Following David Cameron’s speech about the UK's budget deficit on June 7, I was rung up by a few journalists asking me to comment on some of the 'terrible' things he had said. My initial reaction was to ask what was new about what the prime minister had said in his speech.
For months before the general election many academics (including me) and think-tanks such as the IFS have commented at length on the size of the huge budget deficit (and associated Government borrowing requirement) and major remedial actions would be needed to reduce it. Also, comments were made by the same people about the fragility of the UK economy and the likelihood that low levels of growth would inhibit attempts to reduce the deficit (UK economic growth forecasts have now just been downgraded).
To a large extent, it seemed to me that the deficit problem was the non-mentionable subject during the general election campaign since none of the parties wanted to spell out the scale of the problem and what needed to be done to resolve it. In his recent speech, David Cameron has added little detail to where the cuts are likely to take place and it seems that his speech was just an attempt ‘soften up’ public opinion about what is to come.
To remember the impact of the 1976 deficit reduction exercise, following the IMF bailout, you probably need to be over 50 years of age. A large proportion of public sector managers working today have probably been brought up in an era of continuous economic growth and largely continuous growth in public spending. During that period, the term ‘cuts in public spending’ was often used to describe reductions in planned growth in public spending. Many parts of the public sector now face substantial real-terms reductions in funding over a period of several years. Thus one of the key questions for me is whether public sector managers (and financial managers) really do appreciate the scale of the challenges they now face.
Malcolm Prowle is professor of business performance at Nottingham Business School and a visiting professor at the Open University Business School. He can be contacted via his web page www.malcolmprowle.com
