The state of public finances: what will the next government inherit?

Matthew Taylor

Hello and welcome to Health on the Line. Later in this episode, we have a fascinating conversation about the finances of the NHS, the fiscal situation. Last night in the last leaders debate, there was a question about the credibility of both leaders in terms of the promises they've made and the actual money that's available. So we'll be talking to Anita Charlesworth from the Real Centre at the Health Foundation and Carl Emerson from IFS about how the sums add up, what's likely to happen in terms of health spending after the election. 

But before that, I'm delighted that we're joined by Cate McLaurin, who's director at Public Digital, fantastic organisation. And Cate's here to talk to us about another issue that's really front of mind at the moment, which is the recent cyberattack, which has particularly affected the health service in South London, but which started with an attack on the Synnovis Pathology Service. 

So Cate, thank you so much for joining us on Health on the Line. 

Cate McLaurin

Thank you. Thanks Matthew for having me. 

Matthew Taylor

So Cate, just first question, tell us a bit about this cyberattack, what we know about it and how typical is it of the kinds of cyberattacks that public services and health service public services have been subject to over recent years? 

Cate McLaurin

Yeah, so I mean firstly thing I want to say is that my heart goes out to any leader who finds himself in this position of being the victim of an attack like this and sadly they are on the increase. 

My understanding is that at a very simple level, it's a ransomware attack on one part of the system, on a supplier's system, which is then having an impact on other parts of the system. According to the NHS's official updates, where by the way they're being really open and clear about the incident itself and the response that the system is having to it. I think they had to delay more than 800 planned operations and 700 outpatient appointments had to be rearranged. So you can see the impact on patients. 

But what you can also see from the updates that they're posting is that the way that the system is really coming together to respond and keep delivering services to patients because that's what the NHS does best. 

Matthew Taylor

And part of this attack Cate was around data and the threat of disclosing data. Is that right?

Cate McLaurin

Yes, that's right. So in a ransomware attack, quite often what the attackers will do is steal or say that they have stolen some data and threaten to release it unless you pay the ransom. 

Matthew Taylor

And I actually happened to be visiting University Hospital Lewisham this morning, Cate. And, they're still struggling with this. I mean, we read about these attacks on day one and then the news for the next two or three days, but it can take a very long time to get things back on track, can't it?

Cate McLaurin

Yes, so it's not just the first couple of weeks after the attack itself, it's the long-lasting implications and the time it takes to get back to where you were before. And there is also an opportunity to use the disruption that it causes to think about what you might do differently in the future. So to not put things back the way they were, but actually to put them back differently.

Matthew Taylor

This isn't the first attack, it's certainly not going to be the last. What are the lessons each time we have an attack like this, there's the opportunity to learn a few lessons. What would you say are the main lessons that we might even at this early stage of understanding this, that we might take from this nationally and locally? Are we, for example, investing enough in cybersecurity in the NHS? 

Cate McLaurin

So I think there's probably three things that I think are really important. I think the first is that it's really important to share our skills and expertise system-wide and to share the assets that we've already got system-wide and not hold onto them within organisations. 

And the reason for that is because the people who are doing the attacks, they're already sharing ransomware code vulnerabilities and opportunities that they've spotted with each other. So we're only going to be able to respond to these threats by sharing our experiences and our assets and our skills ourselves. 

And it feels counterintuitive, but I think the more that you can open up and share and build trusted relationships between organisations in systems, the better prepared that will be. 

And I think what you're aiming for is a culture of continuous improvement around cyber in the same way as you would for patient safety. 

Matthew Taylor

It's a really interesting point. We talk a lot about collaboration and there's this kind of terrible irony that the criminals are more effective sometimes at collaboration than we are. 

Final question, Cate, and it's been really helpful to talk with you. This is a kind of all-arms race, isn't it? This cyberdefense, cybersecurity, cyberattack. But technology is moving incredibly quickly. One thinks particularly of AI. 

Where do you see the next frontiers in this battle between those people trying to keep the public safe and those people trying to extort money? 

Cate McLaurin

The goalposts keep changing. 

So as technology changes, the risks change. So it's important to really think about what are the legacy systems that you've still got that are slowly becoming out of date. 

And you talked earlier, Matthew, about investment. I think it's really important to invest time in really understanding what is powering your system and how your services are being enabled actually by data and technology and that includes use of AI, but also how your supply chain is enabling your services to be delivered. 

