The State of the State – Deloitte and Reform look at the UK economic and public sector outlook

Another report to recommend to you today if you have any interest in UK public sector matters – or maybe in wider economic issues. It comes from Deloittes and the think tank Reform and is called “The State of the State”.  The authors, Mike Turley of Deloittes and Andrew Haldenby of Reform (the leading think tank) look at UK government from a financial and policy delivery perspective, and is both depressing and stimulating read.

Depressing, because it has some of the clearest charts and description I’ve seen of the economic hole the UK is still in, despite the apparent “green shoots”.  The reports points out, for instance, that debt is still growing at an unhealthy rate – “by 2017-18 the UK can expect to spend £71.3B on debt interest”.  That will be more than spending on Defence and Transport combined.

It also highlights the growing demands over the next few decades on the public sector from an ageing population. That, combined with the stubborn tendency for public sector productivity to remain pretty flat, suggests there will be difficult decisions ahead.

Where it is more encouraging is in the interviews with public sector leaders. Now I suppose it is self-selecting to some extent – you won’t last long at the moment as a Chief Exec or Chief Constable in the public sector if you just sit around going “woe is me – there’s no money”!

 So to some extent they have to be positive. But there does seem to be an appetite for change and new ideas – the report is very much a summary of the interviews though, and I would have liked to see more detail of what was said.

However, the challenges are clear. And one that lies firmly in our area of interest is around “partnerships” and innovative ways of working with the private sector. Now I’m not philosophically against outsourcing and use of the private sector to deliver services on behalf of government. But we’ve seen too many examples, many recently, where the private sector has not performed – and the public sector hasn’t either in terms of managing private contractors. (I won’t go through all the examples again!)

So the report is right to highlight some risks – many in this area. Here are some it identifies

  • “The public sector still carries the risk of failure – even when delivery is outsourced”
  • “Loss of knowledge and skills in-house can lead to inability to commission intelligently”
  • “Long-term contracts may not be appropriate in later years”.

To which all we can say is - too right!

So what are we going to do about this – how can the public sector get better at engaging on these important service delivery contracts? There’s no apparent lead from central government beyond their own direct interest – and the big risks probably lie more with health, in local authorities, or the police service.

That’s where this report  is weaker, in that it doesn’t really attempt to identify solutions or ways forward.  It is billed as a state of the nation analysis, rather than a template for improvement, to be fair. And within its own terms of reference, it’s well worth a look – you can download a copy here.

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