Spending review: An opportunity to redesign services for the better?

When it comes to promoting public service transformation, the Government is not short of challenges – but the November Spending Review could just be the push departments need, says Reform’s Andrew Haldenby

At its best, the autumn Spending Review will not only distribute £3.5 trillion in taxpayers’ money but also explain how government can organise public services more smartly and intelligently.  That positive scenario came a step closer this week as the first details of the review emerged, ahead of its publication on 25 November.
Speaking to the Treasury Select Committee, the Chancellor emphasised three ways in particular in which he wanted public services to transform. First, better use of digital technology: “we can look at making Government much more adept at using the latest digital technology to communicate with its citizens,” as he put it. Second, use of government land: “The MoD holds 1 per cent of the entire landmass of the country; is that really necessary?” Third, to devolve more decision-making to local government and elected mayors.  

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All these themes need to be developed.  Nevertheless they point towards public services that are much more joined up at the local level, beginning with criminal justice, skills and welfare and moving onto welfare, health and social care.  These new services make smarter use of land partly because they are using digital technology more intelligently.  They also use digital technology to understand the nature of the demand on their services, and reshape those services as a result.  They are in tune with the changes that are already happening in public services across England and the rest of the UK.

The Chancellor stole the headlines when he asked the government departments with unprotected budgets (such as local government and justice) to show him how they might save up even 40 per cent of their budgets. That is a huge proportion, bigger than any department faced in the last Parliament. It’s not a real ambition. As the Foreign Secretary Philip Hammond intimated this week, the Treasury has a history of discussing eye-catching cuts as a way of conducting the conversation on its own terms. More positively, as Matthew Hancock MP said on Tuesday, the idea of a 40 per cent cut will make departments think of new ways of working that they would not do otherwise.

Some have criticised aspects of the Spending Review framework.  The Chancellor has protected over half of all public spending from cuts: pensions, the NHS, schools (albeit only protected in cash terms), defence and overseas aid. George Osborne said these decisions were simply a reflection of “political priorities”, and of course all decisions on public spending will include political considerations. Still, it makes it much harder to argue for transformation in these key areas when they have been given “protected” status. Just as importantly, it creates a barrier between the protected and the unprotected which gets in the way when public services should be working more closely together. This is most obvious in health and social care. Cuts to social care (unprotected) have actually imposed costs on the NHS (protected), by undermining services for frail elderly people. In fact the two budgets should be brought together rather than treated as separate.

Nevertheless the direction of travel is optimistic. The Chancellor has given a green light to public service leaders who want to redesign their services for the better.  He has included public service productivity and transformation in his overarching productivity plan. Also this week, an IMF working paper reported that a more productive public sector makes a big difference to the performance of the whole economy, private sector included. For this reason transformed ways to deliver public services will also deliver greater prosperity and opportunity to UK citizens.

Read the most recent articles written by Andrew Haldenby - Andrew Haldenby on digital government, 2015 and beyond

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