And working with your suppliers to really get them into your ecosystem, your wider ecosystem around cybersecurity and safety in a way that allows them to contribute. Because I think suppliers can make a really big difference in either unlocking opportunities to improve that overall resilience or they can make it harder. And a really good example of something would be something like two factor authentication, which isn't new, but it's also still not universal and not all suppliers are compatible with modern authentication standards. And that feels to me like a really simple thing. 

Matthew Taylor

Thanks, Cate. And I think this is so important that every day I hear about a really interesting new technological applications. You're talking today about the really exciting outcome of trials of kind of ambient consulting and the possibility that doctors don't have to sit with their head down writing notes, but the interview can be recorded and analysed on an intelligent device. And know, could really improve the quality of care, improve the lives of clinicians. But again, that's another huge data source with lots of really confidential, sensitive information on it. 

So I did say as a final question, but this is the really final question. If I'm out there, I'm being approached by suppliers, I'm buying tech, what's a good place to go to understand what are the kinds of questions I should be asking to reassure myself when it comes to cybersecurity?

Cate McLaurin

The National Cyber Security Centre has got a really good toolkit to help people be good consumers of software, data, services and technology. I would start there. 

Matthew Taylor

Cate, thanks so much for joining us on Health on the Line. 

Cate McLaurin

Thank you. 

-------------------------------------------------------------------------------------------------

Matthew Taylor

So we've talked about one threat to the health service, cyberattacks, but there's another threat that's probably even more present in our minds. And that's the gap between the aspirations our politicians seem to have for what we can do in the health service and the resources they're committed to providing. We'll explore that next.

Today we're going to get right into the weeds of what kind of financial position an incoming government is going to encounter on the 5th of July. As the polls continue to show, that government is most likely to be Labour, so we're particularly going to explore the challenges that they're going to face. But all the parties have been pretty reluctant so far to explain how they're going to fund the many promises they've made. 

Are the spending commitments we've heard realistic?

Is there too much that remains vague? 

How quickly will things have to change after the election? 

Well, with me today to unpick all of this in the next half an hour or so are two people whose bread and butter it is to go where mere mortals future chances fear to tread. I'm joined by Carl Emerson, deputy director of the Institute for Fiscal Studies and Anita Charlesworth, director of research and the REAL Centre, Research and Economic Analysis for the Long Term, that's what that stands for, at the Health Foundation. 

Carl, Anita, welcome.

Carl, let me start with you because obviously you look across the whole of the public spending kind of waterfront. What has struck you most about the way in which we've talked about public spending and the funding of public spending during this campaign so far? 

Carl Emerson

I think probably the clearest thing is that despite having had a big increase in tax since 2019, and with that, a pretty big increase in public spending. It seems pretty clear that many public services are really, really struggling. And I mean, it's fair to say none of the main UK wide parties really want to grapple with the challenge of why is it the public services are struggling and the extent to which that's going to be an ongoing challenge. Essentially that's what happens when you've accumulated a lot of government debt, where that debt is now more expensive to finance. So you're spending more and more government money on debt interest. You've got a weak outlook for economic growth, so you don't automatically have a lot of tax revenue coming in the door. So you're left with this rather awkward situation of this high level of tax, struggling public services, and yet government debt on course to keep rising over the next few years. 

And perhaps it's not surprising that the main parties don't really want to be completely open about that kind of trilemma of whether are they more worried about taxes being high? Are they more worried about public services struggling? Or are they more worried about the fact that debt is on course to only just about stabilising five years’ time. 

Matthew Taylor

And what's your sense, Carl, of what the public is making of all of this? Because, you the whole campaign really has featured politicians being confronted by the gap between their aspirations and the fiscal reality. I wonder whether part of reason this campaign starts to feel quite muted - I don't sense a great deal of enthusiasm - is because nobody really believes what they're hearing. 

Carl Emerson

Yeah, I think there's two issues there. 

One is that we know from history that quite often we see things come along after an election that were not necessarily spelt out in the manifesto. I think sometimes that can be because a party's chosen not to tell us what it's planning to do and then perhaps gone and done it anyway. 

But quite often it's because the world's uncertain and events get in the way and you need to do things bit differently. Back in 2019, I think we could predict that perhaps the Conservatives had won that election, they'd end up spending more than what they claimed. But no one would have predicted that the reason, big driver of a lot of that would have been a pandemic and Russia's invasion of Ukraine. 

