Time for a fair spending review?

September 04, 2019

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by Daniel Burke UK Strategy& Partner

Email +44 (0)7764 661609

Spending Reviews – of which there was a mini, and fast tracked, one today – are meant to be the opportunity for government to redirect taxpayers' money towards a clear set of national priorities and to invest in big, bold programmes of reform and transformation. Often they can be like a gladiatorial contest in which ministers scrap it out with each other and the Treasury (often in the media) to secure the best budget they can, with strategic intent losing out to politics – and a mystified public wondering what on earth is going on.

The Chancellor’s spending plans for 2020/21 announced today will, of course, be welcomed by those awaiting extra funding for core public services – police, schools, and hospitals. The full multi-year Spending Review is now pencilled in for 2020, which does allow precious time to think about how it could all be done next time around.

PwC has been working with the Institute for Government to study how the Spending Review process could be reformed so that it becomes an important catalyst for maximising the impact government spending has on our lives.   Over the course of two roundtables (in London and Birmingham) we brought together public services leaders with former and current Treasury officials to listen and learn about what worked and what didn’t in previous Spending Reviews, and made recommendations for change. You can see the results of our work here.

There are five changes we think are required:

  1. Be strategic - both in relation to transformation, and to achieving impact from spending in particular places, participants at both events called for the government to be clear and selective about the results it is seeking, with a long term view.

  2. Make collaboration work - the process should incentivise and reward cooperation between Departments on transformation projects, improving the combined impact of different Departments’ investment programmes and public service spending in particular places.

  3. Encourage productive investment - whether in physical and human capital which will grow local economies, increase revenue and reduce future spending, or in preventive interventions which will reduce demand pressures on services.

  4. Use data and evidence - there needs to be better use of evidence, expertise and lessons from past innovations. For example, the Infrastructure and Projects Authority (IPA) has good evidence from the work it and its predecessors have done since 2010 on what has or has not worked on transformation projects.

  5. Make the before and after work - Spending Reviews will take better decisions on transformation if Departments invest in the careful development of proposals well in advance.  Similarly, the discussion between national government and places with devolution deals cannot finish with the announcement of a deal package.

On the first of these – being strategic – lessons from other countries show us the clear benefits of how linking spending prioritisation decisions to a national mission and set of priorities. In New Zealand, the government decided to refocus its public services budget setting process on the promotion of national wellbeing. Increasing wellbeing – rather than economic growth – was established as the purpose of government, with all major investments required to demonstrate how they would contribute to this aim. Discussions about how to prioritise public spending allocations were held in public, as part of a deliberative process which commentators suggest has built common ground and understanding about the sort of country New Zealand wants to be.

What should be our equivalent central principle in the forthcoming UK spending review? How about fairness?

Futureofgovernment

PwC will be publishing the first results from our Future of Government research programme where we’ve asked the public what they think it would take to create a fair and inclusive future for the UK, and what government’s priorities should be in helping to bring that about.

We picked fairness as a topic, because it’s a widely shared value which many people see as characterising the UK at its best. It was also clear to us that fairness is a live theme in our politics and society, with disconnects opening up between people in and of different geographies, generations, income brackets and upbringings.

Our research findings will go into more detail, but it is already clear to us that a Spending Review for fairness might well lead to some different spending priorities for government, including investments in technology to help vulnerable people access services; spending on new training programmes to ‘upskill’ those impacted by automation; and directing more cash to create vibrant, liveable towns.

Our research findings will be published on our website soon. Sign up here to receive your copy. 

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by Daniel Burke UK Strategy& Partner

Email +44 (0)7764 661609