Fear is a Man’s Best Friend

by Ken Gibb

With apologies to John Cale, fear probably is the appropriate word for many when contemplating the Spending Review, which is less than two weeks away. In recent weeks, several Scottish local authorities have warned us of eye-watering cuts ahead, of job losses and service reduction. In Scotland this is also in part to do with the council tax freeze; David Cameron, however, had less excuse when he contacted his constituency council to complain about its cuts.

I do not disagree with the general line taken about cuts and austerity that one would find in places like Mainly Macro  – this is a political choice that is more convincingly about shrinking the state than it is about the necessity for finding rapid fiscal corrections. However, with a majority government this is what we face and it is of course worth thinking about what HM Treasury may propose in the Spending Review.

To this end, the Institute for Government has published an interesting report by Daniel Thornton, Jonathan Pearson and Emily Andrews. Their premise is rather than doing more with less, the public services, particularly in the unprotected areas, will be managing with less. They note that while the cuts to public spending are not without precedent, the sustained nature of reductions over an entire decade, is new. In this context is there a way to a ‘smarter state’?

The authors argue that Departments have to show how they are going to achieve the SR objectives and continue to deliver what they prioritise. In the face of the Review cuts (whatever they turn out to be for specific corners of Government), each department should therefore publish their Single Department Plans by the end of the financial year (March 2016) with a short (i.e. feasible) set of priorities and achievable targets for the SR period and that this be supplemented by project implementation and workforce plans.

Second, the Government has a major projects portfolio and needs to assess which existing projects should be protected and which reduced or even ended.  Project failure risk has to be reduced as a priority by proactive government action, and, any new projects should be much more closely scrutinised before they are announced.

Third, they express muted enthusiasm for public service markets as ways of introducing innovation and efficiencies in to the public sector but recognise the ‘complex challenges in developing and managing effective markets for pubic services, and tee have been several recent failures’ (p.4). So, they recommend establishing a hub of expertise able to steward public service markets – this sounds like a new if necessary layer of regulation.

Fourth, recognising the undoubted importance of the devolution city deals and successive waves of such agreements, they argue for a principled approach to decentralisation. Of course, a key feature of city deals is the lack of a consistent process but rather a series of context-specific ad hoc deals, which look very different across the piece. But it is right that this process cannot simply be a top-down Whitehall-led programme.

Fifth, they recommend continuing to pursue the government’s ‘ambitious digital agenda’, but with strong oversight, including enforcing standards. This is critical to the high risk areas where digital by default is so exposed to possible failure; none more so than in the case of the roll-out and subsequent maintenance of the universal credit system.

Sixth, and in respect of arms-length businesses (which they argue can deliver efficiencies), the authors point to the wastefulness of some institutional reorganisations, which can be ‘disruptive, time-consuming and expensive’ (p.5). They argue instead for careful consideration of the  ‘do nothing’ case to be made and taken seriously whenever such institutional reforms are being actively considered.

Finally, the authors raise questions about the Government’s capacity to actually deliver the legislation it will need in some of these areas as a result of the SR. This needs to be fully considered when contemplating the kinds of changes discussed above. Second, they also question whether the civil service has the capability and capacity to ‘take on the challenge’ of the implications of the likely scale of change implied by the SR.

If we examine the likely SR proposals as they are understood and assess them against their own objectives, then there are a few critical points that can reasonably be made. First, Thornton and colleagues have demonstrated that there are many challenges to delivering the programme changes required and that adequate delivery requires a considerable  evaluating and monitoring infrastructure. Meanwhile, however, second, there are genuine issues about the capacity to deliver what would be required.

And in addition there is still the sense that the government will play short run political games and make 3rd best choices to achieve specific goals and often do this when they have not obviously thought everything through. Witness the recent unplanned bandying about of options to find the tax credit savings elsewhere in the welfare reform programme. At the same time, government continues to provide evidence of its lack of sure footedness over the things it proposes that are a part of this wider narrative.

On the other side of the Spending Review on the 25th, people like the IFS will provide detailed analysis of the Spending Review and I daresay there will be more posts. But I did think the Institute for Government’s analysis is a useful step beyond the big headlines and one that goes into just how the SR would actually be delivered in the departments where it will matter – and that it will not happen without much effort and further reform.