So shocks come along, but I think it does make people sceptical when they hear about, for example, promises not to increase certain taxes, as if politicians can guarantee that they know that they'll never have recourse to that particular lever, regardless of what comes along. 

I think the other thing that people not surprisingly struggle with is a sense of scale. If you read the words in the Labour Manifesto, I think it's fair to say there's lots of diagnoses of big problems, there's lots of promises of reviews. There's lots of challenges which they're saying that they would tackle. But if you put that against the kind of numbers in the manifesto, the actual measures, well, actually the package of tax rises they're proposing are really tiny. The specific spending increases they want to do, yes, they might make a little bit of a difference in those areas, but in aggregate, they're tiny. And if you took, for example, spending on working age benefits and state pensions, the Labour Manifesto basically proposes no change at all from what's implied by the status quo, despite a Labour government would be coming after 14 years of Conservative-led governments. 

Matthew Taylor

So, Anita, turning to you, and I'm going to ask you in a moment to talk about a very detailed piece of work the Health Foundation has published during the campaign about the gap that seems to exist in terms of the needs of the health service and what parties are planning. But as a former kind of Treasury insider, as someone who's observed many elections, what do you make of this kind of credibility gap and the refusal of politicians to entertain the idea that there is such a gap. 

Anita Charlesworth 

Yeah, I agree with Carl that it's almost the scale of the challenges. I mean, we see that in the health service as well. If you take any individual thing, if you say, could you get waiting times for elective care down in five years? You go, well, if that was the only problem I was fixing, I probably could. Could we do that alongside transforming care to meet future needs, tackling the major issues in mental health, sorting out primary care, addressing delayed discharges and getting urgent emergency care system to flow properly, sorting out long-term workforce, modernising our estate? 

Then you go, and then you almost get the sort of paralysis, don't you, of where do I start then? 

I think part of the answer to this, which is one of the things that Labour in particular are wrestling with in this campaign, is I think there are answers potentially to this if you take a ten-year-time horizon. 

So fundamentally, the root cause of our challenges we face at the moment is more than a decade of low economic growth. So we're living with the 2008 financial crash leading to a period of more than a decade where economic growth didn't really happen and living standards fell. And then a pandemic happened on top of that. And then you come out the pandemic and you get the Ukraine crisis and cost of living, but actually it's the cumulation of those things. And the idea that problems on that scale could be fixed in a couple of years is unrealistic. 

But if you start to look at a ten-year timescale, you start to say, okay, we need to address fundamentals in our economy. We need to increase our labour supply, get more people in work. We need to increase the productivity of workers because we need to get our economy really moving again. And we need to do the same. We need to recover our public services, but we need to fundamentally modernize and transform our public services.

When you look at that over a ten-year period, you think, okay, that's not easy, but there might be a path to progress. If you start to try to say in two years' time to everybody, everything will be great, that's not credible. But obviously, a party trying to win an election is quite nervous about being honest that actually this is a ten-year endeavour. You can see Labour very nervous about taking any win for granted and talking about two terms is quite difficult in that. 

But what's really important if they win and they come to govern is how do they govern? If they govern for the short term and the quick fix, there are no quick fixes. And then we're in this constant cycle that fundamentally the numbers don't add up. You're just putting out what appears to be the fire that's in focus, this week.

You have to have an agenda which is about really seriously tackling the fundamentals and you have to believe that the fundamentals in the UK are fixable, that we are a country that could be a prosperous country that tackles inequality, that works for people and delivers decently performing public services to underpin all of that. 

Matthew Taylor 

Well so Anita, there's a lot to pick up on there. Before I return to Carl, let's just talk about the scale here of the kind of gap which you've highlighted in a report, which is really about what the health service will need, notwithstanding the fact that obviously we want to reform and improve productivity or whatever, but our best estimate of what the health service is actually going to need over the next few years and contrasting that with the spending price. 

So just run us through the kind of highlights of that analysis.

Anita Charlesworth 

So what we've looked at is, and I think this is the big gap between what the parties are talking about and our numbers. 

So in the manifestos, people cost individual specific measures at the margin on the health service, sometimes quite a big margin, but at the margin on the health service. What they don't address is that healthcare is a moving target. Our population is growing, it's ageing most importantly, and we are living with more major illness and more complex mixes of illness and over the next decade that if anything increases because we’re the baby boomer generation and coming through into the period of their life when they have all of those multiple health conditions and they reach the end of their life. And that, if you like, that juggernaut of need is not addressed in the manifestos. 

