The Week in Public Services: 22nd December 2020
By: Graham Atkins
Tags: Predictions, Nhs Finances, Prison Reform, Public Finance, Local Government

This week: ‘following the science’; the future of NHS finances; and evaluating my 2020 predictions

Well it’s not quite the festive period anyone was expecting, but I hope you’re all getting some kind of restful break. Stay safe, whatever you’re doing — the week in public services will be back in 2021.

In the meantime, there’s lots of things to cover in the run up to the end of 2020. My colleagues Cath, Tom, and Alex have published a report on science advice during the pandemic and concluded that “the government’s response to the pandemic has too often been undermined by misunderstanding the role of science advice and using it inconsistently”.

I know I’m biased — but I think this is one of the best things the Institute has published this year. It’s a comprehensive overview of scientific advice given during the crisis, with clear recommendations for improvement. The biggest single problem they identify, in my view, was that “ministers put too much weight on SAGE — relying on it to fill the gap in government strategy and decision making that it was not its role to fill […] ministers waited until the scientific evidence was overwhelming rather than using it alongside other inputs to make their own judgements […] this appears to have been a big factor behind the costly delay to the first lockdown”. In retrospect this pretty much perfectly encapsulates decision-making in March. Not so much following ‘the science’ as trying to pass the buck to the scientists. Some things have gotten better since (SAGE is now much more transparent, publishing the notes of its meetings) — but other things have not — the publication of economic advice is still infrequent.

Here’s a final puzzle for 2020: did the UK really have the biggest economic hit of the OECD countries as a result of Covid-19?

The simple answer is yes. The longer answer is: well, what even is GDP anyway? I was absolutely fascinated when I read this story (£) from Simon Briscoe. The way that the UK measures output in public services either means that Britain’s public services’ response to the Covid-19 crisis has been the worst in Europe or our GDP data, the main measure for the size of the economy, is distorted relative to many other countries.

The tech-y reason for this is that the UK measures the output of public services as the total of their activity, a measure of how much stuff they produce (output) rather than the money or resources going in (inputs). The government stopped collecting certain kinds of activity data during the pandemic, making it harder to measure output — particularly in healthcare. The ONS made some adjustments with novel data sources in education but not for healthcare. Any choice has shortcomings but the ONS’ solutions are still debated. If you want to get into the weeds of input and outputs, check out the methodology of our annual Performance Tracker.

Pffttt, whatever, you might scoff. So what if nations measure things differently? What differences does it really make? Well, if the UK had adopted Spain’s approach (assuming that input = output in the public sector), the decline in UK GDP in the first six months of 2020 would have been 16% rather than 22%. The main takeaway here is to always look under the bonnet of the statistics you use.

Last but not least, this lovely essay from Michael Sanders explores why we obsess about mavericks and ‘disruptors’ in public policy. He argues that “there is a correlation between lasting, positive, impact in the public sphere and on our state of understanding of the world, and kindness”. Look, it’s not exactly a rigorous randomised controlled trial and it relies a lot on anecdote, but y’know what? I hope this to be true and it’s a good read. We should all try to be more kind in 2021.

Health and Social Care

Andy Cowper’s final, eviscerating, column of 2020 is a forensic if depressing summary of the recent news. Perfectly timed to back up his analysis of contracting, The Guardian revealed yesterday morning that PPE Medpro was awarded £122m for surgical gowns at the end of June without going through a competitive tender process — that’s quite far beyond the first wave to still be using direct awards…

In other news, the latest statistics on Scottish drug deaths show that the number of annual deaths rose to 1,264 — double the number in 2014, and the worst rate in Europe. The key question is, of course, why. The reasons are still contested, but this BBC article helps — the rise in deaths has been particularly stark among older drug users, which may reflect the now-ageing population of drug addicts who have been using heroin for decades.

In the research world, there has been a lot of new work:

If you can’t get enough of the press conferences, Chris Witty has a bonus Christmas present for us all: his annual report has forensically analysed health trends — lots of statistical detail to nerd out over in here

The Office for National Statistics have blogged about what they are doing to improve social care statistics. Good: they need improvement, as I wrote last week!

Gabriella Conti has published a helpful briefing about health visiting on the eve of and during the pandemic. Great twitter thread summary — staff redeployment started as early as 19 March 2020 and was still ongoing on 1 September in many local authorities!

