The jury's in

The government has a massive decision to take on cuts, making the October 20 Spending Review one of the hardest and most ­significant in recent times.

Ministers have, quite rightly, emphasised the need for the review to be as consultative as possible, launching initiatives such as the Spending Challenge to involve the public in the process. Recent debates over ‘progressive austerity’ highlight the sensitivities involved in these huge cuts.

PricewaterhouseCoopers has been doing some consulting of its own. By bringing together a citizens’ jury of 24 representative members of the public - and commissioning associated opinion polls – we got a picture of what the public will support when it comes to making cuts. The chancellor should take note.

The public will accept difficult decisions so long as they believe that the government is doing its best to limit the sacrifices people are asked to make. This means reducing waste and thinking creatively about how to share costs. It also means being ruthless about efficiency, eliminating unfairness (no ‘free riders’), and making the ‘easy’, symbolically important savings while sacrificing the ‘nice to haves’.

The poll endorsed the jury’s views that administrative savings should be found, with 77% of the jury supporting new ways of providing public services to make them more efficient. The jury also believed that all public services should be subject to the same efficiency drive and felt strongly that neither health nor international ­development should be ring-fenced.

Interestingly, the response from our poll on ring-fencing health spending (58% agreeing) was mirrored by that of the jury members before their deliberations, where an even higher proportion agreed with ring-fencing health (79%).  However, after three and a half days of expert opinion and discussion, the jurors had reversed their views, with 91% wanting to take the ring-fence off.

In general, two principles emerged that could increase the chances of the public accepting the solutions set out on October 20. First, the government’s message needs to focus on the problem to be fixed; the current size of the deficit, where the money is currently being spent, and how and why the government is taking a chosen course of action. The public wants reassurance that this is temporary and that long-term prospects are secure.

Second, this message must come across as cross-governmental and big picture. It must be reinforced consistently by individual departments, in plain language, through a range of media and expert input.

The citizens’ jury expected public money to be spent more effectively and efficiently. This means doing things differently, as well as doing fewer things.  Conventional approaches will not work.

In this case, the objective must be to find savings that are: real and cashable, not ‘reinvested’ in other services; and sustainable over the medium and long term, rather than immediate cuts in discretionary spending, such as training, maintenance and buildings, which store up bigger costs for the future. Finally, the citizen and service user must be put at the centre of the debate. Otherwise, it is all too easy to save money by, in effect, passing the buck to the user.

There are several areas that would ­benefit from doing things differently. Whether resources come from the public, private or third sectors is a secondary issue; what matters is the service citizens receive. 

Without drawing oversimplified parallels, there are lessons from private sector service providers. For example, could many more government services be provided online? As the public gets used to shopping and banking online, these ­savings could be applied to public services.

In terms of workforce issues, the number of public sector employees will decrease (by 610,000 by 2015/16, ­according to the Office for Budget ­Responsibility). How should this be managed? 

Expensive redundancy programmes are not the only way.  Staff reductions should be managed, using recruitment agencies, so that staff are equipped for careers outside the public sector. Quick savings on pay costs can also be achieved through voluntary reduced working hours and holding back increment-­induced pay inflation.

In the area of support services, our analysis has shown that annual total savings of around £4bn could be made across the public sector through cutting core back-office functions (finance, HR etc) if all public sector organisations were as ­efficient as the top quartile.

All public sector organisations should reduce back-office costs by standardising and simplifying processes. A competitive market for support services also needs to be created, with a range of private and public sector suppliers; and existing public sector shared service operations should be separated from their customer organisations.

Public sector organisations also need to regularly review their major supply ­contracts on a risk-weighted basis. 

Another area to check is if there are any services currently provided for free where charging would be appropriate.  For example, it could be introduced to manage overall demand for a service, or differentiated with extra charges for ‘premium’ elements of a service such as fast turnaround.

Finally, the Spending Review must also deal with the fiscal consequences of an ageing population, with all that this implies in terms of increasing health, social care and pensions ­expenditure. Short-term fiscal constraint must be accompanied by measures to make spending affordable in the longer term.

Real political leadership is required to encourage employers and individuals to accept that working lives will have to increase as we lead longer, healthier lives, and to redesign careers and the workplace to make this a fulfilling experience.

Jon Sibson is head of government and public sector at PricewaterhouseCoopers