So what we've looked at is we start with okay, what are those trends in the population, the ageing. Last year we did a whole bit of work with the University of Liverpool looking at what the likely pattern of illness is over the next decade and the fact that we're seeing big increases in the number of people living with multiple health conditions. 

Then we overlay on top of that the backlogs that we've got in care coming out of the pandemic and then also the desire we've had in the health service actually for decades but then most recently encapsulated in the NHS's long-term plan before the pandemic to shift the model of care, move everything upstream - prevent, anticipate, treat early, give more effectively, treat people holistically, put mental health on a much greater parity with physical health.

And then move to a system which is modernised in terms of its delivery. So a stable, fit-for-purpose workforce, training more staff, more appropriate mix of staff, modern facilities, digitised health service, tech-enabled enhancing all of that and high productivity. 

So if you put those things together, what our analysis suggests is that over a decade, you need funding to grow broadly in line with the level of funding growth that we've seen over the NHS's history. Now if you look at NHS in England's average, which goes back to the late 70s, that's 3.8 per cent. If you look at the UK all the way back to 1950, which is the long-run of data, but we only got that for the UK, that's 3.6 per cent. 

So our analysis says, in a way, we're game on with a functioning, performing health service, high productivity, if we've got a decade of funding growth of around that historic average focused on capital investment on out-of-hospital, on supporting the workforce and tech enabled. But in the first few years of that, you'd need more than that. 

Now, in one sense then, this is a good news story. With funding growing by the historic average, we could have a health service in five and ten years’ time that we can be proud of again. And all the polling is that that's what people want. Yeah. Yeah, actually we have a remarkable degree of public consensus and of political consensus about the health service that people want in this country. And we could do that if we grew our funding over a decade in line with the historic average. So if we did that for 75 years, why can't we do it over the next ten years? You know, we've got a short-term crisis, but that's not necessarily therefore fundamentally undoable. 

The problem is the money required, that gives you is much higher than at the moment the figures for overall public spending that are kind of baked into the OBR's projections. They don't come up with the assumption of the public spending, government does, and that both political parties have flowed through, I think, into their manifesto analysis. And so we end up then with a gap, and that's about £38 billion. And you can address that gap then in one of three ways: 

You could try and stick to your spending - envelope for public services as a whole and cut other public services. But that's almost certainly a really, really bad idea. That's a really bad idea probably for that long-term economic growth. Lots of things there are really important for economic growth. It's probably a really bad idea for the health of our nation as well. 

So the alternatives then are either you actually look again at those totals and Carl and his organisation and many others, including the OBR, have raised eyebrows about just how credible those totals are, but that means probably that the tax plans aren't really that credible. Or you accept that you're not going to have a health service, which meets people's needs, and expectations. And then you're into a whole different conversation. 

Matthew Taylor

Well, thanks, Anita. That expresses it very clearly. 

Now, Carl, there are various things I want to pick up on with that, but let's start with the two ways in which politicians tend to try to dodge that stark reality that Anita described, and that's first, productivity, and secondly, growth. 

So first of all, they'll say, well, you see, if we can increase productivity, then we can get the health service we want without that increase in spending. So let's just talk about that first, Carl. What is the scope for significant improvements in productivity in public services? 

Carl Emerson

Well, I don't think politicians are wrong to say we should try and improve productivity in public services if we can get more out of our public services for what we're putting in. That's obviously a fantastic result. And clearly there's been some concerns recently, in particular with the NHS, with why is it that there's more resources going in and yet on the measures that we see, outputs have not grown as quickly. 

So I don't think it's wrong to have a focus on this, but I think saying that that's going to be the solution, I think has two problems. 

One is, well, actually there's reasons to think that delivering much stronger productivity growth over a sustained period in a service that's labour intensive, like the health service, is going to be very difficult to do. It's not something we've typically done in the past. And I'll say there's reasons why in labour-intensive services, it can be really hard to eke those out. 

Secondly, even if you do find some certain productivity improvements that might materialise in getting better quality healthcare for what you're putting in, which is, as I say, a great outcome; that's what we want. But it doesn't necessarily release cash for the treasury to spend on perhaps other priorities. So it doesn't necessarily get you out of the problem, does it mean that we can put less money into the system? It might just mean, still a good thing, but it might just mean the money you're putting in goes further in terms of the quality that you're getting. 

