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The context and outlook for public expenditure

The context and outlook for public expenditure. Tony Travers London School of Economics. The wider public sector and local government. The government’s decision to cut the deficit to zero by 2015-16 will lead to accelerated public spending reductions

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The context and outlook for public expenditure

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  1. The context and outlook for public expenditure Tony Travers London School of Economics

  2. The wider public sector and local government • The government’s decision to cut the deficit to zero by 2015-16 will lead to accelerated public spending reductions • 80 per cent of the reduction will be achieved by real-terms public spending reductions • IFS = sharpest public spending reduction since 1945?

  3. Local government spending to fall sharply, especially capital • Labour and Conservative Chancellors set plans to cut government capital spending by over 50% by 2014-15 • Current expenditure to be protected in some service areas, with will require far deeper cuts elsewhere • Chancellor Osborne has demanded exemplifications of 25% to 40% reductions by 2015-16

  4. June Budget plans ODR estimates, based on previous government’s plans £bn - cash 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Dept Exp Limits 342.7 343.1 341.4 341.2 337.7 340.0 Travers estimates, based on NHS+Overseas Development spending ‘Protected’ exp 110.0 112.8 115.7 118.5 121.4 124.5 DEL minus ‘protected 232.7 230.3 225.7 222.7 216.3 215.5 £bn - real DEL minus ‘protected’ - Real terms 232.7 227.0 214.7 206.8 195.9 190.5 Local government is all within DEL; Social services are within LG

  5. A broad range of possibilities • LG current spending appears likely to be affected in the following – per annum impacts • Labour’s plans, all services treated the same Cash: -0.5% Real terms: -3% • June Budget 10 plans Cash: -2.5% Real terms: -5% C) June Budget 10, but with schools etc partly protected Cash: up to -5% Real terms: up to -7.5% Social servicesare not ‘protected’ in any way

  6. Service impacts for ‘unprotected’ services, and others… • Need, from now on, to do far more than immediate responses such as: • Freezing posts; pay freeze; ‘efficiencies’; use of reserves; delays to capital programmes etc • Near-future possibilities likely to include: • Decentralised pay bargaining • Pay freeze to extend for more than two years • Radical re-thinking of need for joint service provision (LG and other local providers) • Essex, Barnet, Suffolk, Lambeth etc radicalism • Stopping doing some things? • Rise in fees, charges and scope of charging

  7. Developing long term strategic plans to secure adult social services’ survival • Clear and present need to work with other local services to secure the future of adult services • Thinking previously-difficult things, eg: • Could social services move (in part) to semi-independent status? • Might more volunteers have to be used to supplement staffing? • How far can adult social services be co-located in other public service buildings? • Sales of assets to re-use them to ensure capital development

  8. Determining what is to be expected of local public services in the future • Can existing service patterns and providers be maintained? • Can services be co-located? • Can more provision be ‘out-sourced’? • Can the ‘Big Society’ deliver anything? • Councils and other service providers may see a move to a single local budget of some kind

  9. Securing the future • Speed of reaction will be of the essence • From this autumn, change will occur rapidly within town and county halls • Need to secure the objectives of the service within different buildings, structures and, possibly, with different people • Public tolerance will be tested by cuts in expenditure • However, adult social service will continue to exist – but they will inevitably change

  10. The context and outlook for public expenditure Tony Travers London School of Economics

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