The Health Foundation have published a helpful report on how the Covid-19 vaccine is being prioritised. There are many legitimate ways it could be prioritised but, as they note, “the challenge now is for the NHS to overcome the barriers — logistical and attitudinal — to vaccinating the over 25 million people on the initial priority list”. Transparency always helps — see my colleague Tom’s tips here

The Nuffield Trust have looked at the ‘remote care revolution’ during the pandemic — and what we know so far about the effects of the rapid rollout of remote care. The clearest findings seem to be that the rise in remote appointments is correlated with greater medicine prescriptions (possibly risk-averse GPs?) and that GPs are more likely to refer people to hospital care after a remote appointment than a face-to-face one (sidenote: the visual storytelling is fantastic)

Other researchers at Nuffield have looked at the impact of Brexit on healthcare in the UK…it’s not a pretty picture

Over in social care, Simon Bottery outlines the shortcomings of using the national living wage alone to increase pay for care workers. Fast pay increases for care workers on the minimum wage has often come at the expense of slower pay rises for experienced staff, and pay “has not increased as quickly as in other [comparable] sectors like retail” — the latter of which will bite as the Covid-induced recession starts to slow down and private sector employment begins to rise again.

As if to further make the point, this Resolution Foundation report on statutory sick pay concludes that “the early evidence is stark: during the first wave of Covid-19, the Office for National Statistics (ONS) found care homes that paid sick pay were significantly less likely to have seen Covid-19 cases among residents in the early weeks of the pandemic”.

David Brindle has also written an article looking back on his 30 years of covering social care. His conclusion? “Ministers should take this particular leaf out of Thatcher’s book”. I won’t spoil why — you should read the article in full to find out.

Finally, it’s hard to look beyond the next week of the pandemic at the minute, but what might 2021 hold? The King’s Fund have published briefings on integrated care and NHS finances.

Both are very interesting, but it’s worth dwelling on NHS finances — that is to say, the way NHS organisations are paid and the incentives these create — for a moment. As the Institute argued earlier this year, the way the NHS is funded changed pretty radically overnight during the crisis — and it was already moving away the ‘choice-and-competition’ approach to allocating funding before the crisis hit. What seems like an arcane topic is actually really important for what does — and doesn’t — happen in the NHS. Any changes would have big implications for the way the NHS works.

There’s so much good stuff in this, not least this wonderfully short takedown of why competition in the NHS cannot be the main way to improve performance: “organisations can be rewarded but not so much that this creates a two-tier NHS and organisations cannot suffer to the extent that it has a major impact on either patients or staff”. Put simply: governments will always be tetchy about following market mechanisms through to their logical conclusions. They also note that the funding formula for NHS commissioners is in many ways more transparent and clearly-defined than in other public services (a point which is under-rated, in my opinion — ministers at the Department for Education would baulk at the idea if schools funding formula were to be set in a similar way). It also contains possibly the best short history of the NHS since 2010 and why it has felt like perma-crisis since 2015 in the ‘Get the balance right’ section. Well worth your time.

For those wondering what NHS Trusts want from a new financial regime, Chris Hopson has set out what they want here.

Children and Young People

I will only post one piece about schools policy at the minute: this article by Melissa Benn arguing that the latest policy to make schools mass testing centres has not been well-thought-through. Scotland, for what it’s worth, has decided to delay pupils’ physical return to schools in the new year by two weeks (though this is likely to be out-of-date by the time you read it). Ignoring the noise around recent school decisions, Education DataLab have been doing useful research looking at:

Progress 8 — the new exam target introduced in 2015/16 and designed to encourage schools to work more equitably and not just focus on children on the ‘borderline’ of 5 A*-Cs. It’s good news! The researchers look at test scores of below-borderline, borderline, and above-borderline children before and after the introduction of Progress 8 and find that educational inequality, the test score gap between disadvantaged and non-disadvantaged, falls. They theorise that this is because the ‘below’ group sees the largest improvement in scores and disadvantaged pupils are disproportionately found in this group. The effect is small but finding any effect on an effectively ‘free’ reform is pretty impressive.

School absences: they were high and growing in mid-December — the nifty data tool to sort by local areas in this is really useful!

The Education Policy Institute have also looked at the additional costs schools have faced as a result of Covid-19, and found that half of the schools they surveyed had to use their reserves and half were unlikely to balance their budget by the end of the year. Schools in disadvantaged areas faced the largest pressures — which will make levelling up harder. Short Guardian write-up here.

Looking beyond the UK, Chris Cook wrote a great article on why pupils in the UK went back to school after the summer holidays but many pupils in the US did not. (TL;DR: the structure of US education, teaching unions, and the culture wars).

