Ministers must set out ‘quickly’ how they will respond to failing public services in the new environment of increased competition and spending restraint, auditor general Amyas Morse has said.
Speaking to CIPFA’s annual conference in Liverpool yesterday, the head of the National Audit Office said he wanted to know from the government ‘how are we going to deal with’ provider failures as public services are opened up to new providers. ‘The answer to failure management needs to be rolled out quickly,’ he said.
‘We haven’t had a really clear answer and considering that some hospital trusts are getting into some considerable difficulty, we need to get some answers on that.’
The management of public services – provided by both central and local government – were designed for ‘a time of surplus’, he told delegates.
‘Now we are moving somewhere different. If we are now moving into a situation without surplus then you need much better management tools and much sharper ways of responding to crisis.’
He added that the scope for government to bail out hospitals in trouble could be limited in the future. ‘In health, the ability of moving money around with [independent] foundation trusts is much harder. If you allow competition then you’re going to come under pressure to have a level playing field.
‘If you’re going to have a system that isn’t surplus management, people are going to have to have new skills.’
Morse also called for the government to have a ‘better understanding’ of the impact that spending cuts are having on public services. Cuts were being pushed ‘to the frontline delivery bodies’, he said.
‘But if you are going to continue doing this, we need to have a better understanding of what they [frontline services] need, otherwise you’re going to have unintended consequences.’
Whitehall grant funding of local authorities was designed to ensure ‘funding sustainability’ for council services, he added. However, this system ‘doesn’t work if you’re really in trouble and don’t have surplus to transfer’.
There is a need for ‘much sounder information and much better dialogue’ between the levels of government to share the impact of cost reduction, he concluded.
Morse also warned delegates they need to be prepared for ‘further pressures in the public sector’ in the next spending round from 2015/16, and added: ‘It would take a pretty blithe optimist to say that there isn’t more to come after that. Cost reduction will be around for years.’