Matthew Taylor

Yeah, I think they're both really powerful points that productivity can make new gains, but the parameters are not that wide. We're talking about half a per cent productivity improvement in a good year, maybe one and a half per cent in an exceptional year. 

Let's then, turn to the second argument, which is the one that Labour relies on more than anybody else, think, which is growth. And the way in which growth can get us out of this kind of conundrum, because obviously if the economy is growing, then tax receipts grow without you having to raise tax rates as such. 

Now, there are some signs on that the economy is picking up in various ways. We have wage growth, low inflation. Now some suggestions of picking increases in activity and consumer activity, for example.

What is your sense, Carl, of the likelihood of us being able to get into a significantly higher growth trajectory? And to what extent would that help to resolve the public spending conundrum? 

Carl Emerson

Growth can certainly make a big difference. Actually, Anita was saying that the numbers that she's been involved in suggest you might want to increase NHS spending in line with the average it's received in history. And you might say, why is that likely to be difficult to do? And I think there's two big reasons. 

One is, well, actually going forwards, the worry is the economy might not be growing as quickly as what it has done over the last 70 years. So, the economy as a whole is producing less and therefore giving anyone part of the economy the same kinds of increases as it's been used to could be challenging, as particularly challenging when it's the healthcare sector, which is a relatively big part of the economy. 

I think for the public finances, there's another challenge in that over the period since 1950, successive chances have been able to cut the defence budget in order to increase the NHS budget. And that strategy had to come to an end at some point, and it seems pretty clear that it's come to an end now.

I mean, more generally on growth, we've seen this terrible period of growth since 2008. We know that forecasts are uncertain, but the OBR's forecast suggests that growth is not going to be spectacular over the next few years. But actually, their forecasts are actually more optimistic than most. So compared to most city forecasters, compared to the Bank of England, the OBR does have a more optimistic view, which I think poses some risks for whoever's Chancellor in the autumn, because I think it's quite possible, regardless of what the new government is setting out in terms of policies, think it's possible the OBR will say, actually, we're going to downgrade our growth forecast because we're no longer comfortable being a little bit of an outlier compared to other forecasters. 

Now, I don't think it's all doom and gloom. I think there's lots of policymakers can do to bring about better growth. I think there's lots of areas of policy where we can do better. I think since 2016, successive governments, for a variety of reasons, have struggled to focus on the longer term and hopefully after this election, whoever's in office will be able to have that sort of ten-year focus that Anita was talking about. And by having that, I think you can consistently pursue policies in a number of areas that could bring about stronger growth. 

But I think the real challenge there is to bring about stronger sustained growth, you not only have to do the right policies consistently, you've also got to be very patient. It won't materialise very quickly. So I don't think there's any guarantees that even if you are doing the right thing, you'll be reaping the rewards in terms of a bigger economy, bigger tax revenues in three, four, five years’ time. 

That's not to say that won't happen. You might get lucky. You might find that growth just rebounds for external reasons that aren't to do with your own policy changes. But I don't mean you can rely on luck. And if you are doing the right thing in terms of policies, I think there's a good chance you have to be much more patient in saying that's going to be okay, it's going to fix our problem in the next two or three years’ time. I think it will take a lot longer to materialise. 

And you can see that with perhaps one of the things Labour points to most. It's liberalisation of planning. That's certainly one of the areas economists would point to and say, yes, get more homes built in the UK, get them built in the parts of the UK where people want to live and work. But passing legislation that liberalises planning laws is one thing. Actually getting the sustained growth that comes on the back of that is clearly going to take quite a while to flow through. 

Anita Charlesworth 

Can I come in as well though? One thing that I think is really important that an incoming government should have a look at very urgently is the spending plans that are baked into the OBR's full costs at the moment on capital have public sector capital broadly flat in cash terms. 

Now, I think you can argue that actually being cautious with the revenue budget, you know, there is a case for that. But actually, I think most economists would argue that one of the problems that the UK has is low capital investments, levels of capital investment, that's important for our growth. So actually public sector capital investment can be an enabler and a supporter of growth. It's not like public sector activity is a drain on growth and private sector dynamism. They often go hand-in-hand. 

