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Good morning colleagues and a warm welcome to sunny London. It is great to see so many people here for CIPFA conference – we’ve had a really excellent response this year and I think we have a great programme and excellent speakers.
The theme for this Conference, "Beyond austerity - designing the future state", poses a huge challenge for us all - the challenge to focus beyond the long, dark austerity tunnel and to think positively and creatively about the nature and shape of the State and of our public services when we eventually emerge into the sunlight again. Mark Carney warned just before coming into his new role as Governor at the Bank of England, “Without sustained and significant reforms, a decade of stagnation threatens”, though I was heartened to hear him also say last week that the UK was showing some signs of economic recovery.
It seems to me that at the moment there are a number of rather formidable hurdles which are in danger of obscuring our long term view. First, we do not know when or how "beyond austerity" will arrive. Will it be relatively soon? by which I mean perhaps five or six years' time, accelerated by significantly stronger economic performance? Or will we need to wait for much much longer - perhaps a decade or more - as the UK economic engine continues to cough and splutter or, worse still, we are buffeted by further eruptions of the global crisis?
Secondly, just getting to the end of the tunnel poses so many difficulties. Understandably many organisations are now focusing on short term challenges rather than more lofty aims for the future. So much organisational energy and attention is being sucked into surviving the journey, there is very little residual capacity to think and plan creatively for the destination.
Thirdly, for all of our vast experience of managing change; redesigning the State and the social contract with citizens goes way beyond the experience of us all. The sheer scale of the project, not to mention the pace at which it is being attempted, is unprecedented.
Finally, there is the small matter of the General Election in 2015. In theory this should be helpful. It should be the forum for the exchange of views and ideas, and the theatre for the big arguments about the size and shape of the State and its relationship with citizens. But will it live up to this billing? Or will it be a much more limited and less honest debate about the carefully selected themes around which party advantage can be gained?
In summary, there are lots of reasons why it is difficult to see and think "beyond austerity". BUT It is critically important that we overcome them. We have to have a sense of where we are trying to get to, to enable our organisations to steer the right course. We have to help policy makers and the public at large to understand fully what is really at stake and what the country's options and choices really are. That should include discussion not only about the public services we want and need, but also about the level and type of taxes which pay for them.
Despite these many difficulties, I am very confident that we can rise to this challenge. We have all learned a great deal about surviving austerity over the past three years. And if the truth be told, the performance of public bodies in managing unprecedented funding reductions for many years has been outstanding.
Remember it is the failings of the economy not the failings of the public services which have thrown the Government's strategy so off course.
I said "if the truth be told" but sadly, in this space, it so rarely is. For some reason it has become the default option for political leaders nationally to knock and denigrate public servants and the public sector, even when so much of their performance is extraordinarily positive.
I would like to make special mention of CIPFA members at this point. We sit at the top table of so many of our public service organisations, national and local, and play such critical roles in both the planning and execution of complex changes. Without these expert skills, many organisations would be in far more difficult positions than they are currently. In particular, the contributions members make through strong public financial management and good governance help to provide some of the most defining characteristics of UK public services which are admired around the world.
There are no "silver bullet" solutions, of course. But what a difference it would make if Government and public sector stakeholders, including service users and taxpayers, could work together to discuss what needs to be done. Far from opposing change or being unrealistic about solutions, my experience is that people respond very positively to having all of the facts and are very happy to engage with the difficult choices which arise. Very few are attracted to the "do nothing" option which abdicates responsibility and leaves even more difficult choices to our children and grandchildren.
This may sound like a rather idealistic approach but in my view it is also the smart approach. The Economist reported last week that "a wave of anger is sweeping the cities of the world". The events in Istanbul, São Paulo, Stockholm, Cairo and elsewhere are a salutary reminder of the critical difficulties that arise when Governments lose touch with the mood and aspirations of the people.
And lest we are complacent that such difficulties do not apply in the UK, we should remember that our public institutions and representatives are the subject of recurring controversy - intelligence services and the police intruding into our private lives, cover ups and systemic failures in our hospitals and health services, not to mention food standard scares; these are everyday fare in the media and have all to one extent or another shaken public confidence in the institutions of government.
So our politicians and our public services need to stay very close to the people. They need to keep them well informed and they need to listen carefully to their views about how funding should be allocated and how and where cuts are made. Without doubt this will work best if simplistic red lines are avoided. Let's have a proper conversation about schools, the NHS and international development and agree that they are priorities, rather than drawing protective red lines around them and removing them from the debate.
If maintaining a serious dialogue with multiple stakeholders throughout the country poses challenges for Whitehall and Westminster, perhaps that is the cue for a dash of localism to be part of the solution. Crucially, however, it needs to be localism with authority - the ability to make things happen, including across different organisational and geographical boundaries. The Local Government Association's "local treasuries" idea seems like a very interesting contribution to this debate.
Let's also encourage more debate about the big issues: poverty, our ageing population, intergenerational equity, who pays or does not pay their taxes, etc. In many ways all of these are different facets of "fairness" which has become part of the political mantra without ever being properly explained or defined in terms of how it can be measured. And if, like beauty, it is in the eye of the beholder, how much more important to listen to wide ranging views about the perceived fairness of different policy options on different groups in society?
We should also think more carefully about risk and about exercising more control over the pace of reform and change. Alongside the spending reductions, local government has taken on considerable additional risk and responsibility with the localisation of business rates and council tax benefit. The entire structure of our health system has undergone yet another fundamental upheaval with the establishment of clinical commissioning groups. Academies are growing in number and free schools have been established plus Police and Crime Commissioners have been introduced.
CIPFA and its members are uniquely well placed to help explore this terrain, equipped as we are not only with financial and accounting expertise but also with a strategic perspective that encompasses a genuine understanding of the impact of policy on front line public services.
Colleagues, over the next two days, we have a rare opportunity ahead of us to put on our thinking caps, engage the grey matter and give serious consideration to how we are going to return the economy from decline and stagnation into growth, and ensure our public services and institutions receive the respect they deserve.
We will learn more about our environment, the latest forecast for the economy and what kind of society we are likely to be living in come 2020 and beyond, as well as what can we do to shape it. We will ask whether the transformations brought on by this unprecedented period of recession, and a new approach to politics, are likely to result in a more equitable and balanced society.
The public sector has a huge role to play in creating the right environment for business to prosper and for the UK to return to growth. We also need to ask ourselves what policies are required for the future and what strategies need to be put in place today to ensure a sustainable economy offering opportunities for employment, good public services, and balanced public finances for the next generation.
I hope that you will play your part by engaging positively in the discussions and helping to shape the solutions which are so critical to our future.
Thank you for your attention. Have a great Conference.
It just remains for me to introduce our first keynote speaker who will also be our Chair for today. She really needs little introduction as I expect we are all familiar with her incisive and witty commentary.
Stephanie originally worked at the London Business School and The Institute for Fiscal Studies and then became a leader writer and economics columnist with the Financial Times. She then went to America, where she was a speechwriter and senior adviser to the US Treasury as well as reporting for the New York Times.
She joined the BBC's Newsnight in 2002 and as a keen cyclist, in 2005 she presented a review of Britain's economic status for Panorama from her bicycle, travelling the length of the country. Stephanie graduated from Newsnight to become the BBC's Economics Editor in 2008.
Ladies and gentlemen please give a very warm welcome to Stephanie Flanders.