Implementing the Spending Review: the key challenges

25 Nov 15

This Spending Review isn’t simply about achieving more for less. After the chancellor’s announcements today will reduce government spending by nearly a fifth, we’re now talking about a lot more for a lot less.

The next few years will be tough. The scale and complexity of the challenges facing the public sector are enormous, particularly in the non-protected areas of government spending. Even in the protected areas – such as the NHS and schools – the pressures on resources are going to remain intense to 2020. Success will depend on an extraordinary ability to focus on areas where the public sector is most successful and can deliver best value for the citizen.

With public expectations of services continuing to rise, the government’s ambition to reach a spending surplus by 2020 must be matched by efforts to re-shape much of the public sector through a radical and practical 5-year reform programme.

Our own work at the Management Consultancies Association on public service reform suggests some key themes as public services look to grapple with funding reductions.

The transformational potential of digital is now central to successful public sector change. Used wisely, it provides a rocket boost to reform, improving services while also saving money. While the Government Digital Service, which the chancellor announced will recieve an additional £450m in Whitehall, has made a promising start, our member firms believe that much more can and should be done.

Yes, it is important to put processes and transactions online. Often this helps make them both simpler and more effective. But this only really scratches the surface. Digital also provides a real opportunity to re-invent service provision, empowering both citizens and frontline staff, and to allow far greater self-management of services that are currently delivered through high-cost and inefficient channels.

Will the government now give the green light to the imagination, creativity and innovation that will be required?

Reform should also go hand-in-hand with greater devolution, for both the nations of the UK and localities within England. This is a powerful theme of our age.

As local government and other local institutions rise to the challenge of taking on more fiscal responsibility, there is an opportunity to ask fundamental questions about what they are for. Local government’s duties – a set of service responsibilities that have accumulated since the 18th century – are long overdue a principled re-examination. This should establish what councils should do, what they should not do, and what communities should do for themselves.

Again, this will need innovation and courage. Many MCA member firms are working with local councils to help them transform their ways of working. Will the government’s very welcome devolution programme now pave the way for a further flowering of creative energy? Can we secure a new settlement that will lock-in both greater localism and stronger communities?

Two further steps are needed to help the public sector move in this direction.

First, government must be free to take advantage of the plurality of providers that can help. External providers can introduce greater commercial discipline and sense of accountability. But innovation is needed here as well. ‘Business as usual’ outsourcing is no longer an option. We hope and expect to see greater use, for example, of payment by results and a relentless focus on delivering outcomes rather than measuring inputs, often buttressed by the sharing of both risks and rewards.

And, second, this should be supported by a more strategic approach to procurement and the use consulting services. The ConsultancyONE framework for consultancy, for instance, has clearly failed to deliver the benefits that were widely hoped for. Consulting has a great deal to offer, and our member firms are keen that best value is delivered – and demonstrated – in everything that they do for the public sector. With the scale of the tasks ahead of us, nothing less will do.

  • Alan Leaman
    Alan Leaman is chief executive of the Management Consultancies Association

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