The other thing is actually if we want efficient, productive public services, then capital investment again is really critical. And so if you were thinking about a pro-growth strategy and a pro-productivity in public services strategy, I would argue that the biggest area to really look at early in the parliament is capital investment. I'd also argue that we could and should think about some of the prevention spend in a similar way. And these are things as well that we know take a long time to pay back. But if you get them right, they are potentially transformative. And Carl's colleagues have done amazing work following the Sure Start programme through, which we now know delivered huge benefits and was very effective. And those are the sort of things that can influence trajectories and where a patient state that takes the long view and prioritises that investment can make a really big difference. 

And actually I think there would be a lot of support for that sort of careful targeted focus spending. 

Matthew Taylor

So Carl, takes me to this question which Anita has got into now, is how we spend the money. There's a couple of other kind of potentials here. Labour talks about mission-driven government. I mean, there wasn't a great deal about that in the manifesto, although it was reasserted. But we understand that Sue Gray and others have been thinking hard about what it might mean to have the whole government approaches and health is one of the five areas where they've promised that. 

What scope, Carl, do you think there is for thinking about health spending differently? I think there was some excitement that the OBR treated the investment in WorkWell as slightly differently than they would treat normal spending. They recognised the WorkWell as an initiative to help people get back into work, spending on, on talking therapies, that there was a credible argument that this would save money.

Is there more scope, do you think, for us to understand health investment as having a productive capacity, particularly when we've got nearly three million people out of work for health and care related issues? 

Carl Emerson

Yes, you say the Office of Budget Responsibility, which produces the Chancellor's economic and fiscal forecast has in recent events started to take more account of what economists called supply side effects saying, well, actually, if you do this tax change, if you do this spending change we might expect in a sustained way, for example, more people to be in work or more investments be taking place in the UK. And I think steps in that direction are certainly welcome. 

I think whoever is in office after the election is clearly going to have to think very carefully about the huge rise in the number of individuals receiving benefits on account of having been disabled or having health conditions. And that's clearly a big driver of the increase in economic inactivity we've seen and should be an important focus whoever's in office and the NHS clearly has got to be part of the solution there. So I think thinking about these things is the right thing to do. 

I think thinking across government departments, so there you've got the interlink between what's going on in the NHS, what's going on in the Department of Work and Pensions, how we're supporting individuals who are receiving benefits, but we want to help them get into a better place where they are able to look for work and enter the labour markets. I think there's lots of areas where there's more scope for that. 

I think Anita's right to point to the public sector investment plans and how that's going to be a challenge. They do imply cash freeze over the next few years. Labour has a plan to increase investment spending, but it's entirely focused on green investments. Now that may well be a good thing to do, but I think it's important to note if you're doing green investments, you're picking those investments not because of the role they have in terms of economic growth, you're picking them because they're to help you transition to net zero. 

So it means that under a Labour government, at least under the plan set out in their manifesto, and also under a Conservative government, we would see non-green investment looking pretty squeezed, being cut in real terms, being cut as a share of the economy. Doesn't look like a recipe for growth, doesn't look like a recipe for improving productivity and public services. I think that's one of the things that we would certainly be raising an eyebrow on if that was to stick in the spending review that we're expecting in coming months.

Matthew Taylor

Anita, there's another aspect, isn't there, of public spending that we feel particularly acutely in the health service, and that's short-termism. We've had this kind of boom and bust. You'll know the figures better than I do, but we had, what was it, kind less than 2 per cent, one and half per 2 per cent during the austerity years, which is obviously a long way below that kind of 3.5 per cent that you described as being the kind of trend. Then, of course, more money goes in during covid because it has to and in the kind of couple of years after that, but then this year we're back down to less than 1 per cent in real terms. 

I talk to health leaders and they often say to me, know, if they'd rather have slightly less money, but absolutely know what they're going to get for the next three years, then this situation of not knowing month to month, and of course, currently in the health service, there's a widespread assumption there'll have to be bailout, yet another bailout, at some point in this financial year because the situation facing so many systems and trusts is so difficult and indeed many seem to be agreeing to things, you know, with their fingers crossed behind their backs. 

So how much hope do you have as a former treasury insider that we can get out of this terrible short-termism? 

Anita Charlesworth 

Yes, well why don't I be optimistic for a bit because otherwise we could get quite gloomy. So reasons to be optimistic.

Both political parties now have signed up to having a long-term workforce plan and making long-term workforce planning part of the way we do health policy. Now, let's see if it sticks, but that's a really, really important innovation because actually we spend a large chunk of our money on the workforce, having the workforce, knowing where they're coming from, resourcing that workforce, that's really critical. 

