Budget savings should be underpinned with bold reforms

16 Mar 16

Budget 2016 provided a £3.5bn public sector savings target but could have been bolder on reform

Today the chancellor delivered a Budget that made few announcements on public sector reform but maintained the government’s overall direction towards increasing local autonomy in service delivery. Having already made a commitment in last year’s Spending Review to “increase the productivity and efficiency of the public sector”, today the chancellor was bold enough to put a figure on this. His Budget set out an aim to achieve £3.5bn savings from public sector efficiency and improved value for money in 2019/20.

It is not immediately clear how the chancellor will go about achieving these efficiency savings. Nevertheless, the reforms he did outline have much potential to improve services and reduce costs, if implemented in the correct way. One such reform is to extend freedoms currently held by academy schools, such as over teachers’ terms and conditions, the National Curriculum and school day, to all schools. Previous Reform research has suggested that schools are reluctant to use their freedoms when these are not universally applied, thereby preventing this innovative force from driving improved pupil performance.

Another key public service announcement was the plan to devolve criminal justice services in Manchester. Alongside current control over health and social care budgets, Manchester is expected to gain more powers over offender policy, which could help deliver more citizen-oriented, higher quality services. While the details have not yet been released, this reform could give the region greater scope to trial new ways of achieving value for money.

Overall, the chancellor could have been bolder in his approach to public sector reform. One such area is on the schools budget, which will receive more money funded by a new sugar tax. The schools sector has seen a significant real-terms rise in funding over the last two decades, without obvious results. As Reform has argued, the government must take a more consistent approach to improving value for money; it is difficult to marry the approach taken to increasing the schools budget with areas that have seen significant cuts.

Another key challenge is improving public sector productivity. One of the ways the government will do this is through a new ‘Costing Unit’, announced in the last Spending Review to “build a more forensic understanding of the cost of public services and drive productivity across the public sector”. This unit will be of crucial importance if the chancellor is able to both maximise value for money from public services and achieve a budget surplus by 2019/20.

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