For public managers, the most significant aspect of the 2015 budget was the chancellor’s decision to scale back from the levels of austerity forecast in his 2014 autumn statement.
Back in December, George Osborne outlined huge further cuts to central government spending in the five years from 2015-2020, resulting in a slew of “back to the 1930s” headlines. The Institute for Fiscal Studies said the plans would involve a fundamental rethink of the size and role of the state.
But in this month’s budget, Osborne has scaled back that forecast. Spending is still set to fall in the four years from 2015-16 up to 2018-19, but the government now expects to spend an extra £28bn in the final year of the next parliament.
Jonathan Dupont, research fellow at the Policy Exchange thinktank, has calculated that this would change the real cut in departmental spending over the next five years from 17% to 10%, excluding potential savings in welfare, but said the change would create a “bizarre path” for central government budgets.
Change in spending assump creates a bizarre path for department spending - falls then bounces up again #Budget2015 pic.twitter.com/a1LMkxo46P
— Jonathan Dupont (@jondupont) March 18, 2015
The Office for Budget Responsibility said the state would shrink to its smallest level since 1964, but predicted a “rollercoaster” ride over the next five years.
Mike Turley, head of public sector at consultancy Deloitte, said that although the long-term outlook for public finances had improved, the years ahead would see sharper and deeper austerity than we have seen in this parliament “The challenge for public services is not so much when austerity ends, it’s how we get there,” he said. “Today’s forecasts suggest a period of reform across the public sector that will be more concentrated than anticipated, but no less profound.”
Most of the cuts to departmental budgets have come from cuts to civil service jobs, terms and conditions, including pay. The budget confirms that any remaining progression pay, whereby civil servants get an annual increase, will be abolished across the civil service.
Frances O’Grady, general secretary of the TUC, said it was what the chancellor did not say that was probably most significant. “Nothing in #budget2015 about where he’ll make the huge spending cuts he has planned,” she tweeted.
For all the warm words, the #Budget2015 shows austerity is set to continue year after year.
— Frances O'Grady (@FrancesOGrady) March 18, 2015
Efficiency
The budget contained a number of announcements on public sector efficiency and procurement, with improved management information and benchmarks for schools due by the end of 2015. There were promises, but less detail, on cutting NHS procurement, pharmacy and property costs, which are being examined by Lord Carter, the chair of the NHS procurement and efficiency board. There will be a new central body, accountable to the Treasury and the Government Property Unit, to own and manage central government land and estates, and in future departments will have to pay market-level rents for their freehold assets.
A number of programmes to explore the benefits of integrated spending around vulnerable groups are highlighted in the budget, on the back of the success of the troubled families initiative. These include learning from Greater Manchester, following the agreement to bring together commissioning of £6bn of local health and social care budgets, and designing a more integrated, multi-agency approach to keep female offenders out of prison where possible.No new money has been allocated.
Digital government
There have been calls from some parts of local government for a local version of the Government Digital Service, the central body set up to accelerate digital services across central government. One small step in that direction comes with the announcement that the GDS will assist the Treasury and the Department for Communities and Local Government to help local government to develop more digitally-enabled local services.
The government is also implementing a service that will enable individuals to prove their identity online, using new government verification software, Gov.uk Verify. The idea is that different departments use the same tool, reducing duplication. In addition, the government is to create a joint venture for hosting more government data, rather than departments building their own data centres or having to pay to outsource the service.
Northern powerhouse
In October 2014, the chancellor announced that a new body, Transport for the North, would create a northern transport strategy. TfN will shortly publish its interim report on plans for the HS3 upgrade to rail collections across the north and work on a single, integrated ticketing system for the region.
Both Greater Manchester and Greater Cambridge, which comprises the city, Cambridgeshire and Peterborough, will be allowed to keep 100% of any extra business rates generated from April 2015, something for which many local regions have lobbied. The chancellor has reconfirmed his commitment in the autumn statement to review business rates.
Zach Wilcox, an analyst at Centre for Cities, questioned why business tax retention was limited to just two regions:
Why trial #BusinessRates retention in a couple of places? What are you actually testing? Real problem is full local retention across board!
— Zach Wilcox (@urbantweetUK) March 18, 2015
Paul Martin, chief executive of the London borough of Wandsworth, described the announcement as a positive step towards creating a sustainable future financial model for local government and said there needed to be a system that strengthens the link between business rates and local councils.
Further city deals are being discussed with Cardiff, Aberdeen and Inverness, and a devolution deal has been agreed with West Yorkshire Combined Authority, all announcements signalling that the pace of decentralisation is picking up. The north has also been promised £3.5m next year for overseas trade and investment missions.
Libraries
The government has announced £7.4m funding to support libraries in England to provide internet access and Wi-Fi. At the moment, about 2,000 libraries provide free Wi-Fi. BT and Barclays have also announced a programme to provide Wi-Fi to 57 libraries and 13 community centres in England. There have been sharp cuts to library services in the past five years, with some 453 closing in England between April 2013 and January 2014. In December, Birmingham council said that opening hours at its new, £189m library would be halved to save money.
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