The CBI believes public services cannot revert to the ways of the past. But what shape should they take? It’s time for a national conversation
Public services are part of the foundation for a growing UK economy with healthy, educated and productive people. But current models of public services face big challenges now and in the future.
We need to build a consensus across society about what our future public services should look like. Businesses want to be part of the conversation as companies and their employees have a stake in future public services as users, taxpayers and providers of services.
The CBI’s vision is one where public services fit around citizens’ lives and join up to tackle the root causes of the problems people face. Achieving this will require tough choices about spending priorities and a frank dialogue with the public about what services will look like in the future.
The UK economy has finally returned to the path of growth after the global financial crisis. But the pressures on public finances mean our public services cannot revert to the ways of the past. At the same time, the needs of our society are changing. We have to identify new approaches and new solutions to enable the UK to manage four big challenges facing our public services.
The CBI’s report Our future public services has identified these four challenges, which are not sufficiently reflected in political parties’ plans for government. The first challenge is to learn to live within our means even after the current fiscal consolidation is completed. For 18 out of 21 years between 1993 and 2014 the government spent more than it collected in taxes. The savings needed to get the public finances in order currently stand at £77bn, the equivalent of £1,200 per person in the country.
The second challenge is meeting the needs of an ageing population. The population aged over 65 will grow by 39% by 2030, while the working-age population will only grow by 2%. That so many people now live into their 90s is testament to great advances in medical sciences, as well as improved understanding of public health. But the demographic shift will need public services to move in step to meet changing needs.
The third challenge is for public services to adapt to changing expectations and lifestyles. Digital technologies mean our way of life is becoming more flexible and connected than ever before. In 2004, 1.6% of adults owned a smartphone – 10 years on, the figure is 61% and rising.
At the same time, more and more of the UK’s population are living on their own or have caring responsibilities. If their needs are to be met effectively and affordably, public services have to be remodelled to give people a better chance to shape and control how they want to receive and communicate with services.
The final challenge is securing public buy-in for evolving public services. Public services will have to change – and to go on evolving in the future. Achieving that is a challenge in itself. Public services are deeply valued by people from every background as an essential safety net. We have to find new ways to build public backing for changes in services – and to bring in more people with fresh ideas to help shape and improve those services.
The CBI sees three big solutions that will begin to address these challenges. First, we need to get the balance right on funding for future public services. Second, we need to fit services around how people live their lives and third, the UK needs to start a national conversation about how public services should change because citizens, as funders and users of public services, need to be part of the decision-making.
The next government should balance the impact of deficit reduction by looking at potential contributions from protected budgets and cost-effective welfare spending. In the long term we need to ensure public services are built on a solid fiscal foundation. The CBI believes this can be done by linking public spending to GDP growth and by introducing a ‘sustainable fiscal rule’ in the next parliament to be implemented once fiscal consolidation is complete in 2018/19. This will ensure the government spends no more than the revenues it raises (38% as a share of GDP) over the economic cycle.
Cost-effectiveness and adaptability can go hand in hand. We need to use resources in the smartest way we can. At the same time, we should be looking for public services to fit better with the ways people live their lives.
That is why the CBI believes a move towards more digital public services will make it easier for people to deal with any agency. Equally, joined-up services will ensure people get help speedily and effectively because ultimately people care about the service they receive, not about the particular agencies that deliver it. To allow public services to evolve as society changes, the CBI believes the government needs to do more to allow innovation to thrive. Innovation requires collective responsibility, a clear understanding of what failure looks like and cross-sector competition to generate ideas. The CBI has outlined how that can be done through a broad-based public services R&D lab.
Citizens both fund and use public services and should therefore be part of decision-making about them. Much as Lord Turner’s pensions commission developed a consensus over some big issues concerning retirement, the CBI believes the UK needs to start a national conversation about future public services in light of the challenges outlined here. We need to win public backing for change now and in the future and draw on creative thinking from every possible source. This could most effectively be conducted through a cross-party commission with citizen participation.
Our new report is a rallying call to whoever takes the reins in May. We welcome all government, business, charities and voluntary organisations to engage with us through our CBI public services network and tell us what you think are the biggest issues to face future public services.
Jim Bligh is head of public services and pensions at the CBI. Join the debate at www.cbi.org.uk/psn
This opinion piece was first published in the November edition of Public Finance magazine
