Public sector crises, ‘the welfare crunch’ and the future of health and care

‘One day a bridge collapsed, and no one came to fix it’. So goes a much shared internet meme about how people at the time experienced the fall of the Roman Empire.  

Leaving aside the very literal fact that Hammersmith Bridge, sitting in one of the richest areas of our richest city, has yet to be fully repaired since its first closure in 2019 – this idea of the unrepaired bridge is supposed to serve as a metaphor for decaying social orders. When people feel like basic functions of the state are going unfulfilled, major social and political change becomes inevitable.  

Increasingly, it feels like we are approaching such a point in the UK. The welfare state, as imagined by the Beveridge report in 1942 and implemented by governments following the second world war, seems to be running out of steam. The crises that afflict it roll off the tongue – a crisis in social care, a crisis in local government finance, a crisis in NHS waiting times, a crisis in university funding… everywhere you look, the British state is creaking.   

At The King’s Fund, we’ve come to see all these crises as one and the same phenomenon – a phenomenon that can be termed ‘the welfare crunch’. The crunch can be understood as rising demand and increasingly inadequate resource if we continue as we are, creating a sickness that afflicts the entire public sector.  

The symptoms of the sickness are characterised by increasing waiting times for services, increased rationing and means testing of services, declining public satisfaction with those services, increasing inequalities, and an overworked and increasingly unhappy public sector workforce. These symptoms come together to undermine public confidence in the core principles of the welfare state, and in the post-1945  vision of an adequate, universal and accessible ‘good life’ for all.  

As we see it at this stage, the causes of this ‘welfare crunch’ are multifaceted. The economic growth that powered the post-war settlement that underpinned public services has slowed, as have increases in productivity across the economy. These broad structural factors make it hard to finance the public sector, particularly as the potential services that could be made available (such as cutting-edge medical care) become more and more expensive. 

Demographic ageing also plays a major role here, with more people with greater need for public services – and fewer people to staff those services and to pay the taxes needed to fund them.

These factors are present across many countries, but there are also specific choices that have been made by central government since the late 1970s that can also be seen as fuel to the fire.  

A general aversion to raising taxes to meet demand has reduced the resource available for investment in the welfare state and led to spending cuts over the last seventeen years that have frayed the fabric of the state still further. High levels of borrowing have exposed the UK to market volatility, and put bond markets in a position in which they can create resistance to democratic demands for higher public spending.  

The wider determinants of health are also part of the story here, with things like a growing housing crisis, erosion of job security and conditions, and a general deterioration in the quality of national infrastructure making it harder for people to live healthy lives. This then increases demand for public services like the NHS, creating a vicious cycle within the wider welfare crunch. 

What happens now? 

They say that you go bankrupt first gradually, then suddenly – and so it is with the welfare crunch. These dynamics have been building up for decades, but it is only in the last few years – following the interlocking shocks of the 2008 financial crisis, the subsequent years of austerity and then the Covid-19 pandemic – that broad sections of the public are really starting to notice the deterioration.  

Clearly, we need radical action to break us out of the welfare crunch, and to rebuild the public realm so that it is once again on a long-term, sustainable footing both economically and in terms of public support.  

There are ideas out there on how this could be achieved. Shifts to prevention, deeper integration to create services that mirror how people actually live their lives, major investment in the wider determinants of health or in tech and innovation… these ideas have been around a long time and will be familiar to many people reading this. And without doubt, all of these ideas will have a role to play in building us a roadmap to the future.  

However, we will also need fresh thinking. What could a reimagined welfare state look like? What is the role of central government? How should the state interact and work with those it serves?   

With this in mind, The King’s Fund is launching a new project. Titled 'Good health for all: reimagining the welfare state', this major strategic piece of work aims to break the policy world out of a cycle of tinkering around the edges or managing decline, and towards bold thinking and radical solutions. Over the next few years, we will be publishing a range of outputs to provoke debate and push the envelope in terms of policy. You can read the first of these outputs here.

However, we can’t do this alone.

We want to partner with organisations and people with different kinds of expertise. Together we can challenge the received wisdoms that are no longer fit for purpose and uncover the new ideas and fresh thinking needed to take us forward. If you’re interested in working with us, please get in touch.