So actually the penny, I think, has dropped and the consensus in politics now is that we need to get serious about planning our workforce for the long term. Now, interestingly, the long-term workforce plan does imply increases in funding of around the historic average. So to some extent in starting up to that workforce planning, they've kind of signed up to this historic average. It's just bits of government haven't joined up.

I'm desperately keen that we get a long-term capital plan. So when we come to do this spending review we're expecting in the autumn, I think one of the things the Treasury really needs to think about and the Income with Treasury team needs to think about is whether you have the same timeframe for everything. I do think we want three years if possible for public services, generally for day-to-day budgets, so you start to plan that. But actually, we want a ten-year capital plan and I think we want a ten-year prevention plan because things like SureStart only make sense when you start to have that longer timeframe - and you don't build the infrastructure, and you don’t build the infrastructure, and I don't just mean the physical infrastructure, I mean people with the connections into communities, the skills and understanding, the deep roots in to knowing how to make change overnight. You need to build and sustain these types of activities over the longer term. 

So I would like to see a approach to the spending review which actually has different time scales for those critical different areas. And then the other thing that is a perversity is that we often in discourse blame the Treasury for everything, but quite often they set a three year budget and then a department gives its public services a one year budget. Or an ICB might get a three year budget, but then its providers only, and in particular if they're VCS provides, only get a short term budget. And then they're like, well, hang on, but we can't do transformative change in that context. So we need to set budgets with time periods that make sense for them and then in the spending view and then cascade that longer horizon through our public services. And local government, which is a critical part in all of this, they live hand-to-mouth. So how can they be a partner in prevention if they don't really know how they're going to get through the next six months? 

Matthew Taylor

Yeah, thanks, Anita. 

Well, we're drawing to a close, and we haven't even touched really, you've just touched on local government, we haven't even mentioned social care, which is of course another huge challenge for an incoming government. 

But Carl, I'm going to give you the last word, because we're running out of time. I just want from you, not a fair question really, but a kind of prediction. Let's assume Labour is going to win. How is it, do you think, that Labour is going to be able to shift the discourse that has existed around the election and talk in a different, more realistic, maybe, you know, as Anita said, more long-term way about this. We kind of know that we've had fantasy economics during this election campaign and things have got to get real. 

Do you have a sense of how they might do that? 

Carl Emerson

Well, I guess I'm optimistic that actually whoever is in office after the election, if it's a majority government, that they will hopefully be able to focus more on longer term. As I said before, think successive governments since 2016 have struggled with that, sometimes for self-inflicted reasons, sometimes because of external shocks that come along. So I one important thing is while let's fingers crossed hope the UK avoids some big external bad shock. We've had plenty of those in recent times, but I think I am optimistic that if that can be avoided, perhaps a new government could start to have that ten-year horizon. I think we always want our politicians, our policymakers to behave as if they're going to be in post for ten years plus, even if they suspect that's not likely to be the case. So I'm hopeful that that could start to be put in place. 

And I guess I think perhaps the big unknown, the big thing that's really not clear to me is, as I mentioned before, the kind reading of the Labour Manifesto, is it the words in the manifesto that will dictate how they govern, where there's lots of diagnoses of problems, lots of connectivity between where they see different problems relating to each other, all of which is very welcome, all of which the party has said will be under review? How will they respond when those reviews report? What course of action will they take? Is it that that really matters in the manifesto, or is it the numbers and the scorecard where actually the ambition just relative to the status quo looks much, much more modest?

And I guess the big unknown there is what happens when those reviews start to report back and they say, these are the things you need to do. And some of those things might require, for example, more taxpayer provided public service spending. Would Labour be up for that or is that not on the cards? 

Matthew Taylor

Well, thank you, Carl. Well, we at the Confed are heads down. If you were to walk into the Confed office now, you'd find people with their heads down working in incredible detail on the past years manifestos in order that whoever wins the election, we can go to them and talk about how we think the system, we in the Confed, ICSs, providers can best help the government achieve what it needs to achieve. But also to give that government some insight into some of the really big challenges that we have got to address pretty quickly. Well, and in that work, Anita and Carl, your insights will be very valuable. 

Thank you so much for joining me on Health on the Line. 

Anita Charlesworth 

Thank you. 

Carl Emerson

Thank you very much.