2. A new context?
A not dissimilar environment to 2010 But important differences in focus
2
Public service reform
Europe and wider world
Devolution
Purse-strings
Priorities
People
7. Continued – but accelerated – budget
reductions (I)
7
Purse-strings
8. Continued – but accelerated – budget
reductions (II)
8
Purse-strings
9. Similar – but more urgent - priorities
9
Priorities
Public service reform
Europe and wider world
Devolution
• New commissioning models?
• Structural reform?
• Digital?
• May 2016 referendum
• ECHR/ HRA
• Nations
• Cities and regions
11. The UK is highly centralised
11
Structure of general government revenues across levels of government (2000 and 2009)
Priorities
12. London’s economy dominates UK cities
12
Economic output in capital vs other cities, EU countries (capital = 100)
Priorities
13. There is higher trust in local decision-makers
13
Who do you trust most to make decisions about how services are provided in your local area?
Source: polling by Populus for LGA, n=1000
Priorities
14. And other reasons to decentralise…
Arguments for:
- More responsive, tailored public services
- Stimulating local economic growth
- Better prospects for joined-up government
- Greater accountability to the public through elected local
leaders – including directly elected mayors
14
Priorities
15. … as well as reasons not to
But…
- Weak evidence base for economic growth
- Easier said than done
- Centralised services can deliver economies of scale
- Governance, capability and accountability issues remain at the
local level (though less for devolved nations)
15
Priorities
16. Devolution/decentralisation mean different
things to different people
16
Political Administrative
Fiscal Economic
‘Types’ of decentralisation Recipients of decentralised
authority
Individuals
Neighbourhoods
Professionals
Local groups
Local government
Central
Govt
Devolved
Govt
Devolved
Govt
Devolved government as
agent or autonomous
Priorities
17. The Coalition Government did deliver several
changes
17
Devolved nations:
- Scotland Act, 2012
- Wales Act, 2015
- Stormont House Agreement, 2014
- Smith Commission Agreement, 2014
English cities and regions:
- 2012 Mayors
- City Deals, 2012-
- ‘Devolution deals’ and the Northern Powerhouse, 2014-
Priorities
19. More changes to come (II)
19
Conservative manifesto pledges:
- “We will devolve far-reaching powers over economic development,
transport and social care to large cities which choose to have elected
mayors”
- “We will legislate to deliver the historic deal for Greater Manchester”
- “We will devolve further powers over skills spending and planning to the
Mayor of London.”
City devolution bill, enabling:
- the creation of ‘Metro Mayors’ for Combined Authority areas;
- Metro Mayors to take on the functions of PCCs;
- greater flexibility on the functions that can be conferred on a combined
authority;
- new, streamlined local governance models as agreed by councils
Priorities
20. There are signs decentralisation is being
taken seriously
20
The decentralising team
Priorities
22. Responses to pressures not yet fixed
22
Priorities
“Give choice to the
user. Encourage
competition between
the suppliers. Pay by
results wherever
appropriate”
Markets for public services
“there will be no more
of these pointless re-
organisations that aim
for change but
instead bring chaos”
Structural reform
Digital
“we’re going really
become a much more
digital organisation…”
23. Trends towards more, more complex, and
larger scale outsourcing
Complex
Simple
Natureofservice
Payment for
outcomes
Payment for
activity
Type of contract
Reoffending
Desktop
Hip
replacements
Drug treatment
(DIP)
Payroll Estate
management
Troubled families
Priorities
24. Risk that cuts will trigger structural reforms
24
Priorities
25. Ambitious talk for savings from digital
25
Priorities
“We are going to find the [£10 billion]
savings… the systems for finding
these savings are in much better
shape than 5 years ago… take the
impact of digital for instance. GDS…
has the opportunities to go into other
areas it hasn’t been in before”
– Matt Hancock, MCO at the Institute for
Government, May 22, 2015
27. About the Institute
The Institute for Government is an independent charity with cross-party and Whitehall governance
working to increase government effectiveness. Our funding comes from the Gatsby Charitable Foundation,
one of the Sainsbury Family Charitable Trusts.
We work with all the main political parties at Westminster and with senior civil servants in Whitehall,
providing evidence-based advice that draws on best practice from around the world.
We undertake research, provide the highest quality development opportunities for senior decision makers
and organise events to invigorate and provide fresh thinking on the issues that really matter to
government.
27
Hinweis der Redaktion
Cabinet composition to May 2016 (projected)
Source: IfG Ministerial database
Note: core departments have taken a far
Source: IFS
Total spending, 2015/16 prices
Key IFS notes:
1% a year real cut to public spending in 2016–17 and 2017–18
Real freeze to public spending in 2018–19
Spending to grow in line with the economy in 2019–20
2018–19 Spending in real terms around the level it was in 2008–09; Per-capita spend back to 2004–05
Source IFS
Departmental spending, 2015/16 prices
Key points from chart:
Spend in 2018–19 15.6% lower than in 2010–11 (real cut of £62.8 billion)
Spend in 2018–19 6.6% lower than in 2015–16 (real cut of £23.8 billion)
Departmental cuts: the next chapter?
Conservative manifesto pledged to protect 3 areas of spending:
aid: continue spending 0.7% national income on ODA
schools: protect cash spending per pupil
health: spend at least an additional £8 billion (real terms) by 2020
Together imply additional real terms spending of £6.2 billion between 2015–16 and 2018–19
requires cuts elsewhere to amount to £30.0 billion or 15.3%
cumulative cut to unprotected departments since 2010–11 would reach 32.9%
freezing defence spending through to 2018–19 would increase the cuts required elsewhere to 18.7% (or 36.9% since 2010–11)
includes: Home Office, Ministry of Justice, Communities & Local Government and Business, Innovation & Skills, Transport, …
Block grant to Scotland to fall, but by less than 6.6%
Reducing the public sector wage bill
General government employment
reduced by 376,000 between 2010Q1 and 2014Q4, fall of 80,000 in 2015–16 forecast by the OBR
now down to the level of the early 2000s and to the lowest share of workforce since at least early 1970s
Public sector pay also squeezed
our estimates suggest all of the increase in the estimated public sector pay differential seen since the financial crisis began now unwound
Difficult trade-off between 2015–16 and 2018–19
if public sector pay increases in line with OBR projection then we estimate a further 500,000 reduction in general government employment
this would reduce it to its lowest level since 1974
CPI indexation of pay through to 2018–19 would still require a further 350,000 reduction in general government employment
Will the cuts be delivered?
Coalition government successful in keeping (broadly) to the spending plans set out in 2010
But reasons to think cuts likely to be harder this parliament:
squeezing public sector pay will get harder as private wages increase
efficiencies easiest to identify and deliver presumably have been made
programmes judged to be low-value presumably already scrapped
ending of contracting out increases NICs bill of public sector employers (£3.3bn)
latest pension scheme valuations push up the required employer contribution rate (£1.1bn)
new commitments: extension of free childcare (£350m); new tax-free childcare (£0.8bn); abolition of cap on HE student numbers (£0.7bn); Dilnot social care (£1.0bn)
population continues to grow (and age)
-
- The debate in Scotland is extremely polarised. This chart shows some of the different positions on one key measure of decentralisation (control of revenue, control of spending) in Scotland.