The joys of healthy kids, later-life working and Polish donuts

Morning all, 

Did you miss me? Ruth has (temporarily) handed the TOTC reins back this week. It’s not been a vintage one for economic debate, with eye-wateringly expensive tax proposals sitting awkwardly alongside warnings of strained public finances.

Rather than our usual pick’n’mix approach to TOTC, I’ve gone thematic with research about the changing shape of health and wellbeing in modern economies. It’s an important topic with a rich vein of fascinating insights.

Plus we’re świętowanie Polski* and looking ahead to a tight fiscal settlement in next month’s Spending Review.

Have a great weekend,

Mike

Chief Economist
Resolution Foundation 

*celebrating Poland 

Weighing wellbeing. Do you know what makes you happy? Are you sure? This fascinating research analyses more than 3,000 survey responses ranking different aspects of wellbeing (e.g. would you rather have an emotionally supportive marriage or financial security?) to try and determine what people really (really) want. Turns out what people value most is the health of a child. Things that signalled prestige (e.g. a higher income than peers) were deemed to be fairly unimportant. There was also limited variation between different demographic groups, suggesting semi-universal aspects to the kinds of things we humans value most: stability, security, community and health.

Memento mori. It’s good to stay grounded, so here’s a deep dive on death. Specifically, a Health Foundation report on mortality trends in the UK. Essentially, some things have stayed bad, and others have gotten worse. After a period of improving mortality rates, the trend slowed in the 2010s, and by more than in other countries. By 2023, the mortality rate for women in the UK was 14 per cent higher than peer countries, and 9 per cent higher for men. There are persistent inequalities between different parts of the UK too, with mortality being higher in Scotland, Wales and Northern Ireland than England. Indeed, of the 21 high-income countries studied, only the US is worse than Scotland for mortality. Health deterioration is starkest in the 25-49 age group. Women in this demographic experience mortality rates 46 per cent higher than in other similar countries – a clear indication of an ailing workforce. The Foundation draws a direct link between our economic stagnation this century and these declining outcomes. Sadly, identifying a vicious cycle is easier than breaking out of it.

Labouring longer. Stop counting down the years until you retire, because this paper suggests delaying it could be good for you (caveats incoming). The research uses the increase in female State Pension Age to compare women who worked until they were 63 with those who retired at 60, finding that working longer benefited cognition and (on average) mobility. The authors suggest that maintaining social interaction and physical activity – both of which can drop for people in retirement – are key to the boost to health. This is because the impact of staying in work on cognition was bigger for single women, most of whom lived alone, and the impact on physical health varied by occupation, with paid work increasing mobility for those in non-sedentary jobs but reducing it for women with desk jobs. So, delaying retirement might be good for you… if you’re a gardener who lives alone.

Running on fumes. An ongoing theme is here is pressure on the NHS. But what does that mean for NHS staff trying to balance the books, and our health? This report describes the challenge facing NHS leaders of shrinking budgets and rising costs. Decision-makers are contending with rising staff costs, higher-than-expected (non-pay) inflation in 2023-24 and the increasingly complex (aka expensive) care needs of our ageing country. NHS leaders worry about unrealistic expectations, with trusts and Integrated Care Boards agreeing to aim for savings of 6.7 per cent (over £9 billion) in 2024-25, and directives for ‘unprecedented productivity growth’. Strained budgets have also meant capital funds being shifted towards day-to-day running costs, despite a maintenance backlog of *£13.8 billion*, rising staff redundancies and consolidation of services. One to look out for in next month’s Spending Review.

Something for the weekend | Polling Poles

It’s been a rare quiet week in UK politics, but there are seismic battles playing out on the continent. Sunday 1 June sees Poland’s presidential run-off vote (summary here), after the first-round delivered a closer-than-expected victory for centrist Rafał Trzaskowski against populist Karol Nawrocki (from the Law and Justice party). Populism – the notion that society is made up of “good and virtuous people” fighting a “perverse elite permanently plotting against them” – is increasingly popular across Europe. In retrospect, its rise in Poland has been attributed to widening regional inequality, with most Polish voters now valuing economic growth more than democracy.  

But this backlash is surprising given Poland’s remarkable economic success – the IMF projects that Poland people will have higher living standards than those living in Japan by the end of 2026. The country has averaged 4 per cent GDP growth per year since 1990, and  has lower infant mortality than Canada, higher female life expectancy than the US and less violent crime than the UK. 

Nearer home, there are nearly 830,000 Polish nationals in the UK. 2007-08 was the biggest year for Polish arrivals, with 332,000 individuals registering for National Insurance, but the number of Polish residents has been falling since 2017, when it reached a high-water mark of 922,000. Polish communities have become a more visible part of British streets – Tłusty Czwartek is one aspect of Polish culture that I’m particularly fond of. I hope you will join me in raising a pączek* to democracy on Sunday.  

*doughnut.

Chart of the week

The run-in to the Spending Review has finally begun, as public servants air requests for cash. On June 11, the Chancellor will be allocating £40 billion of additional cash for day-to-day public services, and over £100 billion for public investment. This is a huge deal for all of us as  many public services – education, health, housing and transport, for example – provide ‘in kind’ benefits that matter for people’s lives. As Chart of the Week shows, these services disproportionately benefit low-to-middle families, who use more public services than richer households. But the allocation of funding is far from straightforward – most of the ‘extra cash’ just cancels cuts planned by the previous Government. An NHS-heavy settlement (e.g. health receiving a 3.6 per cent real-terms rise) would reflect the fact that it heads the public’s list of priorities but mean cuts for most other public services (as we have set out). Our chart shows what this means for living standards in the red bars – families across the income distribution see a similar boost of around £270. If the rise in health spending was limited to 2 per cent, it would leave around £15 billion more to be spread across other departments by 2029-30 (the blue bars). This could be spent on, for example, boosting social care provision and tackling child poverty via the extension of Free School Meals to all Universal Credit recipients. This would deliver a far bigger boost to lower–income families than an NHS-first strategy, and improve public services across the board.