Law and Order

In criminal justice news, the government have promised to create nine more Nightingale courts to increase court capacity to process trials, most of which are set to open in January 2021.That’s good news for the court backlog but there are a lot more basic questions to answer, as we at the IfG (and now the Commons Justice select committee!) have been saying.

The Police Foundation have looked at how the police in England and Wales responded to Covid-19 and concluded that the use of a national coordination centre through Operation Talla provided police forces with critical tools and information…but there is a general frustration at the poor performance of the criminal justice system during the pandemic and a concern that this could impact on public confidence in the police, as well as the courts and the CPS.

In other research, Rob Allen looks at the Sentencing Council — the independent organisation set up in 2010 to promote greater transparency and consistency in sentencing– and what it could do to reduce the size of the prison population. He finds that the average custodial sentence length for several crimes — including theft, drugs, and weapons possession — increased after 2010, and argues that the Council has not done enough to consider the costs and benefits of custodial sentences when providing guidelines for judges.

He recommends that the government expands the remit of the Sentencing Council, and that the council “conduct a dispassionate overview of the whole range of sentence levels with a view to reducing the unnecessary and ineffective use of imprisonment and give greater priority to encouraging the use of effective non-custodial measures including restorative justice”. If you haven’t got time for the whole thing, Russell Webster wrote a great summary here, too.

Looking forward, Danny Shaw has written a thoughtful blog on what 2021 holds for criminal justice, predicting teething problems with the new publicly-run National Probation Service (seems likely), the reintroduction of police targets (less sure about that), and tangible progress on building new prison places (good luck with that — plans haven’t followed schedules in the past…)

Local Government

Kate Ogden and David Philips of the IFS have looked at the English provisional local government finance settlement for 2021/22, and find that the vast majority of additional core funding (that is, extra money that is not designed to cover Covid costs) comes from increases in council tax bills, not extra grants from government. In theory, this might amount to councils having a tiny bit more money than in 2015/16 in real-terms, but in practice there are likely to be more people claiming means-tested council tax discounts (due to higher unemployment) so that might swallow up whatever small increase in core funding that there is.

Looking at the bigger picture, this settlement continues the trend of local authorities becoming more reliant on locally-raised council tax to fund their spending over the last decade (see this IfG explainer). Councils continue to wait on reviews of social care, business rates, post-Brexit regional development funding, and ‘fair funding’ (distribution of government grants). For finance directors, it’s still going to be like driving towards a cliff without headlights…

Overall: councils are probably going to have find ways to make money go further next year — and that’s before we consider any expansion of services or rises in demand. A typically comprehensive IFS analysis of the spending figures — always worth reading.

A final word on the dangers of predictions

2020. What a year, eh? Regular readers may remember that I like to start each year with five falsifiable predictions. Sadly, I often don’t do that well, but I find it a useful exercise to set out my thinking — here’s how I fared this year:

1) “The government will promise that every department a real-terms increase in its budget over the Spending Review”

Ah, so close! As the Spending Review only covered one year (back in January, I was assuming three to five), you might have thought that increasing funding between 2020/21 and 2021/22 is a bit of an easier target for the government to hit. For the purposes of evaluation, I’m going to treat this Spending Review as covering 2020/21 and 2021/22 because 2019/20 had already finished by when it took place — though I openly admit that if you measure from 2019/20, it is true that the government has given every department — bar the Foreign, Commonwealth and Development Office — a real-terms increase in its budget.

Looking just at core funding for day-to-day resource spending (excluding extra on coronavirus), all departments have a higher real-terms budget next year (2021/22) than in this year (2020/21) apart from:

The Cabinet Office

The Department for Culture, Media, and Sport

The Department for Work and Pensions

The Foreign, Commonwealth and Development Office

While the big public services departments got large increases, some of the lesser-noted ones will see small cuts. I was wrong to assume that “as the government has claimed it will end austerity and halted any further cuts to departmental budgets in the next financial year, it will find it difficult to reverse course”. Turns out it’s easier to reverse course than I thought.

The other thing I got wrong here was assuming that the overseas aid target was too politically controversial to abandon. Proof that, even if you like it, putting a ring(fence) on it won’t always do the trick. Sorry, Beyoncé.

And it’s worth noting that this wasn’t exactly a Treasury bonanza for the departments that did get increases, however. As my colleague Tom noted at the time, the November Spending Review plans for ‘core’ (i.e. non-coronavirus-related) day-to-day spending will be around £10bn lower next year than originally planned in March. The biggest loser from this is the overseas aid budget, cut to 0.5% of national income, while the partial public sector pay freeze also reduces government spending. Spending restraint — as least back in November — hasn’t been abandoned.

