Letter from London
As some of you know, I have been spending half my time in London (watching my grandsons grow up) since I retired from New York State government in 2023. There is an old saw that the United States and Great Britain are “two great countries divided by a common language.” That may be true in many areas, including differences in the style of politics and government between the two countries at this moment in history. But when it comes to the actual public policy issues in the two countries, I have been struck by how similar the challenges are.
These policy challenges were described in December 2024 by the newly elected Prime Minister of the UK, Keir Starmer, in a “Plan for Change” that was presented in what has come to be known as the “Milestones speech.” Prime Minister Starmer’s Labor Party routed the Conservative Party, which had held power for 14 years, in an election last July. The “Plan for Change” set forth six “milestones” for progress to be achieved by the end of the current Parliament, with the general election to be held in 2029.
The six Missions and Milestones that were included in the Plan for Change can be summarized as follows:
- Raising Living Standards in every part of the United Kingdom: The government aims to increase real household disposable income and GDP per capita across all regions by the end of the current Parliament, striving for the highest sustained economic growth among G7 nations.
- Constructing 1.5 Million New Homes: A plan to build 1.5 million homes in England over the next five years, along with expediting planning decisions for at least 150 major economic infrastructure projects.
- Reducing National Health Service (NHS) Waiting Times: A commitment to ensure that 92% of patients receive NHS appointments within 18 weeks of referral, compared to the current average of 59%.
- Increasing Police Presence: Adding 13,000 additional police officers to enhance community safety and address crime rates.
- Decarbonising the Energy Grid: Achieving the goal of generating 95% of electric energy from renewable sources by 2030.
- Giving Children the Best Start in Life: The objective is to have 75% of children school-ready by the time they start school at the age of four, with a focus on early years’ development to enhance future educational outcomes.
There are nuanced differences between the UK and the US on these issues, but by and large, these are among the main challenges both countries face. I thought it would be interesting to examine the common underlying problems and the proposed solutions in the US and the UK. Because the focus of the Step Two Policy Project is really on New York, where possible, I’ve compared the UK (or, in some cases, London) to the situation in New York.
Raising living standards in every part of the United Kingdom
Prime Minister Starmer’s Milestones speech said that raising living standards was necessary to address the “cost-of-living crisis” so that “working people have more money in their pocket.” The Prime Minister said that the UK would achieve this by realizing “the fastest [GDP] growth in the G7.” The milestone for measuring this progress was defined as “higher Real Household Disposable Income per person and GDP per capita by the end of the Parliament.”
Nationally and in New York, politicians have begun to talk about a “crisis of affordability” due to the rising cost of living. Gov. Hochul’s 2025 State of the State slogan of putting “money in your pockets”[1] was not borrowed from Prime Minister Starmer (in the way that Joe Biden in 1988 borrowed some lines from the Labor Party leader Neil Kinnock), but rather it was channeled from the same source of public distress about the cost of living which has led to the crisis of affordability.
There is an important distinction, however, about what the UK considers to be the primary cause of the unaffordability of modern life compared to the diagnosis in the US. The UK attributes the problem primarily to the lack of economic growth, which has stymied wage and productivity growth. Economic growth in the UK has flatlined since Brexit. As a result, the organizing principle of policy in the UK is the belief that the solution to the rising cost of living is increased incomes achieved through productivity growth, higher-paying jobs, and more economic activity.
By contrast, the US has consistently experienced real wage growth in the last decade, but wage growth has not kept up with the increase in the costs of day-to-day life, which is attributable both to general inflation and supply disruptions in sectors ranging from housing to eggs. Unlike in the UK, where there is a consensus about the urgent need for economic growth and specific plans for achieving it, there really is no consensus about what is needed to address the high cost of living and the crisis of affordability in the US. This was amply demonstrated by the flailing economic rhetoric of both candidates in the last presidential election, such as Kamala Harris’s pledge to reduce food prices by prohibiting “price gouging” and Donald Trump’s suggestion that the tariffs would reduce prices.
