Delay to the comprehensive spending review would leave public services in limbo

Government has never more resembled the grand old Duke of York—marching his men up the hill only to march them back down again: working from home, back to the office, then back home again…

In July, Rishi Sunak announced that there would be a Budget and multi-year spending review this Autumn. This was to be the chancellor’s moment to chart the economy’s path to recovery as Covid-19 cases fell. Whitehall geared up and began marching up the hill. Just 10 weeks later, the Budget has been cancelled and it looks like the spending review will be watered down to a one-year funding allocation, with decisions about funding for public services for the rest of the parliament postponed.

While these decisions are understandable, the longer the delay, the more serious the consequences.

The last time there was a proper spending review setting out long-term plans was 2015. Brexit, three general elections and a global pandemic have resulted in years of short-term, hand-to-mouth management of public services.

Even before Covid-19, a decade of austerity had taken its toll. The spending review was already looking tough as the gap between expectations of extra spending and the money the chancellor had to distribute was worryingly large. The public have had enough of cuts, and the government promised they would end; declaring before the election that it had “turned the page on austerity.” As recently as June, the prime minister said there would be “no going back to the austerity of 10 years ago.”

But Covid-19 is a huge headache for the Treasury, blowing a massive hole in the nation’s finances. The economy will have shrunk by 10 per cent this year and borrowing is projected to reach £325bn. The path to recovery will take time. The costs imposed by the virus are already very high. This is most obvious in frontline services like the NHS, with £15bn for PPE and £10bn for test and trace alone, but the pandemic’s impact is far and wide, with the Treasury having to step in with billions for transport, employment and business support and education.

With uncertainty about how long and in what form the social distancing and lockdown measures will need to last, there is immense economic uncertainty. The Institute for Fiscal Studies has argued that this makes it an extraordinarily difficult time to be formulating public spending plans. A one-year process is almost certainly the only realistic option available to the chancellor. But without a clear funding settlement, there is a risk that growing health inequalities widen further. Deprived areas are bearing the brunt of the virus and its economic impact. Long-term investment decisions can’t be put off forever. Eventually, a multi-year commitment to invest in these communities will be needed to ensure these areas don’t fall further behind.

The NHS has been protected from the full force of austerity and before the pandemic was given a commitment from the government to extra funding up to 2024. But that is only for part of the health service budget: the money to cover day-to-day running costs. Existing spending plans don’t factor in patients needing long-term support with the after-effects of Covid-19—including growing demand for mental health services—nor the rising backlog of patients waiting for other hospital care, with half waiting more than 18 weeks for treatment. There is no plan for investment in the local public health services, training new doctors or nurse or capital investment.

Years of failure to plan for enough staff, capacity and local public health infrastructure left England alarmingly vulnerable. Going into the pandemic the UK was in the unenviable position of being at, or close to, the bottom of the European league table on the number of doctors, beds and scanners per head of population. That is why the concerns about the NHS being overwhelmed were so great. The government needs to develop a more resilient service. The right time to have done that was years ago, and while history can’t be rewritten, we can learn from it.

Beyond the NHS, a one-year spending review creates particular problems for social care. Over half of all excess deaths have been among care home residents. The staffing model—multiple jobs, low pay, high rates of zero hours contracts with low levels of training—is one of the factors that placed care homes, and people needing support in their own homes, more at risk. Fixing social care will mean transforming this model—more permanent employees, better pay and terms and conditions, and greater investment in training. But it’s hard to see how work to seriously transform social care can get underway in earnest if we are still locked in a cycle of inadequate, short-term funding.

The grand old Duke of York famously left his men halfway up the hill, neither up nor down. Vital public services risk being left in a similar limbo—hopefully out of the immediate crisis mode of the pandemic but without any clarity about the future.

Until we have a multi-year spending review, the risk is that there will be continued and growing strain on the very public services we are relying upon to fight the virus. A full multi-year review will need to be very high on the chancellor’s to-do list for 2021.