Government approach to funding public services ‘has run out of road’
19 October 2017
Measures to tackle emergency funding shortfalls in key public services will cost £10 billion over five years but amount to a "sticking plaster" solution, according to expert analysis of government spending.
The extra money will help hospitals, schools, prisons and social care keep going but will not tackle the underlying problems facing the services, the Institute for Government (IfG) and Chartered Institute of Public Finance and Accountancy (Cipfa) warned.
Their analysis of 100 different data sets, mostly produced by the Government, warned that the approach taken by ministers since 2010 had "run out of road" and fundamental reforms were necessary.
Chancellor Philip Hammond's options in next month's budget were "limited by the state the services are in" and by the decisions taken since David Cameron began austerity measures in an attempt to balance the books.
The failure to make "transformative" changes had left the Government trapped in a cycle of allowing problems to mount until there was a practical or political crisis and an injection of emergency cash was the only option.
The report noted that £10 billion of extra resources had been diverted to keeping services going over the period 2015/16 - 2019/20 in hospitals, prisons, adult social care and schools.
Report author Emily Andrews of the IfG said: "Failure to deal with building pressure is creating an imperative to act in prisons, hospitals, schools and adult social care. This is a poor state of affairs.
“No government should end up in such a situation, unless beset by a natural disaster or similar unpredictable emergency.
“If the Chancellor and government cannot break out of this reactive cycle they must accept that budgets will rise or services will deteriorate.”
The report noted that for seven years ministers had relied on locally-driven efficiency savings and the squeeze on public sector pay to manage spending,
“Where this proved insufficient, the scope of services narrowed or quality fell, without explicit national political debate,” the report said.
“This approach has now run out of road.
“Although further efficiencies may well be possible, these cannot be delivered by setting hard budgets and sticking to them.
“These efficiencies will only come through the kind of changes that require time and national political leadership.”
Emergency cash had already been pumped into schools and social care, the report noted.
“These sticking plaster solutions have a time limit,” the report warned.
“If the Government does not want to have to return with more money in a few years’ time, it will need to start preparing the ground for genuine changes to the way these services are delivered or funded.”
There was “little choice” for the Government except to pump extra money into prisons and hospitals.
The report noted that even if good decisions were taken by Mr Hammond in his November 22 Budget they “will not solve the underlying problems which have allowed this Government to get into this reactive spending cycle”.
The Government needs to “take action to ensure that foreseeable problems do not become expensive crises”, including drawing up its own “performance tracker” system which should be made public and scrutinised independently.
Cipfa chief executive Rob Whiteman said: “Government must go beyond moving from one reactive cash injection to the next, because this fails to assess the sustainability of many public services.
“It may now be more effective to stop some services than see them collapse.”
A Treasury spokesman said: “We are investing in our vital public services while ensuring taxpayers get value for money.
“Our delivery record is strong: Since 2010 crime has fallen by more than a third, over 6.6 million pupils are taught in good or outstanding schools, and the NHS admitted, transferred or discharged 1,800 more people daily from A&E within the four-hour standard compared to 2010.”