Wednesday 30 March 2011
Calamitous as they may seem, the spending reductions that begin to take hold on Friday are only the start. The first cuts may well be the deepest, but they will not be the last, and nor will delivering them be the only challenge facing public services.
The UK's public services are about to step into a long age of austerity that will present them with twin agendas, both requiring unprecedented skill and ingenuity: to manage the cuts in as clever, socially just and strategic a way as possible; and to design and create affordable and innovative ways of meeting social need.
It might be tempting to assume that the worst is over. The finance director's spreadsheet might suggest the spending cuts trajectory is "smoother" in future years. But how many of the thousands of cuts plans lined up for implementation on 1 April will be neat and self-contained?
Public sector cuts: what we know so far | |
Sector | Total cut |
£20bn | |
£5.8bn | |
£4.4bn | |
£3.4bn | |
£3bn | |
£1.2bn | |
£819m | |
£350m | |
£211m | |
£165m | |
£36m | |
£9m | |
15.00% | |
What if the elegant savings plans don't deliver? A little-noticed warning a few weeks ago from the public sector accountants' body, the Chartered Institute of Public Finance and Accountancy, pointed out that many local authorities, having struggled to set a legal budget, had serious reservations about whether those budgets would hold.
Half of the directors of finance surveyed worried that the complexity of the savings programmes meant they might cost more and deliver less than expected. Almost three-quarters feared that public opposition would mean changes will take longer to implement. An overspend at the end of 2011-12 will mean pain for staff (more job cuts), and for the providers and service users.
The consequences of cuts across the public sector will continue to ripple out. In local government, some difficult choices, which have been "parked" until after the local elections in May, will be revisited. Charities will go to the wall. The NHS cuts programme will heat up, with wards and perhaps even whole hospitals under threat. Cuts to the police frontline, moving on a slower cycle, will hove into view.
The speed and depth of the cuts means that the first part of the challenge – clever cuts – has been even more difficult than it should have been. There has been little time for reflection about what to cut, where, why and how much, and the avoidable waste, individual pain and destruction of skills, value and experience that that is causing will resonate for a long time. The effects will be seen from mental health, substance abuse and homelessness to libraries and swimming pools.
The second part of the challenge is to innovate. Ministers show no leadership or sophistication here: they deliver lumpen soundbites about cutting chief executive salaries, or ill-defined homilies to the "big society". They endorse "charities" and social enterprise as proxies for innovation, and yet oversee a huge, undiscriminating bloodbath of cuts among the civil society economy. The goal is always less: a smaller state, lower wages and lower prices.
Creating smarter, more efficient and socially just public services that deliver demonstrably higher impact and greater social value is the necessary task of the public and voluntary sectors over the next three years.
Investment in innovation at a time of terrible cuts? No one says it's going to be easy, but it just could be public services' finest hour.