Theresa May warned over mismatch between policy ambition and fresh departmental cuts

Written by Jim Dunton on 15 September 2016 in News

Institute for Government says that while Brexit will bring many new challenges, the public finances will face increasing pressures

Influential Whitehall think tank the Institute for Government has said prime minister Theresa May must set out a “clear and manageable set of priorities” for meeting the government’s planned spending cuts, or risk losing public trust.

In a briefing that looks at the spending challenges May‘s cabinet faces ahead of this year‘s Autumn Statement, the IfG said there was a clear conflict between the “back-loaded“ spending cuts, set out by then-chancellor George Osborne in November last year, and promised service improvements.

It said May’s July pledges to stick to the previous administration’s 2015 Spending Review plans to cut day-to-day spending by in excess of £10bn by 2019-20 needed to be delivered against a backdrop of other cost pressures of the government’s own making, such as the “seven-day NHS” and National Living Wage. 

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The IfG said the Living Wage commitment alone would add £2bn to the cost of social care provision.

The report, “The Spending Challenge: how to cut spending while maintaining quality”, said it was already clear that cuts made since 2010 had seen a reduction in service standards, such as rising waiting times at hospital accident and emergency departments, and deteoriorating conditions in the prison service.

Author Julian McCrae said that as May had “set herself against substantial tax rises” the only way the service-improvement and savings pledges could be delivered was against a backdrop of further cuts.

“Theresa May’s government will need a way to address these challenges,” he said. 

“It needs a plan that can cut day-to-day spending while maintaining, or indeed improving, the quality of public services. In doing this, it can learn from David Cameron’s failure.”

McCrae said that core element’s of Cameron’s attempts to reform the delivery of public services to drive efficiency could not be seen as a success. 

In particular, he identified the devolution agenda, public-service market reform, Single Departmental Plans, and the delivery of greater efficiency through the use of digital technology as areas that had so-far failed to deliver against expectations. 

“His government simply lacked the ability to focus on its own reforms,” McCrae said.

He urged May and her cabinet to commit to a stripped-down set of  “clear and manageable priorities” and set about delivering them by building on existing government initiatives, steered by public engagement.

“With over 500 commitments in the Conservative manifesto, it is simply not credible to claim that they are all equal priorities,” McCrae said. 

“And since the government has now abandoned all the headline pledges on the public finances, it hardly makes sense to claim it is a political imperative to deliver a host of less high-profile commitments.”

McCrae, who served as deputy director of the prime minister‘s strategy unit under Gordon Brown, also fired a shot across the government’s bows on behalf of the civil service.

He said significant progress had been made in developing commercial, financial and project management skills across the organisation had been made over the past five years — but said further improvements would need political backing to succeed.

“The prime minister and chancellor should send a clear and early statement of intent in this area,” he said. 

“Without it, the priorities of the last 50 years will quickly re-assert themselves, with abstract policymaking ability valued above the professional skills necessary to actually get things done.”

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Jim Dunton
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