Budget 2017: Treasury urged to avert "disastrous" public service failures – as departments asked to model latest cuts

Written by Suzannah Brecknell & Matt Foster on 28 February 2017 in News
News

IfG and CIPFA data reveals growing pressure on key public services, as the Treasury asks departments to crack on with pre-announced £3.5bn in efficiency savings by 2019/20

Chancellor Phillip Hammond has been warned not to ignore “mounting pressure in public services” ahead of next week's Budget, as the Treasury asked departments to spell out their contributions to an ongoing £3.5bn cuts drive.

A new report by the Institute for Government (IfG) and the Chartered Institute of Public Finance and Accountancy (CIPFA), warns that government could face “a disastrous combination of failing public services and breached spending controls" just as the UK prepares for Brexit in 2019.

The authors urge Hammond to push for meaningful public service reforms and major changes to the way spending decisions are made in Whitehall.


Treasury is "overbearing" and "overstretched", warns Lord Kerslake – but review stops short of calling for break-up
Treasury must not "micromanage" departments, say former civil service heads Kerslake and Butler
Autumn Statement 2016: Hammond loosens Osborne's £3.5bn efficiency drive – but departmental cuts plan remains


The report, which uses government data to examine spending and performance in five public services says: “In the upcoming Budget, the chancellor cannot choose to simply ‘tough it out’ as he did in the Autumn Statement, largely eschewing reference to the mounting pressures in public services.

“He must lead the government in a hard-headed assessment of where it is, and what it needs to do to get its plans back on track.”

The IfG and CIPFA's analysis examines spending and performance data for hospitals, adult social care, police, prisons and schools. 

It looks at performance against stated ambitions of both coalition and Conservative governments to maintain or expand the scope and quality of public services while cutting public spending.

But while the report finds that the government initially managed to reduce spending without impacting services, it says these savings were made largely through cuts and rationing, rather than through meaningful reforms or efficiencies.

This meant that, by 2013, some services – in particular prisons, hospitals and adult social care – were starting to show signs of falling performance.

“It is clear that not enough action was taken during this period to fundamentally change the way public services were delivered – for example, by reducing demand, making better use of IT, or integrating services,” says the report.

By the end of the Coalition administration, the authors conclude: “Government was increasingly relying on unsustainable factors, including falling quality, explicit rationing and increased queueing, in prisons, adult social care and hospitals respectively.

“Looking back from 2017, with further spending reductions tabled and economic uncertainty ahead, the early years of austerity look like a missed opportunity.”

However, the IfG and CIPFA say that these signs of pressure on public services did not inform the 2015 Spending Review, meaning that the government is now “bouncing from crisis to crisis” – forced to announce extra funding or emergency measures for struggling services.

The authors urge the government to report on the progress of its current efficiency review – a commitment made by George Osborne and re-iterated by Philip Hammond to make £3.5bn of efficiency savings by 2019/20.

The Treasury announced on Tuesday that, as part of that review, departments had been asked to begin drawing up proposals to cut spending by 3-6% by 2019/20, with an update against this aim due in autumn 2017. 

Hammond said at last year's Autumn Statement that he would allow £1bn of the £3.5bn to be reinvested in "priority areas", and while the Treasury's latest release provides no further detail on what that means, it suggests that the pressure on the adult social care system will not be one of them, saying it will be addressed by "efficiencies found within local government".

The IfG and CIPFA said the efficiency review should be used to “embed a culture where incremental improvements in the efficiency of public services are made year on year”.

“The government needs this to be a serious, data-driven exercise,” the report sats, as it calls for the efficiency drive to be closely linked to recent work to improve Whitehall’s finance function.

Launching the report, Julian McCrae, IfG deputy director, said: “As we’ve seen with prisons, social care and now potentially hospitals, the government risks getting into a cycle of crisis, cash, repeat. 

"This report is not a call for more money. It is a call for better financial planning and reforms that are robust enough to survive public scrutiny.”

Rob Whiteman, CIPFA chief executive, said: “We know that for some parts of the public sector resources are stretched and that those working to deliver services are up against it. What is crucial is that we make the best possible use of the funds available.

“This means having a thorough understanding of how organisations are run and services are provided, using this information to think strategically and creatively about improving policy decision making, which will ultimately improve service delivery.”

Share this page

Further reading in our policy hubs

Add new comment

Comments

Alan Scott (not verified)

Submitted on 28 February, 2017 - 12:44
We are certainly up against things in my department, all the hope of savings is being placed on digital solutions. Those solutions are far from being ready and the thought amongst my colleagues is that the usual will happen. That is we will be forced to use systems that cannot do what was envisioned placing more pressure on the workforce to deliver stretching targets with not fit for purpose systems.

Libra (not verified)

Submitted on 28 February, 2017 - 16:33
Time for new thinking: Government is a system with Departments as its components, Look at the outcomes that this system should produce. Consider which actions by Government produce most outcome for least resource: Fund those actions then manage them.

Contact the author

The contact details for the Civil Service World editorial team are available on our About Us page.

Related Articles

Dave Penman on life and taxes

24 April 2017

Momentous life events remind us why the last thing we need is politicians playing fast and loose...

Latest civil service & public affairs moves — April 24

24 April 2017

New appointments in the civil service, UK politics, and public affairs, via our colleagues at...

Jenkin urges government to tackle cyber interference before election

24 April 2017

Public Administration and Constitutional Affairs Committee calls for government to quicken...

Related Sponsored Articles

BYOD: The critical balancing act
3 April 2014

How can organisations allow employees to use their own devices to access corporate information...

Bringing government data to life
8 June 2016

Microsoft shows a few of the ways that governments can turn data into insight

Mind the Gap
3 April 2014

Given the rhetoric surrounding the shift to the modern workplace and the importance of centring...

The value of Unified Communication in practice
12 May 2014

There is no doubt that the innovative use of technology within the UK’s public sector is fast...