Politicians and public sector managers have been bracing themselves for the severest public expenditure cuts and constraint for 80 years. Now they are told to ‘prepare planning assumptions on the basis of up to 40% reductions’.
If those pressing for these 40% plans were not senior Treasury ministers, one might have been forgiven for assuming that this was some sick joke by an ill-informed comic. There were always going to be serious questions to be asked about the impact of and the capacity and indeed competency of politicians and managers to address 25% reductions - but 40%?
Let’s be clear. Reductions of this magnitude – across whole departments, entire local authorities and other agencies – have never before been attempted, let alone achieved.
One is left to wonder why the government is so keen to plan for cuts beyond those widely seen as required to close the financial deficit? And to do so much faster than many economists regard to be prudent. There will be a significant negative economic impact of reduced public sector spending in the private sector and a massive loss of public, third and private sector jobs.
The logical implication is that the government’s position is increasingly driven by a political agenda that goes beyond economic considerations. It would appear to be about changing and dramatically reducing the role of the state – be that central or local government or education or the health service (the reality is that the ‘protection’ given to the NHS is very limited given demographic and demand growth).
Where is the option of further increases in taxation?
Ultimately, this appears to be a political agenda. Therefore, I am less convinced that the government can simply ‘take 40% of the money away’ and say to local authorities and other public agencies – ‘over to you to make the decisions on what to do and what not to do’. I am all in favour of the maximum devolution of decisions and resource allocation - although this has to be accompanied by a review and changes to statutory duties and national standards. However, at 40%, government will need to signal, clearly and swiftly, what is no longer required statutorily or centrally from local authorities and other public agencies. It will have to be ready to accept local variations in service levels and not complain about the ‘postcode lottery’.
The current agenda would seem to be based on an assumption that individuals and households will organise services which hitherto have come from the state; and make personal financial contributions for services where previously they have collectively paid for them through tax. This requires a proper debate and, at the very least, there needs to be a discussion around the ethics of co-payments if these lead to a multi-tier of services depending on people’s ability to pay for them. This direction of travel could add to rather than address the inequalities within what some in government choose to call ‘the Broken Society’.
I am sure that the community and wider civil society sector will be able to move into some of the gaps left by a retreating public sector – but what is missed in the argument is that, with few exceptions, this sector usually looks to the public sector to fund such activities and for the resources to build its capacity.
There is a very strong case to be made for enhanced roles for the community and third sectors. Indeed, there is no reason why the state should provide as much as it currently does. However, such change cannot be spontaneous. It will take time to build the sector’s capacity and this will require capital and revenue expenditure. Equally, the major redesign of services that is required, especially across public agencies, will take time and money - and the plain truth is that with public agencies planning to take 25-40% out of their budgets over the next three to four years, they will have little time, money or strategic thinking space for such upfront investment. The government is ominously quiet on this point.
‘Challenging’ doesn’t even begin to describe what lies ahead – so what is to be done?
Localism and local responses will be essential. There has to be greater collaboration across public agencies, and the principles of ‘Total Place’ (or ‘place-based budgeting’ if this supersedes Total Place) must prevail. Local authorities need to demonstrate their will and ability to be place shapers – influencing and ideally strategically commissioning from their local partners. There will need to be much more local discretion and decision making. The government’s plans for the NHS and schools can be accommodated in such arrangements, but the schools and GPs, as well as other public agencies, will have to be under a duty to co-operate if progress is going to be made. Without such ‘architecture’, the government’s plans have even less chance of working.
Hard decisions are required. What services are to be stopped? Which are to be delivered in completely different ways? Which must move from public sector to the community, voluntary and social enterprise sectors? Which can transfer to employee-led co-operatives? How will the necessary transitions be designed, managed and funded? Above all, where are the managerial and professional capacity and competencies – and let’s not simply say ‘in the private sector’.
Candidly, even in the private sector, there are few who have faced the magnitude of the challenges currently facing the public sector. Closing a whole retail chain is somewhat easier than re-designing and/or relocating an entire public service that continues to have to deliver outcomes even during a period of change. Staff will be the subject of major change but they have to remain motivated and focused to deliver. Service users cannot be expected to ‘suspend’ their needs to accommodate the change programme!
The scale of ‘adjustment’ requires the painting of a new picture of a very different public sector and public service landscape – where the former plays a much diminished role in securing the latter.
The government needs to be honest about its ambition and end goal – both financial and, more importantly, political. If this truly is the direction in which we are headed, then we need a swift and honest political debate about what the role of the state should be and what the alternatives are if the country is going to benefit from the civilising and cohering value of public services – by whomever and however they are provided and funded.
There must be also be a practical debate and dialogue about the implications of such a direction of travel, and more importantly, how we are going to get to the government’s goal without a lot of people getting hurt and damaged along the way. The political and practical debates will ultimately be about the shape of civil society and the role of the collective state and its relations with the citizen. These are fundamental matters. While I am not arguing for no change, I am, however, arguing for reasoned and transparent decision making.
What will the fallback position be if cuts on this scale are unachievable and/or their social and economic price are unacceptable?
If there is a case to be made for new arrangements of such a scale, and a radically new social contract between citizen and state – now is the time for the government to articulate and justify it.
John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGiU)
