Policy landscape 2025

It hardly needs saying that the UK is confronting a number of acute policy challenges. It is frequently difficult, however, to differentiate between analysis and hyperbole, to make sense of all the talk of ‘broken Britain’ and critiques of such miserabilist analyses. So what are the challenges we face? To what extent is there political consensus over what they are, and what are the various parties proposing to do about them?

These are complex questions. That is why the Resolution Foundation and UK in a Changing Europe have partnered to produce a series of evidence-led, research-based assessments of the key issues that politicians will confront as parliament returns from its summer recess. We have brought together a group of leading experts from respected institutions including the Health Foundation, the Institute for Fiscal Studies, and our own organisations. We asked them to consider the challenges the country faces in their area of expertise, the immediate and longer-term issues politicians will need to address, and the potential implications of any choices they might make.

We selected the issues based initially on the IPSOS issues index, though we have added some that did not figure amongst the public’s priorities in July of this year (UKICE could hardly partner in producing a report that does not mention Brexit, after all).

The collection reveals that one major policy challenge dominates them all. Growth is not only the overriding priority of the government but arguably the most important challenge the country faces – not to mention the key to unlocking many of the other difficult decisions sitting in government in-trays.

And the picture is not a rosy one. We have seen poor performance when it comes to growth since the financial crisis. In the 15 years prior to 2008, GDP per capita increased by 40%. It is now about 5% higher than in 2008. The problem is not necessarily that government is doing the wrong things. It has to date adopted sensible supply side responses, including planning reform, industrial strategy, trade deals and increased infrastructure spending. Rather, the issue is how much growth such measures might be expected to generate, and how quickly.

Delivery and detail matter too though. For example, the government has steered clear of the most ambitious planning reforms. It has failed to provide a watertight definition of the ‘grey belt’ and ensured continued dependence on local

authorities in order to achieve its housebuilding ambitions. The fact that planning applications in the first quarter of this year were the lowest of any first quarter since 2015 speaks volumes.

Economic growth can sound abstract, but this collection shows the effect weak growth is having across the areas top of the public’s mind – from the cost of living to the NHS.

Concerns about cost of living remain high and we have seen particular price rises amongst the cost of essentials that can be hardest for lower income families to absorb. But widespread improvements in the cost of living will ultimately hinge on the ability to secure the kind of growth that will make incomes grow faster than inflation. Recent signs of a weakening labour market pose immediate concerns for those looking for work; and in the medium term will make raising the employment rate, as the government wants to do and which boosted living standards in the 2010s, harder.

Higher growth, it is hoped, may also ease the government’s fiscal challenges and free up funding for other priorities. Here we need to be wary of assuming a free lunch – especially with so many mouths to feed at the table. Indeed, this autumn it is expected that the Office for Budget Responsibility may go the other way and lower their medium-term forecasts for growth. Making the books add up could then require the Chancellor to put up taxes, which are already set to reach their highest ever proportion of national income in 2027-8. Raising taxes can damage economic growth, but there is also no shortage of options for tax reform that would support growth and improve fairness.

When it comes to health, while the 10-year plan is in itself a sensible document, there are legitimate reasons to wonder whether it will be effectively implemented. After all, prevention, community-based care and digital transformation have been themes of health policy for at least 20 years. And the fiscal bind looms large: the last time ambitious reforms on this scale were mooted, funding was increased by 6.8% a year in real terms. The equivalent figure today is 2.8% a year in real terms.

Similarly, key decisions in areas like SEND provision in schools will have significant budgetary implications, while the ability of the UK to sustain a major international role will depend on our ability to fund our ambitions. At a time when child poverty is nearly double the rate for pensioners, the government’s commitment to reducing it is unlikely to be achieved if the forthcoming strategy comes without additional funding.

Then there are the trade-offs inherent to governing. The government has already belied the supposed priority accorded to growth by refusing to countenance the kind of rapprochement with the European Union that would have a marked impact

on the economy. Equally, reducing migration still further will require difficult decisions on issues like staffing social care or the economic consequences of reducing foreign student numbers. Indeed, when it comes to immigration, the government finds itself in a bind. Public concern has increased – with 40% of respondents to the IPSOS issues index poll in July citing immigration as their top concern. Thus, government risks sacrificing progress on its own priority in order to address the priority of the public.

And public opinion forms a less than propitious backdrop to this policy environment. Public satisfaction with the NHS is at its lowest level since 1983. The rise in visible lawbreaking such as shoplifting has helped account for heightened public anxiety about crime, despite long-term declines in crime rates (which have halved since 1997). While the Gauke and Leveson reviews suggest sensible reforms to the criminal justice system that can be carried out, the government needs quick improvements, not least to fulfil its ‘taking back our streets’ mission.

More broadly, government has to operate in a time of low trust in politics, itself a consequence of the long-term economic underperformance with which we began this analysis. At the same time, reforms to local government might reduce the number of councillors in areas affected by structural reforms by 90%, with inevitable implications for accountability. And councils themselves are increasingly stretched by higher demands for high-cost services such as social care and SEND provision. It is hardly calculated to enhance faith in politics or the political process.

Added to which, we are witnessing cratering support for the two erstwhile major parties. Labour and the Conservatives won just 59% of votes cast in 2024 – their lowest combined share for over a century. 2024 witnessed the second-lowest turnout under universal franchise, meaning Labour won a massive majority on the back of support from only one-in-five voters. And the fact that the party is losing votes to both left and right means its MPs face different political challenges. Tax increases and spending cuts will irritate different parts of its coalition. It will not be easy to formulate a strategy which will get buy-in from the whole parliamentary Labour Party.

There is no getting away from the fact that this is a pretty grim picture. Yet an honest assessment of the various challenges we face is a necessary precursor to any attempt to address them effectively. The intention of this collection is to inform and not persuade. We hope that readers will look at it in that spirit. As an attempt to inform them about the facts and to allow them to assess rival political claims.