In the US, discussions about economic growth are centered less around the cost of living for individuals and more around the cost of operating the government – i.e., specifically, the federal budget deficit. Increased economic growth is held out by many on the right as a means to cover our current, historically high budget deficits without having to make difficult decisions about revenue or spending. In the US, the annual federal budget deficit as a percentage of GDP is 6.4 % and publicly held debt, at $29 trillion, is approaching 100% of GDP.[2]
In the UK, government debt reached 100% of GDP in September 2024, but the annual budget deficit is only 4.4% of annual GDP. The UK could not operate with an annual budget deficit at the US level even if it wanted to. The bond and currency markets in the UK nearly collapsed when then Prime Minister Liz Truss proposed “growth-oriented” fiscal policies (i.e., lower taxes not offset by spending reductions) that were a fraction of the ambitions for profligacy of the incoming Trump administration.
Faced with the overwhelming likelihood of massive increases in US budget deficits, the incoming Trump administration’s response has been a combination of magical thinking on the spending front – e.g., cutting $2.5 trillion of “waste, fraud and abuse” through the Department of Government Efficiency (DOGE) to cut the numerator of the deficit – and magical thinking about a rate of economic growth that would so expand the denominator of the deficit (the GDP) that it would bring deficit metrics in line with historical benchmarks.
“How do you pay for this?” House Majority Leader Steve Scalise recently asked rhetorically about the deficit before answering, “You actually get this country moving again.”[3] While East Coast billionaires like Paul Tudor Jones have been issuing dire warnings about the unsustainability of the federal budget deficit, West Coast billionaires are buying into the “grow-our-way-out of-it” mantra. The thinking of Jeff Bezos, as reported by the Wall Street Journal, is typical of this West Coast philosophy:
“’The way out is by outgrowing them,’ [Jeff] Bezos said, referring to economic challenges including the deficit and national debt. He advocated for boosting GDP growth to 3-5% annually while maintaining slower debt growth, rather than focusing on debt reduction itself.”[4]
Both the UK’s expectation of “the fastest growth in the G7,” and the incoming Trump administration’s expectation that we can lower prices by imposing tariffs, seem like leaps of faith that are unlikely to achieve their aspirational goals.
Constructing 1.5 million new homes
The second agenda item of the UK Plan for Change – constructing 1.5 million new homes throughout the UK by 2029 to address the rising cost and shrinking availability of housing – should feel particularly familiar to Americans, and perhaps especially to New Yorkers. Both London and New York have become emblematic of the broader international housing shortage, with many common underlying causes.
Prime Minister Starmer’s 1.5 million housing unit goal includes the building of 88,000 new units of housing in Greater London over the next five years – a total of 440,000 new homes by 2029. This rate of new housing production would be more than double the roughly 40,000 homes currently being built in Greater London annually.
Coincidentally, housing experts suggest that New York City will need a similar number of units of new housing – 500,000 – by 2030 to address current shortages and meet projected population growth. Given that only about 28,000 units of housing a year have been built in New York City in recent years (and current permit levels are even lower), New York City seems even less likely than London to make a dent in the housing shortage, barring significantly different policies being adopted.
Other aspects of the housing crises are also similar in London and New York City. Rental vacancy rates hover at around 1-2% in London and about 1.4% in New York City. In terms of affordability, median rents account for roughly 40% of median income in both cities. In London, only about 20% of housing is considered affordable, while in New York City, about 30% of the housing stock is rent-regulated. The cost of home ownership in both cities is increasingly out of reach: Median home costs in London are approximately 12 times the median income, while in New York City the ratio is around 8-10 times.
The threshold barriers to building more housing in both cities have been zoning and planning restrictions. In London, a national policy called the Green Belt restricts development in the outer boroughs of London and its suburbs, while planning and zoning restrictions in non-Green Belt areas of London—focused on height, density, conservation, and community input—combine to limit new housing development. Similarly, New York’s zoning laws limit increasing the housing density of neighborhoods. The additional development made possible by New York City’s recently adopted City of Yes initiative is still a fraction of what is needed to reach the levels of construction needed to address the housing shortage.
