If you were to plot a line for spending by government departments in real terms, from 2009/10 over the period of this Parliament through to the end of the period covered by the Autumn Statement in 2019/20, you would see a significant, but measured, decline.
If however, you were to separate this graph out into two lines, one for protected areas of spending and one for unprotected, you would see something very different.
While, as expected, protected areas would stay the same more or less, the decline of unprotected areas would become more of steep and drastic descent.
This was in effect what the Office for Budget Responsibility (OBR) did in this year’s Autumn Statement and coverage of this illustration is what angered the chancellor so much the following day. It showed that if this were to happen, per capita spend on public services outside of protected areas will have fallen from £3,000 a year to around £1,300 in the space of a decade.
I believe it was a useful demonstration of the extent and trajectory of the change the public sector is set upon at the moment. It shows how the resources used to support protected areas are crowding out other areas of public spending.
And, we must remember that according to independent experts such as the IFS, we will be less than half-way through the consolidation by the end of Parliament. As The Chartered Institute of Public Finance and Accountancy (CIPFA) pointed out in our Manifesto last month, things can only get worse.
If we were to accept it at face value, this forward projection of public spending is staggering, and it is possible that all the state will be able to do by the end of the decade is pay pensioners their benefits while they wait in GP surgeries for their next appointment. We have not had nearly enough public debate about how much of a fundamental change this indicates in the way that governments spend citizens’ money in this country.
It is unfortunate that despite the clear illustrations from the OBR, IFS and others neither Labour, the Conservatives nor the Liberal Democrats seem to be prepared to engage in serious discussion on these issues. It is almost as if the fiscal consolidation left to come are the cuts that politicians dare not speak their name.
CIPFA, along with many others, has been pointing out the need for a constructive and thorough debate for a long time and we hope we made a small contribution to this debate with our Manifesto. In it we called upon government to start budgeting for the medium to long-term, investing strategically in growth and investing in early interventions for the benefit of both current and future generations.
And, before those longer-term challenges, we see some stark tests for local authorities in the short-term, within the context of the public spending numbers and especially as the Autumn Statement didn’t offer a path through for local authorities, but presented a bleak picture of spending and left it at that.
From speaking to finance professionals and others, we’re seeing an urgent need to address future demand levels for all public services, but there seems to be little recognition of this from government.
To stand alongside the steep descent of public finances, we’re keenly aware of the potential fiscal cliff that councils are facing because of a combination of policies, including the council tax cap, the uncertain future of the freeze grant and the possible costs of incoming policies, such as the Care Act.
If we are serious about putting the NHS on a sustainable footing we need much better work between the Department for Communities and Local Government (DCLG), councils and the health service to implement collaborative schemes such as the Better Care Fund and a much better working relationship in general between local authorities and the NHS.
In my opinion, it is difficult to see the political parties after the election effectively implementing this level of cuts; but that is why we need a much more honest debate about the challenges we face.
We cannot continue arguing policy in half-truths and ignored realities, but must instead engage in honest debate about the challenges we face and choices we would like the Government to take on our behalf.
Rob Whiteman is chief executive officer of the Chartered Institute of Public Finance and Accountancy
