The Week 28 July (Recess Wrap up)
Director
Parliament, like schools, has broken up for Summer. And while Westminster hasn't entirely wound down, the next few weeks are going to be (probably; please!) much quieter. We therefore thought we'd take the opportunity to give our mid-year report on the Government's performance.
Below you'll find the team's highlights and lowlights, our 'where's the plan?', and a brief assessment of the state of play in our two core areas of health and Whitehall reform.
Reimagining Whitehall
The dynamic between ministers and officials is the engine of the Whitehall machine — and, at times, the engine is prone to stall. After last year’s flare-ups, the first half of 2023 did not see much improvement of this most fundamental relationship, and the latest Civil Service People Survey shows declining morale. Sue Gray’s recruitment as Keir Starmer’s Chief of Staff and Dominic Raab’s resignation from government after an inquiry found he had been “aggressive” in his treatment of officials both reignited the debate about civil service impartiality, while the Cabinet Secretary came out to criticise politicians for referring to ‘the blob’.
This is the kind of friction that emerges from a system in need of reinvention, where the various participants are often unclear about their purpose, and significant barriers prevent lasting change. Lord Maude, who is still working on his review into the governance of the service (see below), weighed in with an interesting early sense of his thinking: a service that is more relaxed about ‘politicisation’, and bolstered by much stronger leadership. We look forward to learning more.
Perhaps the most ambitious moves on machinery of government reform – aside from some recently announced efforts to set up more secondments with the tech sector – are to do with the way that Whitehall relates to local government.
Devolution of power is set to spread to more places following the announcement of major ‘trailblazer’ deals for Greater Manchester and the West Midlands (see below), with new frontiers opened by the inclusion of ‘Combined County Authorities’ in the forthcoming Levelling Up and Regeneration Bill. The new Office for Local Government, though still awaiting permanent leadership, is up and running — for now it’s primarily a data comparison resource to help benchmark and promote best practice among councils. Plans for investment zones are taking shape. And we’re looking forward to the details around ten planned funding ‘Simplification Pathfinder Pilots’ for local authorities — all part of a very welcome new plan to improve the funding landscape for local government.
Reimagining Health
It’s been some time since anyone could claim our health and care systems were starting the year in good shape, but the first half of 2023 has been particularly difficult — access, performance and satisfaction all continue to deteriorate and long-term aspirations have given way to crisis management and firefighting.
On the positive side, government and NHS leaders have issued a series of pretty sensible plans to get on top of two of the most pressing challenges — the crisis in A&E and primary care access. Though neither will, in the short term, bring standards up to the level we should expect (see below), both will set us up for improved performance longer term. The Urgent and Emergency Care Recovery Plan avoids the usual myth making about A&E performance — that the only way to improve the system is to stop people showing up — and focuses on the real problem at hand — how can we move patients through hopsital and discharge them back home most efficiently. The Primary Care Recovery plan makes a series of sensible suggestions to improve practice appointment booking systems and use pharmacy to reduce pressures on GPs.
Elsewhere in health policy, a year after their establishment as statutory bodies, health leaders are finally starting to think through how Integrated Care Systems (those bodies responsible for spending a cool £110 billion a year) should actually work. We weren’t entirely convinced by former Health Secretary Patricia Hewitt’s recommendations on how to make ICSs accountable to the people they serve, but at least the penny is finally starting to drop that controlling our system entirely from Whitehall may not be the answer to the complicated health challenges of our century.
Now, onto our government report card. Below you will find Reform's verdict on the policies from the first half of the year.
👍 GOOD FOR
Devolving actual power (the cash)
After a long negotiation process, we were expecting the announcement of two ‘trailblazer’ devolution deals to build the power and autonomy of Greater Manchester and the West Midlands. What we didn’t expect from this year’s Budget was arguably the most radical shift in local government policy since the 1970s. The promise of multi-year, single departmental-style funding settlements for two mayoral combined authorities is a major step: drawing together multiple funding streams and creating the conditions for longer-term and more locally attuned decisions at the local level. While the real details are still to be worked out — these settlements won’t be introduced until the 2025 spending review — they are explicitly intended to function as a model for future devolution deals in other parts of the country.
This contributes to the deeper sense that a step-change is occurring in English devolution policy, with growing momentum around the idea that mature combined authorities should be seen as true governing bodies, capable of wielding regulatory powers and operating with high levels of accountability. The ‘trailblazer’ deals even go beyond the powers available to Greater London in some areas. If these combined authorities can demonstrate that this leads to better outcomes and innovative, locally-informed policies, a massive change to the distribution of power could be on the way.