NIMBY-ism is quite strong in both New York and London (although in London you would say, “Not in My Back Garden”), although there are subtle differences as well as commonalities. NIMBY-ism in both cities stems from similar fears about change and infrastructure strain, with the nuanced difference being London’s focus on historical preservation and Green Belt protection, while New York’s battles center around building height, density, gentrification, and concerns about impacts on existing housing values.
It is difficult to make an apples-to-apples comparison between New York City and London when it comes to homelessness. New York City (with a population of approximately 8.3 million people) houses approximately 120,000 homeless individuals each night: approximately 60,000 in predominantly congregate homeless shelters and roughly another 60,000 (mostly recent migrants) in hotels, scattered site apartments, or temporary dormitory shelters. In London (with a population of approximately 8.9 million people), the government provides “temporary accommodations” as an interim housing solution for approximately 185,000 individuals, although these housing arrangements generally are not congregate homeless shelters. In addition, New York City provides approximately $2.3 billion in rental subsidies to prevent homelessness. This appears to be about three times the comparable amounts in London, which suggests to me that New York City may be keeping more people in their current apartments through rental subsidies who in the UK might be shifted to temporary accommodations.
The number of street homeless at any point in time also appears to be comparable in New York City and London, although my anecdotal observation is that street homelessness is much less visible in London. The official January 2024 New York City “Point in Time” count of street homeless was 4,140 individuals, although this count is widely considered to not fully capture the number of street homeless. There is not a similar “Point in Time” count in London, but from July to September 2024, a record 4,780 people were documented as “sleeping rough.”
Reducing National Health Service (NHS) waiting times
There is far more press coverage about the National Health Service (NHS) in the UK than there is about the healthcare delivery system in the US and in New York. Before addressing the NHS agenda in the Plan for Change, let me offer a few anecdotal observations about some of the fundamental differences between the healthcare delivery systems in the US and the UK.
The US, with its private provider and payer delivery system, offers a wide range of high-quality services that are generally accessible with moderate waiting times for those with commercial insurance – although certain specialties, such as endocrinologists, are in short supply and therefore difficult even for commercially-insured patients to see quickly. Access to specialty care for those who rely on Medicaid and/or safety net hospital systems for services looks more like the NHS. The cost of receiving services in the US using commercial insurance, however, is increasingly unaffordable for most people, as a result of rising premiums, co-pays, and deductibles. A second broad generalization about the healthcare system in the US is that (without in any way suggesting a rationalization of recent tragic events) the commercial health insurance system is widely reviled.
By contrast, the NHS as an institution is a source of great national pride in the UK, notwithstanding widespread complaints about how it operates in practice. With no out-of-pocket payments required to receive care from the NHS, affordability is not an issue, but as of October 2024, the median wait time for elective procedures is 14.2 weeks, with 7.5 million people on the waiting list (3 million of whom were waiting for more than 18 weeks),[5] and 10% of patients are now waiting for 12 hours or more in A&E (accident and emergency) departments.[6]
This lack of access within a reasonable amount of time in the UK is the NHS focus within the Plan for Change. An extra 450,000 appointments will be offered for tests and check-ups with extended hours at community diagnostic centers, which will be open 12 hours a day, seven days a week to tackle a waiting list of 7.5 million. The stated Milestone is that 92% of patients in the NHS will be able to access an elective procedure within 18 weeks, compared to 59% today. As of January 2024, no specialty had achieved the 92% Milestone.[7]
The first budget of the Labor government made a significant increase in funding for the NHS in order to address the backlog of appointments, but the government made clear that this investment was tied to demanding improvements in “productivity and accountability” from the NHS in return. Let me quote the “reform” agenda at some length, since it expresses familiar themes to those who work on these issues in New York:
“Delivering the mission requires three big reform shifts, which will be central to the Government’s 10-Year Health Plan, to be published in spring 2025. These are fundamental and necessary reforms in the way our health services deliver care…
- First, from ‘hospital to community,’ bringing care closer to where people live, including through a new neighbourhood health service to deliver more proactive and personalised care.
