11 May 2007
By using the Comprehensive Spending Review as a clean sheet assessment, the government has a chance to satisfy the public's demand for better services – while keeping spending under control
The Comprehensive Spending Review comes at a critical time economically and politically. We are at the end of a period of public spending plenty, when massive real-terms increases were the norm. The far lower increases set out in the last Budget might well feel like cuts to those parts of our public services that have not pushed through reforms or embedded a culture of efficiency.
The lower increases are born out of a need for greater spending discipline overall, both for the 2008/09 to 2010/11 CSR period and beyond. The CBI's submission to the Treasury makes it clear that current government borrowing targets need to be met and the tax-to-gross domestic product ratio stabilised and then reduced if the UK's competitiveness is not to be damaged.
Yet the public appetite for public services is undiminished, with people demanding better quality, more choice, greater personalisation and, as taxpayers, better value for money. Satisfying this appetite while exercising fiscal constraint is no mean task.
This is a political as well as a financial challenge, and we have the uncertainty of the interregnum period following Tony Blair's resignation to face, too. This uncertainty has been with us for a while, with neither Gordon Brown nor David Cameron being explicit in their plans for public service reform.
The result has been jitters among service providers and a lack of clarity of purpose from commissioners. Wait-and-see attitudes do not make for continuous improvement in service delivery. That is why the CSR must be used as a clean-sheet assessment of what the government does and what it pays for. It can be a vital lever in the process of securing greater efficiency, innovation, user focus and fairness between public service providers.
We have recommended a five-point plan to transform public services and public spending in our CSR submission, as well as outlining fully costed spending proposals. We see the plan as a way of squaring the circle of people wanting more and better public services while the country faces a period of greater fiscal austerity.
First, delivering flexible, high-quality services and better value for money requires a new model of government. In many cases, there is a conflict of interest between government as a provider of services and government as a protector of the public interest. This should end.
The post-war model of the state as monopoly provider is no longer appropriate. Instead of trying to deliver everything, the government should take a strategic view of those services it can provide directly while increasingly commissioning others to deliver the rest. It should decide what outcomes it wants to achieve, and then choose from a range of providers to ensure users get the best services and value for money.
Two, there should be greater competition and use of markets in service provision. The past decade has shown how these can deliver improved services, value for money and social equity. Business is justly proud of its role in improving outcomes in failing local education authorities, reducing hospital waiting lists through independent sector treatment centres and introducing more decency in our prisons.
But if the market is to deliver more such improvements, there must be a level playing field between providers, regardless of which sector they come from. The regulatory environment has to be even-handed and must never unfairly benefit one provider over another.
Three, it must be recognised that the most effective services are those that are responsive to community needs. People should be involved in service design and delivery through consumer boards and citizens' juries. Rigorous ongoing testing of user satisfaction will improve standards and help deliver the services people actually want.
Four, the government needs to take forward the shared services agenda. This could see significant savings go hand-in-hand with improved services. Yet a fear of the consequences of pursuing this agenda, such as localised job losses, coupled with an unambitious ten-year shared services transformation programme, means progress is likely to be limited unless Whitehall and council leaders show greater leadership.
Finally, there needs to be a greater willingness to tackle aspects of the public sector employment regime. Pay needs to be linked to performance, with rewards used as incentives, rather than perceived as a right. Taking public sector staff along with reforms is crucial. Only motivated staff will deliver the best services and any good employer will tell you that change cannot work without employee buy-in from the start.
Reform is a huge issue for business as a user, funder and supplier of services. The government needs to be bold, seize the opportunity the CSR affords, and take the debate forward.
Neil Bentley is CBI director of public services
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