Policy evaluation
Trailed by the Evaluation Taskforce late last year, Jeremy Quin’s speech earlier this month contained some more clues on the creation of an “Evaluation Registry”: an online portal that will provide easy, public access to thousands of evaluations, becoming “one of the biggest” repositories of social policy evaluation in the world. Launching with over 2,000 evaluations, this could become a key resource for evidence-based policymaking, helping to benchmark new policies against previous initiatives, and ensure that taxpayer pounds are directed at projects with the best chance of success.
Given concerns from the NAO and others about how evaluation is embedded in policy design, the litmus test will be how this resource is actually used. But it’s certainly a win for government’s ability to share and draw on vital evidence of what works.
Global technological leadership
Under PM Rishi Sunak, the science and tech agenda has received plenty of attention — and artificial intelligence is at the centre of that. We’ve had the new Science and Technology Framework which listed AI as one of five critical national technologies, a new National Quantum Strategy worth £2.5 billion over a decade, and the Government’s new “pro-innovation” AI white paper. More funding, more capacity and proper thinking about how AI can support our national interest — these are all promising signs.
Most interesting is the PM’s early efforts to establish the UK as a global hub for regulating AI safety. It suggests a welcome desire to take a global leadership role given how much AI is likely to disrupt our world. But there are some contradictions in our approach to the risks around AI. A pro-innovation stance (as in the white paper) has obvious upsides, but regulatory leadership on AI safety would imply a more cautious path. One to watch going forward…
Long-term investment
Pension funds are one of the biggest sources of long-term ("patient”) capital and when deployed effectively can provide a serious boost to economic performance. The UK pension market, worth £2.5 trillion, is Europe’s largest. Yet compared to international counterparts, our pension funds are much more likely to invest in overseas assets than high-growth companies based in the UK. In his Mansion House speech two weeks ago, the Chancellor set out a promising vision to unlock up to £75 billion in patient capital by 2030 through a package of new measures aimed at directing this investment into the UK. These include a formal “Compact” signed by many of the biggest defined contribution pension schemes and a consultation on consolidating local gov pension schemes, worth over £350 billion, to boost transparency and potential returns.
A welcome message for unleashing long-term investment — and one that could contribute both to economic growth and increasing average returns for pensioners.
Life science superpower status
The UK has a world-leading life sciences sector, but in an aggressive global market, it is key that we maintain that competitiveness (according to some global rankings, we have already dropped below Germany, France and Italy). The O’Shaughnessy Review, published in May, is a step in the right direction. The Review provides some very sound recommendations, including, for example, a boost in funding to the MHRA (which Reform called for last year). This should help clear clinical trial approval backlogs and reduce delays. More radically, but also sensibly, the Review calls for conducting trials outside of hospital settings. This would mean both lower costs and an increase in the number of clinical trial participants — and a more diverse pool making trials more robust. Given that fewer patients are being enrolled each year, this could help boost delivery of large-scale trials needed to test new drugs, essential to maintaining our life sciences superpower status.
In addition, the Prime Minister’s commitment to the science and innovation agenda is extremely welcome, as is the Chancellor’s announcement of £650 million aimed to attract investment and boost innovation.
The future NHS workforce
6 years after it was first announced, the Government finally published its long-term NHS workforce plan in June. Our verdict? Pretty good on the whole – projecting and forecasting workforce needs for the world’s 5th largest employer is no easy feat. Commitments to expand and reform training, particularly in areas where there are real shortages such as general practice, dentistry, disability nursing and mental health make good sense. So too do pledges to expand new roles such as physician and nursing associates to free capacity for doctors and nurses to work at the top of their licence and improve access for patients.
However based on some pretty punchy productivity assumptions, the elephant in the plan is how to drive productivity in a system currently delivering far less for far more (see below). But hats off for long-term thinking in an area where firefighting and crisis management tend to dominate.
👎 BAD FOR
Public finances
It’s not been a brilliant seven months for the public finances. The OBR’s most recent economic outlook shows that public sector net debt has exceeded 100% of GDP, the cost of servicing this debt reaching £114 billion in 2022-23 (more than we’re expecting to spend on education and defence, combined).
Even before the pandemic, the UK’s debt-to-GDP ratio was above the OECD average, and well above neighbouring countries in Northern Europe like the Netherlands, Germany and Denmark. Post-pandemic, of course, interest rates are now returning to historically higher levels, reflected in the high cost of borrowing and driving up the cost of servicing that debt.
As well as creating long-term risks to the public finances, and storing up repayment costs for future generations, this forces unwelcome trade-offs against spending in other areas, including investment in public services. In the context of an ageing population, disappointing levels of economic growth, and the cost of decarbonising the economy, it’s perhaps no surprise the OBR expects debt to climb even higher, to over 300% of GDP, by the 2070s.
