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Analysis: budget light on public efficiency savings

14/07/15

Public sector productivity was only a footnote to a footnote to last week’s budget. Expect more ideas in the autumn.

iStock_Whitehall_Linda-StewardChancellor George Osborne’s first all-Conservative budget lays less emphasis on public sector reform than its recent predecessors. Even the productivity plan Fixing the Foundations, published as a postscript to the main budget, features the public sector only in a single page final chapter. A postscript to a postscript, in fact.

This does not mean that the government has run out of ambitions - but it does suggest it is running low on new ideas. The one new tool in the box promised by Fixing the Foundations is Single Departmental Plans, “which will identify key priorities for every department, and link inputs to outputs”. Otherwise we are left with “service redesign: shifting delivery to the local level, to put the public at the heart of service delivery; integrating front line services; and promoting early intervention to unlock savings”. There’s also that old favourite, “promoting the use of shared services across government”.

On technology, we have only a vague promise to increase the use of “digital technology and data sharing across government to enable services to reduce costs and increase outputs”.

The idea seems to be that more specific ideas will emerge from a Cabinet Office programme, funded by the Treasury, to explore “a number of cross-cutting savings proposals”.

Northern powerhouse

As for the main budget, the most promising ideas for reinventing the public sector were the devolution proposals for Sheffield City Region, Liverpool City Region, and Leeds, West Yorkshire and partner authorities as part of building the “northern powerhouse”. One especially promising ingredient is the Northern Health Science Alliance. However, if devolution is to mean anything, different parts of the powerhouse will have to work at different speeds in transforming public services, and may have different ideas about where they want to end up.

As expected, the budget also states that the government “will seek to dispose of other commercial and financial assets, which there is no policy reason for the government to hold, in order to maximise value for taxpayers and reduce the level of public debt”. But outside the banks shares acquired in the crash, the emphasis is on completing the sale of the state’s remaining 14% shareholding in Royal Mail “subject to achieving value for money”. There is no mention of the public data group of organisations - Companies House, Land Registry and Ordnance Survey - and we can expect the autumn spending review to say more.

The NHS in England has its own target of £22 billion in efficiency savings by 2020‐21. “This will come through improvements to quality of care and staff productivity, and better procurement,” the budget says, reflecting the aspirations of this year’s Carter review

More controversially, the spending review will also contain plans for “pay reforms”, including the terms and conditions of public sector workers. “This will include a renewed focus on reforming progression pay, and considering legislation where necessary to achieve the government’s objectives.” If a Conservative government with a narrow majority is serious about this measure, it will have quite enough on its plate without any other public sector productivity measures.

Enjoy the summer break: it will be a busy autumn.


Fixing the Foundations: https://www.gov.uk/government/publications/fixing-the-foundations-creating-a-more-prosperous-nation

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