- Second, from ‘analogue to digital,’ by rolling out new technologies and digital approaches to modernise the NHS, including bringing together a single patient record, owned by the patient and shared across their care teams, putting people in control of their own health.
- And third, from ‘sickness to prevention,’ shortening the amount of time people spend in ill-health by preventing illnesses before they happen, as well as earlier identification and management of chronic conditions.”
Many of the underlying causes of financial unsustainability are similar in the NHS and hospital-based health systems in New York. Reimbursement rates, especially from government payers, have not kept up with the rising costs of providing care. Those high costs are exacerbated by workforce shortages, reliance on agency staffing, and general wage inflation. In both countries, demographic trends further intensify financial pressures. Aging populations and the rising prevalence of chronic diseases create growing demand for healthcare services, particularly complex and resource-intensive care. The aging population creates another common problem in both the UK and New York, which is delays in discharges resulting from limited capacity in the downstream ecosystem – i.e., nursing homes and home care, as they are referred to in New York, and “social care” as they are referred to in the UK.
Technological advances have simultaneously increased costs and reduced hospital revenues. In theory, new medical technologies and outpatient surgical innovations promise efficiency and better outcomes. In practice, both the NHS and safety net hospitals in New York often lack the upfront capital to invest in these technologies. The lack of investment capital in both the NHS and New York safety net hospitals has resulted in an inefficient infrastructure, making these institutions unable to respond to technological and market developments because they are unable to invest in outpatient facilities or digital health infrastructure.
Because of the similarities, I am eagerly awaiting the release of the 10-Year Health Plan for the NHS that will be released this spring. I think New York may be able to learn a lot from understanding how a very different health system plans to address very similar issues.
Decarbonizing the energy grid
The fourth plank in the Plan for Change involves reducing carbon emissions in the electric energy system. As an aside, amidst negative trends related to the economy, the availability of housing, and the affordability and access to healthcare, progress towards reducing carbon emissions from the generation of electricity is a bright spot in the UK and (to a somewhat lesser extent) in the US generally and in New York in particular.
The UK is far ahead of the US and New York State in the adoption of clean energy. The news headline about the Milestones’ pledge relating to “decarbonising the energy grid” was actually that the UK was tempering its ambitions by saying that only 95% (down from 100%) of the UK’s electricity by 2030 would be generated by renewable fuel sources.
Over the past decade, the UK’s renewable electricity generation has seen substantial growth, increasing from approximately 19% of total generation in 2014 to over 50% in 2023. This growth is primarily attributed to the expansion of wind and solar capacities. The wind blows hard in the Island nation. Moreover, both political parties have been supportive of the investments and trade-offs of these climate change goals. In a world where so many problems seem intractable, it appears that the UK has found consensus support for a long-term energy policy that addresses the very real problem of climate change.
In New York, the political debate over the costs of the clean energy transition is heating up. New York’s Clean Energy Standard (CES), established in 2016 and expanded in 2020, mandates that 70% of the state’s electricity come from renewable sources by 2030, with a goal of achieving a zero-emission electric grid by 2040.
Between 2014 and 2022, New York’s renewable electricity generation from wind, solar, and hydropower projects increased from approximately 20% to 29% of total generation. The New York State Comptroller predicts that New York will not meet its 70% renewable electricity goal until approximately 2033, but that would still represent a tremendous achievement in less than 20 years – at a time when many policy metrics in other areas are going in the wrong direction.
It remains to be seen in both the UK and New York whether this progress will be stalled if it proves that the marginal costs of clean energy increase as we get closer to achieving ambitious clean energy goals. But it remains a bright spot in terms of government’s ability to actually accomplish a major public policy goal.
Safer streets: putting police back on the beat
The fifth goal in the Plan for Change is to improve public safety. The statistical description of the problem regarding public safety is less specific than the other goals in the Plan for Change, although the Plan does say that “our ambition [is] to halve knife crime and halve violence against women and girls (VAWG) within a decade.”
The focus on knife crime reflects a striking difference between the US and the UK: the absence of gun violence in the UK. For Americans who have become numb to the epidemic of mass shootings, random gun violence, and gang-related shootings, the UK focus on “knife crime” seems almost quaint.