Keeping promises 1: Social Care
In 2021, the Government set out its long-awaited vision to ‘transform’ social care in England and announced funding reform for the sector. We weren’t entirely convinced by their plans but gave them credit for (finally) grasping one of our thorniest public services challenges.
2022 saw progress delayed, but the first half of this year has seen social care reform abandoned. Small pots of funding (£500 million) set aside for training and workforce development, and for adapted housing (£300 million) have been cut by a half and two-thirds respectively. Labour may be talking a big game about reform, but firm policy commitments are few and far between. So we’re left where we’ve been for many years now – with a system unable to cope with the demands of an ageing population, driving local authorities into financial turmoil, and heaping pressure on to the NHS.
Keeping promises 2: Renters
Back in 2019 — four years and three Prime Ministers ago — then PM Theresa May promised an overhaul of the private rental market. These are the provisions in the Renters’ Reform Bill. The biggest policy change was the repeal of Section 21 of the Housing Act 1988, ending a landlord's right to evict tenants for any (or no) reason at the end of contracts. This right, as well as increasing insecurity for renters, creates a strong disincentive for tenants to complain about poor housing standards.
The Bill will also create a new and compulsory housing ombudsman scheme, so that legitimate complaints can be settled outside of the courtroom. As literally every (non-house-owning) member of the Reform team will attest, this is long overdue: it’s a vital protection for private renters in a staggeringly unbalanced market. And yet, after four years, the bill isn’t in law or even in its final stages…. It’s not even had its second reading in the House of Commons. We’ll keep waiting for these promises to become policy.
NHS productivity
The NHS has been in perpetual crisis — headlines on the winter crisis, industrial action, and the growing elective waitlist have dominated the news cycle. This period of polycrisis, though amplified due to the pandemic, is rooted in long-term systematic issues plaguing the NHS. The Government has sharply increased funding since the start of the pandemic (by 13.4%) and increased staff numbers (with a 11 per cent more nurses, 10 per cent more consultants and 16 per cent more junior doctors since the pandemic even after adjusting for absences).
Despite this NHS activity has fallen. The number of people being treated, according to many metrics such as outpatient appointment and elective admissions, is lower than before the pandemic.
We’re not convinced that increasing frontline staff will save the NHS’s productivity problems. *Actually* making a move on productivity would mean focusing on the right things (as we have argued previously), such as increasing capital and digital investment and focusing on good operational management.
Access to healthcare
In his first major speech this year, the Prime Minister told us to hold him to account if NHS waitlists did not start to fall. The first six months of this year will leave him (and the public) disappointed. The total number of patients waiting for treatment has climbed month-on-month since January and now stands at almost 7.5 million. Despite commitments to eliminate long waits by April, there were still over 10,000 patients waiting more than 78 weeks the following month.
The situation isn’t any better in emergency care. On average, between January and June, less than 60% of patients were discharged, admitted or transferred out of A&E within 4 hours — the worst start to a year since records began. Our access woes won’t be made any easier by the industrial action that has gripped the healthcare sector in 2023 — more than 600,000 appointments, procedures and operations have been cancelled since strikes began in October. The Health Secretary and his counterparts at NHS England will have unenviably large in-trays for the rest of the year, but restoring access to care will need to remain priority number 1.
🔎Where's the plan?
Fixing up Whitehall
It's been a quiet first half of the year for Whitehall reform, saved only by a late intervention from the Minister for the Cabinet Office. In a speech last week, Jeremy Quin laid out his plan for a new wave of secondments, trailing new recruitment approaches to increase outside talent, upskilling civil servants in digital and data and further driving digital transformation across Whitehall, and an Evaluation Registry (highlighted above). All very good stuff…and yet… more than two years on from the Declaration on Government Reform there's been little serious action.
The highly-anticipated Maude review was meant to be submitted in September 2022(!) — it’s now likely to come out a full year later than that. We're hoping for some bold ideas.
Tackling economic inactivity
Higher levels of economic inactivity, driven in large part by long-term sickness and older workers leaving the labour force early, are one of the defining post-pandemic policy challenges. The Spring Budget majored on three areas aimed at boosting the labour supply: an expansion of free childcare, pension reform and a number of measures contained in the Health and Disability White Paper. The first two of these have very little direct effect on economic inactivity, while reforms in the latter will be rolled out “no earlier than 2026/27”.
There were also several positive, but small scale, policies announced, such as embedding tailored employment support in mental health and musculoskeletal services, and increased funding for work coaches.
But given the scale of the challenge posed by growing inactivity, and its impact on productivity and growth, this falls short of the sort of radical plan needed to address this productivity-sapping problem.