Chancellor’s plans will reinvent service provision
Chancellor George Osborne has told Whitehall to draw up savings plans of 25 and 40 per cent of its budget, in an effort to save an additional £20bn in public spending by 2019-2020.
In his latest spending review, the chancellor promised to “deliver more with less” in an effort to make central government more productive and “efficient” in the years ahead.
The review pledges to “finish the job of repairing Britain's finances”, which the chancellor said would require "significant savings" across unprotected government departments; that is every department other than health, schools, defence and overseas aid, whose funding is ring fenced and out of direct government control.
“We will prioritise our investment in the NHS and in our national security. We will continue to protect spending on schools and honour our commitment to the poorest people in the world,” the review said.
“These investments will ensure the sustainability and quality of core public services, but must be accompanied by measures to increase productivity and efficiency to ensure that every extra pound is put to the very best use,” it said.
However, critics claim Osborne’s savings strategy is in contrast to the government’s 15-point plan to tackle the UK’s productivity puzzle, which pledged “long-term investment in economic capital, including infrastructure, skills and knowledge.”
According to analysis from Institute of Fiscal Studies, departments whose funding has not been ring-fenced have faced cuts of 20-30 per cent since 2010, with the number of jobs falling as a result.
“There's no longer fat to be cut,” said Stewart Hosie, deputy leader of the SNP.
"I think the key thing is we look at the last parliament. He [Osborne] failed on all these major targets. It's into the bone and the impact on services could be catastrophic,” he added.
In his analysis of the review, the BBC’s Robert Peston said the public sector would need a complete culture change to improve productivity.
“Ministers aren't management-consultant productivity gurus. And we have a generation of civil servants, who grew up under the post-97 Labour government, who were better at spending than saving and were demonstrably appalling at IT,” he said.
Gary Porter, chairman of the Local Government Association, said reducing local government finances by 25 per cent would mean a decrease of £4bn in real terms, while a 40 per cent reduction would mean this rises to £7bn by 2020.
"For many councils, there are few efficiencies left to be made and these alone will not be enough to cope with further funding reductions. Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels,” he said.
A PCS spokesman added: "While the true extent of these needless and politically motivated cuts will not be known until the autumn, it's clear they will be deeply damaging and leave key services at risk of being taken over and stripped down by private companies to run them for profit rather than in the interests of the people they are intended to support."
The full review will be published on 25th November 2015.