Verdict: incorrect

2) “The government will break its fiscal rules this year”

Fiscal rules — how quaint! I can safely say that I didn’t foresee 2020 would herald the sharpest decline in economic output since 1709, or that the government would assume responsibility for paying the wages of most employees who couldn’t work from home.

What I actually thought was that the government’s public spending promises were going to bring it into conflict with its tax promises and fiscal rules, and that the government would choose the extra cash over its tax promises and fiscal rules when push came to shove. But the pandemic essentially obliviated that choice. The (entirely justified!) level of extra spending to respond to the pandemic simply meant the fiscal rules stopped mattering around the middle of March.

You can see exactly how increased pandemic increased spending and lowered tax revenues this year in this fantastic chart from my colleague Tom.

I’ll give the final word to the Office for Budget responsibility on this one: “all the legislated deficit and debt targets are more likely to be missed than met based on our central forecast by very large margins”. Indeed, the OBR estimate that the structural deficit (annual borrowing) will be 18.6% of GDP this year — the target is 2% — and it’s pretty remarkable when put in context too:

Verdict: correct

3) “Performance against the four-hour waiting times target in the English NHS will only start to turn around in May 2020”

I almost spat out my coffee when I read this one — it reminded me just how different things were in January. When I wrote this, I thought that the 2019/20 winter had been particularly bad, and that it would take longer to recover waiting time performance in Accident and Emergency than usual.

In fact, the pandemic pretty swiftly put an end to that, due to the drastic reduction in the number of people turning up at A&E (which, of course, brought its own challenges and worries about people staying away from A&Es when they should have sought medical attention):

Regardless, the share of A&E attendees admitted, transferred, or discharged within four hours did improve a bit — although perhaps not as much as might have been expected given the huge reduction in demand:

This, for me at least, was a bit of puzzle: if demand reduces so quickly and deeply, why does it still seem to be difficult to admit, transfer or discharge accident and emergency patients within four hours? Back in April, I looked into this trend, and here’s what I think explains it:

More people turning up to A&E departments have needed to be admitted…: of the people turning up, a larger share have needed to be admitted this year (A&E attendances fell 48% between January and April 2020; A&E admissions fell only 38%)

…while supply was constrained: spare beds was in short supply before the pandemic, and only got tighter as hospitals filled up with coronavirus patients

Perhaps the most interesting thing to take away from this is that the number of patients turning up isn’t the main factor when it comes to A&E performance. A more likely culprit is bed availability and flow through A&Es to the rest of the hospital — you can’t admit patients from A&E if you’ve got nowhere to put them. Indeed, NHS England chief executive Simon Stevens acknowledged that the NHS had too few acute beds back in June 2019.

This is not a novel observation — Steve Black, has convincingly argued that rising demand is not a good explanation for A&E performance for quite a long time — but this year should hopefully prompt politicians to be more curious about why it’s harder to see patients within four hours in A&E. The proposed new A&E targets, Steve argues, won’t do that…

The UK already had many fewer beds than comparable wealthy countries going into this crisis — so let’s hope that’s remembered when the government is thinking about how to build a more resilient health system.

Verdict: spectacularly incorrect

4) “The government will promise to turn the remaining 25% of maintained secondary schools into academies”

An odd prediction, you might think — academies have basically been off the political agenda since Justine Greening’s white paper in 2016. Fair point — but I thought that might change as Dominic Cummings re-entered government. Cummings was a prominent advocate of academies while he was Michael Gove’s special advisor at the Department for Education. But, as a colleague mentioned to me, I made one crucial error in this prediction: assuming that Dominic Cummings was as interested in governing as he was in campaigning.

Verdict: incorrect

5) “There will be fewer assaults on prisoners and prison officers this year than last”

Last but not least, this one was right. Happy to have called this one correctly — and here’s the chart to prove it:

The reasons for the decline in assaults, however, was quite different from what I had expected. I had thought that there would be a reduction in assaults because of the injection of extra money and staff in 2016, which was always going to take a while to translate into experienced staff who are able to maintain order. There might have been a bit of that going on but the main factor — as this report from Nick Hardwick argues — is more likely to be the much-increased amount of time prisoners were spending in their cells and reduced contact with other staff and prisoners.

Put bluntly: you can’t assault other prisoners and staff if you’re stuck in your room for most of the day (although there are obviously other huge problems this creates and it cannot be a sustainable solution).

Verdict: correct

Overall: 2 out of 5 — albeit where my reasoning was wrong on almost all counts! No improvement on my 2019 predictions (2/5). Let’s hope for better in 2021 — I will set out another five falsifiable predictions next year