It is perhaps because of the prevalence of guns in the US that the homicide rate in the US is four times that of the UK.[8] The suicide rate in the US is 25% higher than in the UK, with guns accounting for 43% of all suicides in the US but only a negligible number in the UK.[9]
Separating the reality of crime from the perception of public safety is notoriously difficult. The perception of crime in New York City is higher at the moment than it has been in decades. Horrific crimes dominate the front pages of the tabloids here, while routine shootings and assaults dominate the inner pages. By contrast, violent crime is rarely front-page news in the UK. Yet, with the exception of homicides, the statistics suggest that the levels of serious crimes in New York City and London (which can serve as a proxy for the two nations) are comparable.
Moreover, the perception of public safety based on at least some survey data is similar. According to the Sienna College Research Institute, nearly 75% of New York City residents say that crime is a problem in their community,
Comparing the concern of New York City residents to those across the rest of the state, we see that city residents are far more likely to view crime in their community as a problem, and by a margin of nearly 20 points (70%-51%), they are more likely to be concerned that they personally will be a crime victim.[10]
In London, “62% were concerned about crime and ASB [anti-social behavior] in their local area, compared with 46% from other English regions.”[11]
Indeed, the Public Safety plank of the Plan for Change seems to be focused as much on the perception as the reality of crime. As the Prime Minister put it in his Milestones speech:
“More police on the beat…Stamping out anti-social behaviour in every community…Because nobody should feel insecure on the streets they call home.”
His proposed solution involves adding to the size and the visibility of the police force.
“Police must be visible and responsive to the communities they serve. Our milestone over this Parliament is to put police back on the beat in communities, placing 13,000 additional police officers…into neighbourhood policing roles. Each neighbourhood will have a named, contactable officer dealing with local issues.”
Mayors across the US, including Columbus, Los Angeles, Newark, New York City, and Philadelphia, are similarly responding to the perception and reality of rising crime with increased focus on community policing.
In Philadelphia, the new Mayor, Charelle Parker, has issued a comprehensive Public Safety Plan (PPD) that describes this focus on community policing:
“Over the past decade, we have focused heavily on discussing what our “officers cannot do” instead of considering what we want our “officers to do.” This is our opportunity to rethink what we mean by proactive and community policing, which has been the backbone of every effective policing strategy. This includes proactive stops, based upon reasonable suspicion, regular foot beats, voluntary and intentional engagement with the community, business security checks, SEPTA security checks, and “park and walks” where officers park their patrol cars and walk among the community to build relationships.” [12]
One of the big challenges facing all major cities in the US is the surge of crime in recent years. Every mayor who is looking for a solution must be envious of the existence of gun control in the UK and other advanced countries, which seems impossible to achieve in the US.
Giving children the best start in life
The sixth goal in the Plan for Change is defined as “breaking down barriers to opportunity” by “giving children the best start in life.” The metric Prime Minister Starmer has chosen to focus on is the growing number of children who lack “school readiness” at the time they start school. The UK starts public education one year earlier than kindergarten in the US, with four-year-olds attending what the Brits call the “Reception Year.”
“School readiness” is an umbrella concept without a universal definition, although it probably refers to age-specific cognitive, social, and emotional development. The Plan for Change anecdotally describes the problem as “too many children not being ready to start school, with over a third of children unable to dress independently and 90% of reception teachers saying they have at least one child in the class not toilet trained.”
The milestone for success in the Plan for change is:
“We will measure our progress through 75% of five-year-olds reaching a good level of development in the Early Years Foundation Stage assessment by 2028. This assessment looks at children’s development across areas like language, personal, social, and emotional development, and maths and literacy. This is an increase from 67.7% currently, and would mean an additional 40,000 to 45,000 children a year hitting developmental goals.”[13]
The US is facing a similar challenge of lack of school readiness. An international survey of teachers found that 78% of US teachers said American students are less ready for school than in previous years, with much of the effect being related to the lingering effects of the Covid pandemic.[14] Unfortunately, school readiness data is not standardized and difficult to come by.
