We might have seen it coming. The next round of cuts (expect many more) is where it gets nasty. It involves ‘raising the bar’ of eligibility for benefits, health, social care and anything else the state provides for us.

This is at once logically plausible and utterly wrong-headed – a classic example of assuming that there is no alternative to the current woeful methods and trying to doing them righter, thus making them wronger and worse. It’s ‘leading-edge conventional wisdom’, which makes it the worst of all possible worlds.

Not to beat about the bush, the new white hope for the economy is rationing. A 2009 McKinsey report proposed that a substantial portion of the £20bn savings the NHS has to find over the next four years should come from denying ‘low added value healthcare’, including preventing hospital admissions, with more coming from persuading patients to treat themselves. A recent Guardian survey of an admittedly small sample of GPs found that they were experiencing delays not only in non-urgent treatments such as cosmetic surgery, but also in opthalmology (cataracts), hip and knee replacements and hernia repairs.

Meanwhile, tens of thousands of people are facing cuts in disability benefits. And a couple of weeks ago the BBC reported that in response to austerity English local councils were steadily raising the eligibility bar for adult social care. Of 148 councils that responded to the survey, only 22 would now fund people with ‘moderate’ or ‘low’ need, which includes people needing help to bathe or cook a meal. Six councils limit help to those in ‘critical’ or life-threatening need.

Many people hearing these and other stories shrug wearily and ask, ‘What’s the choice?’ Surely it makes sense to clamp down on the cheats and in times of austerity limit payouts to those most in need?

Well, yes and no. The trouble is that it won’t cut costs; it will raise them. And while it will make it harder for some of the most vulnerable in society to get their needs seen to, it won’t stop the real fraudsters from continuing to freeload on the rest of us.

There are at least two reasons for this. The first is that this kind of rationing falls into the very large department of false economies. While there may a case for restricting access to some minor NHS treatments (mole removal, some weight loss), the general rule in services is that the earlier the intervention the cheaper and better. Putting off something that is going to happen anyway just makes it more expensive. If there are knock-on effects (delaying a hip replacement may affect the knee) the expense doubles. If there are then knock-on effects for other agencies (for example, lack of mobility may generate demands on social care) the expense trebles, and so on exponentially.

Rationing is perhaps most perversely damaging in social care and disability, affecting many of those least able not only to fend for themselves but also to kick up a fuss. Restricting care to those in most urgent urgent need of care is not so much beggar-my-neighbour as bugger-my-neighbour. It will not only guarantee an epidemic of critical cases as those with untended conditions deterioriate, it will also export massive amounts of costly ‘failure demand’ for others – hospital wards, advice bureaux, housing offices and police stations – to pick up the pieces.

In the (few) places where social care has been studied as a system, one thing is blindingly clear. Keeping people in their own homes as long as possible is a) what they want; b) a thousandfold cheaper than putting them into care homes, which they don’t want; and c) often quite simple. The biggest single factor is being able to bathe or shower. So a cheap, simple and effective way of heading off later demand for ‘moderate’ or even ‘critical’ care would be for councils to employ a team of full-time plumbers and carpenters to modify bathrooms at the first intimation of difficulty.

We desperately need to free up local managers to experiment with new methods of meeting growing care needs. But this requires saying ‘no’ to the current Soviet-style method of doling out centrally approved care packages to those who are deemed to fit official categories and instead analysing local demand and figuring out ways of responding quickly to what people actually need, as opposed to what the centre has decreed they should get.

This needs political courage as well as management insight, which is why it won’t happen nearly enough. What will happen – and this is the second reason why costs will rise, not fall – is not just rationing, but computer-aided rationing. Read Charlotte Pell’s eloquent article for the inhuman consequences of dealing with claims by computer; as eligibility tightens it will get worse. Computers simply can’t handle the complex variety of human need – and neither can centrally-designed classification systems. That is something only skilled humans can do. This is also, incidentally, why computers are hopeless at unmasking determined frauds and benefits cheats, although that doesn’t prevent people from vainly trying to make them do so – with the side-effect of making it ever harder for legitimate claimants to get what they need.

Thus, finally, do cuts and rationing set up the sinister Orwellian process by which bodies established for one purpose imperceptibly morph into their opposites. So employees at jobcentres and benefits offices are incentivised to make it harder rather than easier for people to get payments; HR departments to get people to leave rather than stay; ‘bloodthirsty and incompetent’ HMRC to terrorise small firms to meet its targets rather than undertake the much harder forensic work of pursuing large and sophisticated tax evaders. Welfare becomes illfare. Big Society, anyone?