Transcript The context and outlook for public expenditure

The context and outlook for
public expenditure
Tony Travers
London School of Economics
The wider public sector and local
government
 The government’s decision to cut the
deficit to zero by 2015-16 will lead to
accelerated public spending
reductions
 80 per cent of the reduction will be
achieved by real-terms public
spending reductions
 IFS = sharpest public spending
reduction since 1945?
Local government spending to fall
sharply, especially capital
 Labour and Conservative Chancellors
set plans to cut government capital
spending by over 50% by 2014-15
 Current expenditure to be protected
in some service areas, with will
require far deeper cuts elsewhere
 Chancellor Osborne has demanded
exemplifications of 25% to 40%
reductions by 2015-16
June Budget plans
ODR estimates, based on previous government’s plans
£bn - cash
2010-11 2011-12
Dept Exp Limits
342.7
343.1
2012-13 2013-14
341.4
341.2
2014-15 2015-16
337.7
340.0
Travers estimates, based on NHS+Overseas Development spending
‘Protected’ exp
DEL minus
‘protected
110.0
112.8
115.7
118.5
121.4
124.5
232.7
230.3
225.7
222.7
216.3
215.5
206.8
195.9
190.5
DEL minus ‘protected’
- Real terms
232.7
£bn - real
227.0
214.7
Local government is all within DEL; Social services are within LG
A broad range of possibilities
 LG current spending appears likely to
be affected in the following – per
annum impacts
A)
B)
C)
Labour’s plans, all services treated the same
Cash: -0.5% Real terms: -3%
June Budget 10 plans
Cash: -2.5% Real terms: -5%
June Budget 10, but with schools etc partly protected
Cash: up to -5%
Real terms: up to -7.5%
Social services are not ‘protected’ in any way
Service impacts for ‘unprotected’
services, and others…
 Need, from now on, to do far more than
immediate responses such as:

Freezing posts; pay freeze; ‘efficiencies’; use of
reserves; delays to capital programmes etc
 Near-future possibilities likely to include:






Decentralised pay bargaining
Pay freeze to extend for more than two years
Radical re-thinking of need for joint service
provision (LG and other local providers)
Essex, Barnet, Suffolk, Lambeth etc radicalism
Stopping doing some things?
Rise in fees, charges and scope of charging
Developing long term strategic plans to
secure adult social services’ survival
 Clear and present need to work with other
local services to secure the future of adult
services
 Thinking previously-difficult things, eg:
 Could social services move (in part) to semiindependent status?
 Might more volunteers have to be used to
supplement staffing?
 How far can adult social services be co-located
in other public service buildings?
 Sales of assets to re-use them to ensure capital
development
Determining what is to be expected of local
public services in the future
 Can existing service patterns and
providers be maintained?
 Can services be co-located?
 Can more provision be ‘out-sourced’?
 Can the ‘Big Society’ deliver
anything?
 Councils and other service providers
may see a move to a single local
budget of some kind
Securing the future
 Speed of reaction will be of the essence
 From this autumn, change will occur rapidly
within town and county halls
 Need to secure the objectives of the service
within different buildings, structures and,
possibly, with different people
 Public tolerance will be tested by cuts in
expenditure
 However, adult social service will continue
to exist – but they will inevitably change
The context and outlook for
public expenditure
Tony Travers
London School of Economics