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Beyond austerity – where we might go and where we should not go

I was recently invited to contribute to two New Economics Foundation (NEF) workshops in London and Birmingham on the theme of ‘beyond austerity’.

Given the general election result on May 7 and the government’s stated policies, I have been pondering what realistically can be beyond austerity for at least the next five years.

However much we may wish the government to adopt a different and progressive public expenditure and investment-led macro-economic strategy, realistically, this is simply not going to happen as long as the current government holds to its current position and remains in office.

The next two years will see public expenditure cuts even greater than over the last five years, even though many (perhaps not the even the majority) of the last spending review-driven cuts are yet to fully realised. The extraordinary Budget on July 8 will confirm the government’s direction and speed of travel in advance of the new spending review itself, but it would appear that in unprotected departments and services, government is actually going to impose additional ‘in year’ cuts – this financial year.

The government has yet to allocate all of its planned cuts in vital areas such as welfare and in-work benefits. The IFS has stated that it will be very difficult to find an additional £12bn without some serious consequences, and there will inevitably be knock-on effects on other public services, as well as on families and communities.

Taken altogether, there would seem every reason to be gloomy and pessimistic, especially for these unprotected spending areas (and, I both suspect and fear, many that are meant to be protected).

‘There is an on-going political campaigning role to challenge the orthodox view that austerity and cuts are inevitable and unavoidable’

So what can be done by those responsible for sustaining public services in the public sector but also in wider civil society? And by those who continue to wish to make the case for tax-funded public services and redistributive taxation and public expenditure?

I believe that there are several strands that the response should take.

There is an on-going political campaigning role to challenge the orthodox view that austerity and cuts are inevitable and unavoidable. As has been seen in other European countries and in the UK, this can secure some political traction but, in the UK, at least as long as the current government is in office, this is unlikely fundamentally to change the government’s policy. This is no reason not continue to promote powerful responsible alternatives to austerity. There needs to be powerful political campaign for anti-austerity policies based on different values and principles.

There is also a duty for public sector and civil society leaders to explain the consequences of further cuts, just as the Local Government Association is now doing. This should include demonstrating not only the immediate impact but the long term social, economic, environmental and often financial consequences of sustained cutting.

The public sector beyond Whitehall has to find a strong and consistent ‘voice’ to speak up for public services. It has to form alliances with wider civil society, trade unions and the business sector that relies heavily on sound public services to flourish and grow. Collective voices are stronger than individual ones, and common messages are needed.

The voice of charities and others must also be louder on this agenda.

There is also a responsibility on public sector leaders – politicians and executive officials – and especially in local government, to both explain why they are being forced to make cuts but also to seek ways to mitigate these and their impact.

Inevitably, there will be some scope for efficiencies, and savings can often be made by smarter working, shared services and combining organisations. And these initiatives should always be pursued with serious vigour, even in times of plenty. However, the reality is that they are not going to be sufficient to plug the ever-growing funding gaps across the public sector.

So, it will be necessary to: stop doing some things; do others in very different ways; and in some cases, to consider charging or rationing access even more than may be the case today. The extraordinary Budget will confirm in stark and brutal fashion) that public sector leaders have absolutely no choice but to explore such approaches – and to do so immediately.

I am convinced that a Total Place approach has the potential to both save money and improve user experience and outcomes but it cannot compensate for the government’s cuts. It is little short of a tragedy that central government and sadly, many in local government, still have to be persuaded that such an approach should be at the heart of any further decentralisation and devolution. And where the latter occurs, it must be done in ways that are both fully transparent and based on the involvement of service users, alternative providers (especially the voluntary, community and social sectors), and staff. There simply must be more dialogue between stakeholders.

It is essential that public bodies establish very clear and understandable criteria, by which they will assess any proposal for change and budget reduction before they consider implementation. I would expect that such criteria should, for example for a local authority, include the short and long term social, economic and environmental impact on service users, communities and places. Progressive local authorities will wish to seek to avoid increasing poverty and/or inequality or worsening employment conditions for public service employees irrespective of who employs them. They may also wish to ensure that the Living Wage is paid across the public sector, by its suppliers and (as far as the authority can influence) by employers in the authority’s area.

‘There is passion to succeed in spite of the on-going cuts and austerity across the public sector and beyond’

The assessment against such criteria of the impact of any proposals for cuts should be the subject of public debate. The public and other stakeholders can and should be treated respectfully and as intelligent stakeholders, and be invited to become involved in considering options. This will not always be easy but it is highly preferable to random cuts or cuts made by stealth, or those made without any due consideration for their intended or unintended consequences. To make significant cuts without such measures is a dereliction of duty of care to the public – and to democracy.

The public sector has to find ways of being innovative and be prepared to experiment. It may seek new relations with the voluntary, community and social enterprise sectors – with a greater emphasis on partnership including grants and less on competitive tendering and contractors. There may be opportunities to adopt creative approaches to use social and collective investment to secure social outcomes.

The public sector has to be a ‘strategic commissioner’ rather than simply a provider or ‘procurer’. This does not mean that it cannot and should not continue to be a service provider, but it does mean that it is should be primarily focused on identifying need and determining the outcomes to address this need; and willing to consider any which way of achieving these outcomes without compromising public service ethos and accountability. Indeed, traditional outsourcing has little to offer contemporary challenges.

Public sectors will have to prioritise and make some hard choices, but they also need to be ready and able fully to explain and justify its choices.

I am not calling for continuous cuts or collaboration with the implementation of the most damaging government policies. Public sector leaders especially politicians have to decide and seek public support for their ‘red lines’.

The NEF events, like many others, have both demonstrated and reassured me that there is passion to succeed in spite of the on-going cuts and austerity across the public sector and beyond. And they have also, for me, reaffirmed the spirit, which exists to defend the vulnerable and marginalised; and the will to act differently. However, I am also a realist and so should we all be – no amount of intellectual or emotional energy can save every public service from cuts. Choices, however difficult, must now be made.

The next few years will be deeply unsettling for most of us and there will be causalities, but unless we find ways of going beyond the headline and the barrier of austerity, the casualty list will be even bigger and bloodier. Public sector leaders have to be bold and respond.

 

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