficulties accessing general practice.

Hospital spending and staff numbers have continued to rise, but so has demand. In this challenging context, clinical standards and patient satisfaction are being maintained. But queues for services are growing.

Despite an ageing population, spending on adult social care is currently 5% lower than in 2009/10. The number of people receiving services (particularly community care) has fallen, while providers are facing increasing financial strains. User satisfaction is being maintained, but the general election revealed significant public concern about how future demand will be funded and provided.

Schools

Spending on schools is now falling, but it is still 6% higher than in 2009/10. Teacher numbers have kept pace with rising pupil numbers, although there are recruitment gaps in some key subjects and more teachers are leaving the profession. Pupil attainment, meanwhile, has remained broadly flat.

Law and order

Despite sharp cuts to police spending and officer numbers since 2009, official inspection ratings and satisfaction with the police have largely held up. However, victim dissatisfaction is slowly rising, and the public perceive the police to be less visible. The recent terrorist attacks, alongside an increase in recorded crime and changing demand, have provoked renewed debate over police numbers.

Spending across the entire courts and tribunals system has fallen by 19% since 2010/11, with additional fees introduced in non-criminal parts of the system. Criminal courts are dealing with fewer, but more complex, criminal cases, more of which are going ahead as scheduled. But problems with court administration persist, and government will need to keep an eye on waiting times as transformation to a smaller, more digital estate gets under way.

Reflecting significant reductions to the Ministry of Justice budget, prisons spending fell by around 22% between 2009/10 and 2016/17, and there are a quarter fewer prison officers than in 2010. Violence within prisons continues to rise, with the number of assaults on officers 124% above 2009 levels. Government is committed to recruiting 2,500 extra officers as part of a broader package of safety measures, but it will take time for the impact of this to be felt – and problems with retention remain.

Local neighbourhood services

Spending on many services that affect people’s local neighbourhood – waste collection, road maintenance, food safety, trading standards, libraries – has fallen sharply in the past seven years. During this period, some activities have been scaled back, re-prioritised or more selectively targeted – but public satisfaction has broadly held up, suggesting real efficiencies. However, the Government lacks sufficient data on service volume and quality to judge how much further these efficiencies can go.

UK Visas and Immigration

UK Visas and Immigration (UKVI) has managed a Brexit-related surge in its workload – a 200% increase in the number of applications from European Union (EU) residents over the course of 2016 – remarkably well, increasing its level of activity without a large increase in staff numbers or a drastic drop in quality. However, this is only the first phase of a much more challenging series of changes UKVI will have to make as the Brexit process unfolds.

The decisions facing the Chancellor

The Chancellor and his Cabinet colleagues ought to have a wide range of options for controlling spending and for dealing with service pressures. They could pursue strategies to deliver the same level of service for less money – through better use of technology, for example, or by improving the way that services relate to each other. They could choose to reduce the level of service they provide – through sentencing reform, for example, or by more explicit rationing. They could allow the quality of services to fall. Loosening spending control, and putting more money from tax or borrowing into certain services, is also an option.

In reality, however, the options faced by the Chancellor right now are limited by the state that the services are in – and by the decisions that he and his predecessor made in the past. For seven years, successive governments have relied on a combination of locally driven efficiency savings and pay restraint to manage spending. Where this proved insufficient, the scope of services narrowed or quality fell, without explicit national political debate. This is laid out in Chapter 7 of this report.

This approach has now run out of road. Although further efficiencies may well be possible, these cannot be delivered by setting hard budgets and sticking to them. These efficiencies will only come through the kind of changes that require time and national political leadership.

The Government’s failure to make successful transformative changes, or make explicit national decisions on the quality or scope of services, has left it trapped in a reactive cycle: allowing problems to mount, being confronted with a crisis (practical or political) and being left with the only option of injecting emergency cash.

This report makes it clear where the risk of continuing that cycle is greatest: in prisons, hospitals, schools and adult social care.

  • In prisons and hospitals, the Government has little choice but to put in more money. Hospitals are set to continue running a deficit – the question is whether the Government wants to allow that overspend, or put in the cash up front. In prisons, with a serious operational crisis under way, and no policy changes on the horizon to reduce prisoner numbers, the Government needs to do whatever it can to recruit and retain prison officers as a matter of urgency.
  • In schools and adult social care, the Chancellor has already made emergency cash injections. This will allow the services to carry on operating in much the same way in the short term. But these ‘sticking-plaster’ solutions have a time limit. If the Government does not want to have to return with more money in a few years’ time, it will need to start preparing the ground for genuine changes to the way these services are delivered or funded. The same goes for hospitals: the Government will need to make good on the transformative promises of the Sustainability and Transformation Plans (STPs) if it wants to break out of the deficit spending cycle.

There is a political imperative in other services, but the operational imperative is less clear – because the state of the services is less clear.

  • The police and neighbourhood services have both absorbed large spending reductions since 2010, and are not showing the clear signs of immediate distress evident in other services. But in both cases, the Government and the public need better evidence to make a coherent choice about next steps.
  • UK Visas and Immigration (UKVI) has fared well with the Brexit-related surge in its workload, but it now faces a much more challenging task: transforming its processes so they are fit to process applications for settled status from EU nationals resident in the UK (approximately three million people), and to manage the as-yet undesigned post-Brexit immigration system.

Finally, there are two services – criminal courts and GPs – for which the Government has set out clear plans for the future, and which appear to be on a stable course.

  • A new plan for GPs was initiated in 2016, which was matched with new investment to transform the service and recruit 5,000 more GPs.
  • Criminal courts have made substantial efficiencies, even before their ambitious transformation programme – to reduce the number of court buildings and make greater use of digital technology – has really got under way. The Government now needs to deliver on those reforms.

Ultimately, however, a single set of good decisions made at this Budget will not solve the underlying problems which have allowed this Government to get into this reactive spending cycle. The Treasury operates a highly effective system for spending control, but it has no standard framework for assessing what has been achieved – or not – with the spending. The Government needs to change the way it makes spending decisions: looking beyond the short term and making an honest assessment of the balance between funding, quality and efficiency.

We recommend:

  1. The Chancellor should instruct the Treasury, working with departmental finance and analytic professionals, to develop its own Performance Tracker, as a planning and performance management tool. The Tracker should set out clearly assumptions about demand, inflation, efficiency and quality at least three to five years ahead and be regularly updated.
  2. The efficiency assumptions should be supported by clear and realistic delivery plans including timescales and national and local responsibilities.
  3. The Treasury should publish this Tracker or, at a minimum, make the key assumptions public and available for scrutiny by Parliament.
  4. The Government should subject these assumptions to independent review to assess their viability, potentially through an ‘OBR for public spending’.

The Government needs to take action to ensure that foreseeable problems do not become expensive crises.

*     Figures are for Total Managed Expenditure (TME) between 2010/11 and 2016/17 and are taken from HM Treasury’s Public Expenditure Statistical Analysis (PESA) 2017, Table 4.3.