The public sector will have to work smarter and redesign key services to tackle the deficit and start reducing debt by 2018, according to Deloitte’s annual State of the State report.
At yesterday’s launch of Deloitte’s annual report The State of the State, Deloitte vice chairman Mike Turley emphasised need for productivity in the public sector to make a significant dent in the deficit, while director of Reform Andrew Haldenby stressed the need to redesign public services to control public spending.
The report, produced in conjunction with think tank Reform, highlights the government’s goal of being out of deficit and in surplus by 2018-19, at which point the actual debt can be tackled.
Speaking to an audience of senior civil servants, and leaders within local government and the NHS, Turley stated that there would be a “shift from deficit reduction to how we start to think about debt reduction. And how we start to think about long-term liabilities for the country as opposed to the short-term spend.”
During his speech, which preceded a panel discussion, Turley drew attention to the difficulties the next government will face in dealing with the deficit “against the context of an economy that is growing”.
Turley pointed out: “The first half [of our dealing with the deficit] we were in recession; it’s a lot easier to do public service cuts and reduction when you’re in recession than it is when the economy is growing; our citizen expectation is different.”
These feelings were echoed by director of Reform, Andrew Haldenby, who spoke of the need for the public service to explore the structure of public services as a means to tackle public spending.
Haldenby stated that to date we have employed “relatively crude ways to get public spending down; in particularly public sector pay freezes has been a key tool to control public spending in this parliament. But it can’t just be like that in the next parliament; there has to be a phase 2, and that phase 2 is looking much more deeply at the redesign of public services.”
A key issue flagged by Turley was the “disconnect between what politicians say [with regard to the public’s] expectation and right to public service, and what is practical and can be delivered in the financial environment at the local level.”
A key theme is Turley’s address — and throughout the panel discussion — was the use of productivity to bridge this gap.
He stated: “For every 1% of improvement you get in productivity you get a saving of about £1.6bn.”
Also on the panel were Labour MP Lisa Nandy, Conservative MP Peter Lilley and Lib Dem MP Duncan Hames, and the event was chaired by public policy and public services reform commentator Richard Vize.
Now in its third year, the annual State of the State report offers and independent and accessible view of the UK public sector.
Download The State of the State