Wales needs pan-public sector response to 'unprecedented' cuts

13 Oct 11
Welsh auditor general Huw Vaughan Thomas has warned that the public sector in Wales must collaborate to cope with 'unprecedented' financial pressures, particularly on the NHS.

By Richard Johnstone | 14 October 2011

Welsh auditor general Huw Vaughan Thomas has warned that the public sector in Wales must collaborate to cope with ‘unprecedented’ financial pressures, particularly on the NHS.

Huw Vaughan Thomas

In a report published today, the Wales Audit Office says every Welsh Government department will feel the pinch over the next three years due a £1.9bn (12.4%) cut in the grant from Westminster.

Vaughan Thomas said that the Welsh NHS faces the worst financial settlement in the UK, following the Welsh Government’s decision not to protect health spending to the same level as the Westminster and Holyrood administrations.

The health service funding gap is estimated to reach between £440m and £570m by 2013/14. Vaughan Thomas warned of ‘a real strategic gap in terms of guidance and direction around cuts’ to the NHS.

He told Public Finance that the health service has had ‘a track record of really struggling to break even, despite real-terms funding increases’. And while last year it was given an extra £110m to ease pressures, this would be unlikely to happen again.

‘I can’t see that there’s a cushion to fall back on,’ Vaughan Thomas said.

He added that efficiency savings would not be enough to meet the cuts required, and called on public services to be ‘realistic’ about their plans to bridge the funding gaps. 

‘We have to go back to looking at how we provide services and whether we provide services, particularly in the NHS,’ he said.

The WAO report, Picture of public services 2011, also says that councils in Wales will face a 7% real-terms drop in revenue from the Welsh Government by 2013/14.

All Welsh councils bar one are planning to increase council tax to bridge the funding gap, an option the London and Edinburgh governments have discouraged their councils from using.

However, Welsh councils would still experience a ‘significant squeeze’, Vaughan Thomas said. ‘This [council tax] has protected local government, but they face fundamental changes across the services that they provide.’

He added that there was ‘very much’ an emphasis on councils’ sharing services, but so far they had struggled to agree their business cases.

The WAO report, which warned that 21,000 public sector job may be lost, calls on the Welsh Government’s Public Services Leadership Group, which promotes best practice, to co-ordinate a ‘pan public sector response’ to the cuts. This should ensure that cuts in one part, such as social care, do not simply lead to increased costs elsewhere.

The report states: ‘There is a real strategic gap in terms of guidance and direction around cuts. To mitigate the impacts of such cuts, public services can plan collaboratively to take account of local and national priorities, the impact on service users and wider outcomes and any unintended consequences for other public services.’

Vaughan Thomas added: ‘What is needed is strong and purposeful collaboration, good governance, bold leadership and public engagement across Wales to deliver real cost reductions and to manage the impact on service users and the wider community.’

The chair of Wales’s Public Accounts Committee, Darren Millar, said; ‘The auditor general’s report clearly demonstrates that tough times lie ahead for public services in Wales and painful decisions regarding the way they deliver services must be made.

‘Waste and inefficiency remains and cannot be tolerated as now, more than ever, every penny of public expenditure counts.’

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