By Alex Klaushofer
Public sector managers need to prepare for significant cuts in public spending now, the chief executive of the Audit Commission has warned.
Public sector managers need to prepare for significant cuts in public spending now, the chief executive of the Audit Commission has warned.In an interview with Public Finance, Steve Bundred predicted ‘substantial public spending cuts’ would result from the government’s attempt to rebalance public finances as soon as the first signs of economic recovery appear.
‘We know that cuts are coming, and with that knowledge and the time that we have available to us, it ought to be possible to manage reductions in public expenditure without doing real damage to services,’ he said.
Bundred’s comments follow an article in The Times in which he claimed that public service managers who do not plan their spending on the basis that they will have substantially less money in two years are ‘living in cloud-cuckoo-land’.
In the interview, he suggested that Gershon-style efficiencies – such as merging back office functions with neighbouring authorities or other public service providers – would be one way of mitigating the effects of the recession. ‘That does involve a degree of time and planning and letting contracts that take many months to organise,’ he said. ‘People ought to be planning for that sort of thing now, rather than waiting until the money dries up.’
Such a strategy could avoid the ‘slash-and-burn approach’ to public expenditure that prevailed in the 1970s, he added.
But he also warned that inspectors would not give public service organisations an easier time just because they had fewer resources to draw on.
‘If those resources are less than they have been used to in the past, that won’t be an excuse for providing inadequate services,’ he said.
‘I don’t think there’s a direct correlation between the amount of money that councils spend, and the quality of the services that they provide,’ he added.
‘Looking forward, I expect all councils to make the most of the resources that they have available to them.’
But he admitted that the downturn could mean that public service providers had to tighten their eligibility criteria and offer fewer services to fewer people.
‘Councils have always been in the position of rationing services – that’s what they do. The demand for public services is always going to be far greater than the ability of tax payers to fund,’ he said.
