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The 2020 Public Services Trust Blog

Wednesday, June 23, 2010

A budget for cuts but is it a budget for reform?

By Ben Lucas

This is a tough budget. It adds another £40bn to the already stringent consolidation planned by Labour.  We won’t know its full impact for some time to come. The real test will be what happens to the economy and to jobs.  If growth continues and gathers pace next year, then the Government will feel vindicated, if not then people will question whether the scale and timing of deficit reduction was right.

At least now we know the numbers – what we don’t yet know is what will be the impact on public services.  That will be set out in the spending review, which now assumes even greater importance given the challenge of trying to maintain and even improve social outcomes in the context of huge spending cuts.

A large part of the story is about welfare cuts.  Child benefit will be frozen for the next three years and all other benefits, except pensions, will be uprated only in line with the Consumer Price Index, rather than with RPI.  Housing benefit will be capped at £400 a week.. The principles which are being applied to welfare cuts are conditionality and means testing, with the aim being to target expenditure on those who need it the most and to incentivise work.  But this clearly does not explain the decision to uprate the state pension, which is a political decision.

By far the biggest inconsistency in the coalition government’s position on public expenditure is on health.  The government’s argument is that we face a moment of unprecedented fiscal crisis and so everyone will have to share in the pain of cuts.  In so far as there is a glimmer of hope at the end of the tunnel, it lies in the belief that a crisis can be an opportunity to reform public services to get more for less.  Both these considerations ought to apply to health, it bears a huge share of public expenditure and no service area better represents the concentrated power of institutional and vested interest than the NHS.  Either public services need to be reformed or they don’t. It makes no sense to exclude the most expensive service of all from this process.  The exemption risks undermining reform elsewhere as well as forcing other spending areas to shoulder a disproportionate level of cuts.

It is a measure of just how big the other departmental cuts are that what looked a savage reduction in capital spending under Labour now looks likes an infrastructure reprieve under the new government – even though this still corresponds to a 17% cut in building projects.  The previous Budget’s projection of 10% cuts in non-ring fenced department spending now looks like the good old days, when compared with the 25% cuts which these departments will now face.

What the Budget lacked, and the Spending Review will have to provide, is a coherent public service reform narrative and strategy.  This points to a dissonance at the heart of the Coalition Government.  Whilst the Prime Minister has proclaimed the Big Society as the Government’s big idea, this is not mentioned anywhere in the 120 pages of the Budget statement.  Yet, if the Big Society is to have substance then surely it must be relevant to the fiscal challenge, otherwise it is just a nice to have decorative adornment to the age of austerity.

The spending review will need to develop a strategy for public service reform and transformation and not just for expenditure cuts. The challenge is even greater than that faced by countries like Canada, because the scale of potential cuts is greater and the expected level of economic growth is lower.  The question will be how can cuts on this scale be delivered without unsustainable public sector job losses, particularly in the north? And how can communities and neighbourhoods prosper and develop greater autonomy, when the support they will need to enable this will be under pressure as never before.  The spending review will need to put the emphasis on structural and institutional reforms and on building social productivity – focussing on neighbourhoods, service integration at local level,  more for less budgets for local areas and the social finance mechanisms which can enable scarce funding to be reprioritised on prevention and early intervention.  Without this, retrenchment will quickly turn into residualisation.

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Wednesday, June 16, 2010

England’s Promised Land?

By Charlotte Alldritt

One of the most important points raised at this morning’s launch of 2020 Vision was the need to motivate citizens to engage with public services.  If we are to draw upon the broader, social resource that individuals and communities can bring to the table we need to paint a positive vision for public service transformation. As Rt Hon Stephen Dorrell (2020 Commissioner and Chair of the Parliamentary Health Committee) said, the prophets did not lead people out to the ‘wilderness’ but into the Promised Land.

 

2020 PST welcomes the public debate taking place on the need for public spending cuts.    However to inspire change in citizen attitudes and behaviours about the part they can play in achieving the outcomes we want from public services, we need to set out what our Promised Land looks like.  The public debate will eventually need to move from one of ‘fearful’ realisation of the ‘harsh realities’ of ‘tough choices’.  It will need to call upon language that speaks to a positive future, brought about by seizing the opportunities for change that the current ‘period of discontinuity’ (in fiscal, economic and political terms) presents.   Then we can encourage people to help create the service outcomes that we – as a society – want for ourselves and each other.

 

Timing is crucial though.  Last September only 24% of the public agreed that public services should be cut to address the level of national debt (Ipsos MORI/2020PST, 2009).  Seven months later, 54% agree (Ipsos MORI/Economist, 2010).  It is not uncontroversial to say that shift of political parties in framing the size of the problem and the available policy solutions has been critical in steering public attitudes.  The media also plays a part. 

 

And here, on the brink of an opportunity for reform into the Promised Land, we meet an age-old barrier; to paraphrase Alan Shearer after England’s 1-1 draw against the USA on Saturday – the British media is either in a state of abject despair or bursting elation.  Neither is particularly helpful when England puts in an ‘ok, but can do better’ performance. Similarly, the complexities of the UK’s fiscal challenges mean that a nuanced and genuinely ‘honest’ public debate is likely to be reduced to black and white headlines and soundbites.

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Posted by Charlotte Alldritt at 1:58 pm
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Monday, September 14, 2009

Carpe diem: don’t stress about national debt – bigger issues are at stake

By Charlotte Alldritt

According to yesterday’s poll by YouGov on behalf of Policy Exchange, the primary public concern is to reduce the size of the national debt. Speaking last night on BBC Radio 4’s Westminster Hour, the Director of Policy Exchange said that people are no longer willing to stomach tax rises to combat the spending deficit and welfare payments top the list of prospective cost cuts.

However, as Will Hutton argued in the Observer yesterday, the size of the national debt should not our primary concern. Although the views of the public should be taken into serious, meaningful account, scare tactics about arbitrary and abstract debt levels cloud the debate. Hutton reminds that “since 1750 the national debt has always been proportionally higher than [80%], except for two 40-year periods – one at the end of the 19th century and the other from the 1970s until now.” In fact, “[p]eriods when the over-riding preoccupation has been lowering the national debt have coincided with industrial, economic and strategic decline. So it will again.” Cutting welfare and spending on public services to reduce debt is an attempt to solve an imaginary problem. Doing so will make the genuine reality a whole lot worse, particularly as unemployment continues to bite.

Instead of cutting debt soon and fast, we should invest in transforming our public services so that they are fit for the needs of citizens now and in the medium to long term. Our research has shown that while the fiscal situation is critical and should inform much of the context and impetus for reform, there are other significant drivers: climate change, an ageing society and the rise of chronic health conditions to name just three. The costs of meeting the demands upon our public services are increasing and the current model of delivery is buckling under their weight.

Now is not the time to cut spending for the sake of an arbitrary magic number – our economy can and will thrive at a debt level of 80% or even 100%. Instead, let’s seize the day and dare to think the unthinkable – a radical re-imagining is needed to deal with the bigger issues at stake.

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