Government spending on public services in a ‘reactive cycle’

19 Oct 17

The government is “trapped in a reactive spending cycle on public services”, an analysis released by the Institute for Government and CIPFA today has warned.

Any “good decisions” made in the Budget next month will “not solve the underlying problems” of short-term spending decisions, the Performance Tracker has said.

Report authors noted emergency funding worth £10bn over five years by 2019/20 is being spent “just to keep troubled services going”.

But they added: “This extra money is not sorting out any of the underlying problems these services face”.

The Treasury must “improve the way it makes spending decisions, to break out of a reactive cycle of crisis, cash, repeat,” urged the report.

Otherwise it risks being left “in a reactive spending cycle, bailing out services when they reach crisis point,” the analysis authors warned.

Emily Andrews, senior researcher at the IfG think-tank, said: “The government [is] ignoring warning signs, allowing problems to mount and then reacting with emergency cash in response to operational or political crisis.”

She added: “What is most worrying is there aren’t clear plans in place for what government is going to do differently when that money runs out.”

The Treasury has no standard framework to allow it to make an “honest assessment” of the balance between funding, quality and efficiency, the report concluded. 

Working with departmental finance and analytic professionals, the chancellor should instruct the Treasury to develop its own performance tracker, the report suggested.

The IfG/ CIPFA tracker looked at 100 data sets across nine key public services to give a full picture of government’s efficiency in running these services.

It highlighted the pressures on services, such as hospitals, schools, adult social care and prisons [see details below].

“No government should end up in such a situation”, the report said, “unless there is a natural disaster or similar unpredictable emergency”.

Rob Whiteman, CIPFA chief executive, said: “Government must go beyond moving from one reactive cash injection to the next, because this fails to assess the sustainability of many public services.

“It may now be more effective to stop some services than see them collapse.”

Commenting on the Performance Tracker findings, Saffron Cordery, director of policy and strategy at NHS Providers, said: “The report calls for an honest assessment of what can be delivered within current funding constraints. We couldn’t agree more.”

The Performance Tracker also called for the creation of a new watchdog, similar to the Office of Budget Responsibility, to scrutinise assumptions underpinning government spending decisions.

This was the second edition of the publication, which expanded on the first edition released in March.

Key findings from the report include:

  • Hospitals and prisons are spending more, with no sign of improvement in key pressure points
  • Schools and adult social care have had emergency cash injections, but there is no clear plan for what happens when this extra money runs out
  • GP numbers are not rising, despite the government’s plans to improve the service
  • UK visas and immigration managed the initial post-referendum surge in demand, but a much greater task lies ahead
  • Government does not have enough data to manage risks around vital neighbourhood services like bin collection and road maintenance.

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