Liz Truss wants to inflict more austerity on Britain – but there’s nothing left to cut

When a ship encounters a storm, the captain does not rip up the deck and cut off the lifeboats to make the ship move faster. Doing so might temporarily delay flooding, but it gives passengers no chance when an iceberg crashes against the hull. And yet that’s exactly what British governments have been doing ever since the financial crisis of 2008. One by one, the ropes holding on to our welfare services and public institutions have been severed. The current government, which has called on departments to find “efficiencies” to meet its unfunded tax cuts, is no different.

So what can we expect to happen if Liz Truss’s cabinet pursues these cuts? Already, Conservative MPs are extolling the benefits of an “insurance-based” health service, and seem to be preparing the ground for further waves of NHS privatisation. Yet Britain’s public sector has already been gnawed to the bone. How will departments “trim the fat”, as the levelling-up secretary Simon Clarke described the approach over the weekend? Is there even any fat left to trim?

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Over the past decade, the dismantling of Britain’s welfare state often took the form of direct budget cuts. Spending on schools per pupil in England decreased by 8.3% in real terms between 2009 and 2019. Local authority funding from central government was slashed by 49.1% between 2010 and 2018. Many government departments also had their budgets cut by millions; the Department for Energy and Climate Change’s spending was hit by 23% in 2011.

In other areas, the public sector was hollowed out in more insidious ways. Although total healthcare spending was protected from direct cuts, for example, the soaring demand for health services caused by rising poverty and demographic ageing have not been matched by NHS spending increases. By the end of that decade, waiting times for emergency care and complex treatments had soared. The size of the civil service plunged by 19% between 2010 and 2016. Between 2010 and 2014 alone, government spending on outsourcing services in the UK doubled to £88bn, transferring colossal public resources into private hands.

This time around, the Conservatives don’t need to introduce pay freezes or productivity targets to encourage further privatisation and outsourcing. The dire situation of our public sector may guarantee that when faced with further budget cuts, the people running government departments feel they have no option but to contract more services out. The minority of patients who can afford to choose may opt for expensive private insurance over long NHS waiting lists, while those continuing to use public healthcare will grow frustrated with its inefficiencies and waiting times – and in many cases they will likely blame the health service, rather than the reasons for its decline.

Britain now faces a real risk that its welfare state will become a “dual system”, where a sizeable chunk of care is provided by private companies in parallel with a public healthcare system. Some may ask why this matters – if we still have a public health service, what’s the issue with the rich paying for private healthcare? The problem is that dual systems of welfare exacerbate inequality and frequently undermine the quality of public services. Moreover, once the principle of universal free public services is eroded, it becomes more difficult to make the argument for their existence in general. The case for a welfare state begins to fray.

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In Chile, for example, reforms to the health system introduced under the Pinochet dictatorship created the option for wealthy citizens to pay into a private health fund, rather than the already underresourced National Health Service. This exacerbated the resource pressures the health service was already under. Not only did the private fund absorb the majority of contributions, despite covering only 16% of the population, but those it covered were disproportionately wealthier, younger and male, and so statistically “less likely to require sustained health services” . Many people with access to private services also continued to use the public system for routine treatment in order to protect no-claims bonuses. This compounded the pressures on the public system, as those able and paying for private insurance remained reliant on it. In other words: the introduction of a dual system of healthcare did not even work as it was intended.

Outside central government and the NHS, many local authorities are already at breaking point, with poorer local authorities struggling to provide and maintain basic services such as parks, libraries, refuse collection and children’s centres. And we’ve already seen how privatisation leads to the growth of predatory multinational companies that profit at the taxpayer’s expense. Given all this, it’s only fair to assume that further privatisation is precisely what the Truss government hopes to achieve through further cuts. The policies announced this week are a textbook case of how you scuttle the welfare state, and perhaps even sink it entirely.

• Rosie Collington is a PhD student at UCL’s Institute for Innovation and Public Purpose