Leigh Lewis: We need a better early warning system to flag up short-sighted spending cuts

Written by Sir Leigh Lewis on 10 March 2017 in Opinion

We shouldn't have to wait until the wheels fall off to find that cuts to services have gone way beyond any sustainable level, argues the former DWP permanent secretary

In the run up to the Budget it was widely reported that the chancellor had asked all but the "protected" departments to come up with proposals for a further reduction of £3.5bn in spending by the end of the current Parliament. Unless the world has changed utterly since my own time in government, a ritual process will have taken place.

To parody only a little, the Treasury will have told each affected department what its ‘share’ of these cuts needs to be. Departments will have responded by describing the likely impact of such cuts, painting a picture of death, disaster and mayhem. The Treasury – inured by decades of listening to such protests – will have ignored the protestations and demanded the number it first thought of.

Last minute political haggling – and even, in some cases, threats of resignation – may have secured some alleviation, but not much. And the previously warring ministers – once the spending figures have been announced – will have assured the public that the cuts, while challenging, can undoubtedly be delivered through greater efficiency. And sometimes they can.

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But not always. Take the Prison Service as perhaps the most glaring example of this macabre dance in recent years. Between 2010/11 and 2014/15 the Prison Service budget was reduced by around a quarter – approaching £1bn – at a time when prisoner numbers remained at an all-time high of around 86,000.

Over the same period, prison officer numbers fell by around 9,500 – nearly 30%. At Pentonville prison – to give one example of the impact of these cuts at local level – it has been reported that officer numbers fell from 280 to 211 between 2013 and 2016, while at Holloway the reported reduction was from 150 to 121 over the same period.

The effect of these reductions is now clear; serious outbreaks of disorder, increasing drug and substance abuse and, potentially most serious of all, a collapse of prison officer morale to name but three.

Finally, faced with increasingly lurid and public examples of each, the government has responded by restoring some of the cuts in Prison Officer numbers and implementing unilateral pay increases for Prison Officers in the areas of greatest shortage in what has looked extremely close to a panic reaction.

Predictably, the media and the opposition have piled in to attack the government for its incompetence. But the truth is that all governments in recent decades have been guilty of imposing similar examples of short-sighted reductions. Indeed the current crisis in social care is arguably the result of every government over the last thirty years acting with similar irresponsibility.
But does it have to be like this? Is the only way of finding out that cuts to particular services have gone way beyond any sustainable level being when the wheels finally fall off?

I believe that there has to be another way. There are precedents. The Office for Budget Budget Responsibility (OBR) now provides an independent forecast of economic indicators and public spending. Pay Review Bodies, for all their weaknesses, provide an objective view of the evidence for differing levels of wage increase in the public sector. True, government can override their recommendations – as rightly in a democracy it must be able to do – but at least it has then to put before parliament its reasons for doing so.

Is it inconceivable that an expanded OBR – or a new body with a specific remit – could be charged with providing for each of the major public services each year not a recommendation of what the correct level of public expenditure should be but at least a view on what it believes to be a maximum sustainable level of reduction if existing service standards are to be maintained? Had such a process been in existence would we perhaps have seen a more rational set of outcomes on Prison Service expenditure?

There may be other ways of delivering a similar outcome and there will undoubtedly be many objections which can be levelled at the specific idea floated above. But has not the time arrived when there is an onus on all those of us who are seriously interested in the business of government to at least ask if there is not a better way?

About the author

The author was permanent secretary at the Department for Work and Pensions from 2005-2010

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