This is true in New York State as well, notwithstanding that the State Education Department has comprehensive school readiness survey tools for individual school districts. Universal Pre-K and 3-K in New York City represent one of the true public policy success stories of the last 10 years. But given that the contributors to a lack of school readiness are prevalent in New York City and elsewhere in the State, it seems safe to assume that school readiness in New York is still a problem.
The prescription in the Plan for Change for improving school readiness is a familiar if overly conventional strategy, including more teachers, more support for childcare, and more training and better pay for early childhood educators. The one strategy that caught my eye, however, was titled,
Set every child up for the best start in life. This means delivering accessible, integrated maternity, baby and family support services through the first 1,001 days of life, and high-quality early education and childcare to set every child up for success.
Many health policy experts believe the single most important thing government could do to improve the health and well-being of its population is to focus more on the first three years of life. In 2017, the New York State Department of Health launched a highly ambitious “First 1,000 Days of Life” initiative through the Medicaid program, which focused on enhancing health outcomes for children from birth to age three enrolled in Medicaid. Sadly, only $3 million – expected to grow to $12 million in three years – was budgeted for the program and it never took root, despite the involvement of over 200 stakeholders from various sectors who focused on improving early childhood outcomes.
Scott Galloway, a business school professor and entrepreneur who has built a large following as a social observer, talks eloquently about “intergenerational inequity” that is marbled throughout public policy.[15] New York State spends more than $30 billion a year on long-term care (metaphorically, at least, the last three years of life) yet spends a relative pittance on the first three years of life. One wonders whether those priorities should be re-examined.
Conclusion
The first week of January is like the calm before the storm in New York State government. Within a few weeks, the State of the State and the Executive Budget will be released, and the game will be on for 2025.
I have commented in other contexts that New York State government tends to be provincial in its outlook, only occasionally benchmarking to what is happening in other states. Spending time in London and following public policy issues there makes me realize that the biggest problems facing governments today tend to be shaped by common global forces and thus look pretty similar in both diagnosis and prescription. I hope this short meditation on the main issues in the UK and the US will help provide a broader perspective as we drill down more narrowly on the public policy issues of 2025 and the federal government and in New York.
Paul Francis is the Chairman of the Step Two Policy Project. He served as the Director of the Budget in 2007 and as the Deputy Secretary for Health and Human Services from 2015-2020, among other positions in New York State government, before retiring in May 2023.
[1] Money in Your Pockets: Governor Hochul Proposes Sending 8.6 Million New Yorkers an Inflation Refund Check as First Proposal of 2025 State of the State
[2] “Tax Cuts Take Lead Over Deficit Worries in GOP’s Internal Fight,” by Richard Rubin, Wall Street Journal, December 16, 2024.
[3] Ibid.
[4] https://finance.yahoo.com/news/jeff-bezos-counters-elon-musk-005915941.html?guccounter=1
[5] https://www.england.nhs.uk/statistics/statistical-work-areas/rtt-waiting-times/rtt-data-2024-25/
[6] Plan for Change at p. 27 https://assets.publishing.service.gov.uk/media/6751af4719e0c816d18d1df3/Plan_for_Change.pdf
[7] https://www.nuffieldtrust.org.uk/resource/treatment-waiting-times
[8] https://www.nationmaster.com/country-info/compare/United-Kingdom/United-States/Crime/Violent-crime
[9] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/bulletins/suicidesintheunitedkingdom/2023
[10] The Feeling That Won’t Go Away, Vital City, February 28, 2024.
[11] Public Polling on Community Safety, March 27, 2023.
[12] “100 Day Report, prepared in response to Mayor, Cherrell L. Parker’s Executive Order No. 1–24”
[13] “Plan for Change” at p. 37
[14] Survey by Theirworld in partnership with Hall & Partners, September 2024 – https://theirworld.org/news/teachers-say-too-many-children-are-not-ready-to-start-school/
[15] TED talk, “How the US is destroying young people’s future,” April 2024 – https://www.ted.com/talks/scott_galloway_how_the_us_is_destroying_young_people_s_future/transcript?subtitle=en
