Political parties must be honest with Britain about the immediate crisis of collapsing public services facing the next government, according to a hard-hitting report that lays bare the crisis affecting the NHS, criminal justice system, prisons and local government.
In a direct challenge to Rishi Sunak and Keir Starmer to come clean with voters, the Institute for Government thinktank said most state services are performing worse than at the time of the 2019 general election, and “substantially worse” than when the Conservatives first took office in 2010.
The IfG said it was not plausible for the victorious party on 4 July to stick to current spending plans at a time when the performance of hospitals was arguably the worst in the history of the NHS, prisons were at crisis point, and councils were shutting libraries and cutting back on waste collection and social care.
Warning that few incoming administrations had faced challenges on such a scale and of such severity, the thinktank called on the Conservatives and Labour to provide a “credible vision” for dealing with problems that had worsened since Boris Johnson won his landslide victory in December 2019.
The election campaign has been dominated this week by the row over Sunak’s claim that Labour would need to raise taxes by £2,000 to fund its spending pledges. Both main parties are relying heavily on a growing economy to provide extra revenues to boost public spending, although Labour has said it will raise more money through taxes on private school fees, scrapping the non-dom tax status of wealthy foreign nationals in the UK and by a stiffer windfall tax on energy companies.
Friday’s report from the IfG, titled The Precarious State of the State, said the reality was that growth had stagnated in recent years, living standards had fallen over the course of the 2019-24 parliament, tax and spending levels were already at a historically high level and plans for post-election public spending were implausible.
Emma Norris, the IfG’s deputy director, said: “Few newly elected prime ministers will have had to take on such a long and painful list of problems. Many will require immediate attention, not least to rescue services on the brink of collapse. Almost all – from stagnant growth to a fragile civil service – will require serious reform over the next parliament and beyond.”
The bleak analysis came as the Institute for Fiscal Studies thinktank warned that more councils were likely to go bust if the next government stuck to existing spending plans, and the Local Government Association revised upwards its estimate of English councils’ funding gap over the next two years (the difference between resources and demand) from £4bn to £6bn.
On Thursday the rating agency Moody said the near-term outlook for the next UK government was for a sluggish economy and stretched public finances. Earlier this week the Resolution Foundation thinktank said the next government would need to fill a shortfall of £33bn in the public finances unless it was prepared to embark on a fresh round of austerity measures.
Both Labour and Conservatives pledged to cut public debt as a share of national income within five years, a commitment the independent Office for Budget Responsibility says can only be met by sticking to post-election plans for the public finances that involve a 1% real terms increase in day-to-day public spending.
With some areas of public spending ringfenced – such as the NHS, defence and overseas aid – sticking to the 1% target would require deep cuts in unprotected departments, such as the Home Office and the Ministry of Justice.
“Spending plans from April 2025 onwards for public services are very tight”, the IfG said. “Sticking to these – given existing commitments to fund the NHS workforce plan, increase defence spending, maintain overseas aid and expand free childcare – implies other areas of spending being cut by 2.6% a year in real-terms between 2024/25 and 2028/29.”
The IfG warned that the proposed tough spending plans came at a time when:
NHS waiting times had been the longest on record, and targets for elective care, A&E and cancer treatment have not been met since 2016. The number of people waiting for more than 12 hours in A&E has tripled to 1.5m since 2019.
People are struggling to see their doctor, despite more appointments being delivered than ever. The numbers of patients per GP had risen by 18% since 2015.
Prisons were at a crisis point. Capacity would be used up shortly after the election, resulting in further early releases of prisoners and delayed court cases. Even so, funding was set to fall by 5.9% each year relative to demand in the next parliament.
In the last six years, there had been six times the number of section 114 (“bankruptcy”) noticed filed by local authorities than in the previous three decades, forcing cuts to key services. Residents in those areas face rising council tax bills and vastly reduced services such as libraries, waste collection and adult and children’s social care.
“Current spending plans are implausible”, the IfG report said. “They assume further cuts to a criminal justice system that is on its knees, minimal change in schools or local government, and only small increases in a health service which has suffered a decade of insufficient funding.”
Historic underinvestment in capital meant public services were often short of critical equipment like CT scanners or forced to rely on outdated technology. Maintenance backlogs across schools, hospitals, prisons, criminal courts and the road network had also grown substantially and now totalled £37bn.
“All of this makes it harder for staff to do their jobs, reducing the productivity and performance of public services”, the IfG said.
The report singled out school performance in England as the key area in which England had seen improvement, in absolute terms and relative to international comparators.
