The papers are littered with stories of public sector doom and gloom – job and service cuts, threats to the Big Society, and Ken Clarke's recent warning that real effects will start to be felt in middle England this year.
The economic justification for this is 'pain today and gain tomorrow'. The government argues that the deficit is unsustainable, raising borrowing costs and feeding a bloated and inefficient state, which in turn stifles the private sector and civil society. Public spending must be cut to get back on track and create the right conditions to deliver growth and innovation in the private sector, and in turn, the jobs and well-being that we all want.
But how will this affect health and wellbeing? Sir Michael Marmot's review, Fair Society, Healthy Lives, and the rich resources and analysis that support it, provides evidence of how state intervention and spending affect our life chances and health: from the importance of early childhood development to our access to green spaces.
But this sort of evidence does not tell us how health and wellbeing are affected by the overall dynamics of economic growth and decline, or how and at what level governments choose to tax, and spend the revenue they collect.
In general, economic growth is good for objective measures of health, but once we get past a certain level of income we don't seem to get much happier – the effects of economic growth on our well-being tail off once our basic needs are met. Clearly recessions lead to unemployment and anxiety, and there is strong evidence this is not good for the physical or long-term mental health of those affected or their families. Strangely though, and particularly in rich countries such as the UK, recessions are sometimes associated with a reduction in health inequalities. Recessions tend to affect everyone in society to some degree – not just the poorest. In the presence of decent welfare safety nets, those on higher incomes therefore fall further before hitting that net. Over time, this can be reflected in a reduction in inequalities in mortality and other indicators of health.
As a nation this points to our future health being driven by the approach to economic policy: the relative health effects of cuts in the welfare safety net versus greater growth, led by the private sector. Whilst we cannot be sure how this will pan out in the UK, an innovative recent study does give some clues. Using data from the Organisation for Economic Co-operation and Development (OECD), the authors – David Stuckler, Sanjay Basu and Martin McKee – looked at how responsive various measures of mortality are to non-health government spending across 15 EU countries between 1980-2005. Overall, they found that the effect of a given change in social welfare spending on overall mortality is seven times greater than an equivalent increase in GDP.
This was an average finding across all countries, it doesn't unbundle social welfare spending into its component parts and it ignores the fact that economic growth has more benefits than health alone – including creating the pot from which welfare spending comes. Nonetheless, it's a timely and salutary warning that cuts in social welfare spending need to be carefully thought through, since GDP growth needs to work hard to counteract the effects of falling social welfare spending. The implications for health inequalities are less clear.
We urgently need more studies like this in the UK that look closely at which elements of welfare spending are most important for mortality and broader measures of health. The Sub-Committee on Public Health would then have far better evidence on which to base their decisions, as would the Treasury as Budget day nears.
This blog also appears on the Public Finance website.