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1. Stronger central strategic financial management and making spending decisions on evidence-based assessments
The UK currently faces increasingly challenged public services and spending constraints. There needs to be a renewed focus on effectiveness, which will require building capacity, improving skills and putting in place better financial leadership, structures and reporting processes.
Following the 2013 Financial Management Review, the government positioned financial leadership, the role of ensuring spending efficiently delivers the outcomes that matter to taxpayers, in the Treasury, and at the heart of its decision making. The Chancellor’s decision to reverse this move is unclear, but the shift of central leadership could mean that the focus is taken off improving financial management and financial skills at a time when they need to be strong across the whole of government.
2. Greater fiscal devolution away from Westminster
The relationship between central government and the devolved nations and local government should be redressed to allow local public services to be provided more effectively and decisions on funding to be taken at the right level.
The UK remains one of the most centralised economies of our Western partners, but a growing body of evidence supports the case for substantial fiscal powers – the ability to raise and spend money locally – to be devolved to Scotland, Northern Ireland and Wales, as well as across English counties. Greater fiscal devolution can help drive economic regeneration in local areas and bring the provision of services closer to areas of local need.
The election of English city mayors is a significant step in a series of devolution developments – from the original city deals and Local Enterprise Partnerships to creating combined authorities, the local retention of business rates agenda and now metro mayors – that have seen more freedoms and incentives move to the local area.
We still need to go further. Of course, this level of devolution comes with risks as well as rewards and finance professionals will play a key role in implementing new funding models within new governance arrangements. With greater collaboration and shared accountabilities, devolution may challenge our traditional approaches to financial management.
3. An understand of the risks and opportunities to the public sector must be central to the government’s Brexit negotiations
Brexit will have a profound impact on public finances, therefore the consequences for the sector must be kept in the foreground during the Brexit negotiation process. As well as quantifying the risks, examining the opportunities for public service transformation must also be given equal ministerial consideration. Furthermore, in planning for Brexit, the government must understand the immediate strain Brexit is placing on the sector due to increasing uncertainty, such as the rising number of unfilled vacancies.
4. Urgent action must be taken to put health and social care on a sustainable footing
There remains a need for urgent reform to ensure a sustainable health and social care system. Without that both health and social care budgets will be stretched to breaking point. CIPFA remains of the view that NHS and social care funding should be linked to a minimum share of GDP. This would logically link spending to what the country can afford and would reduce the unpredictability of politically driven funding decisions. That would facilitate longer term planning and encourage preventative investment, which would help the sector control future costs.
5. Deliverable affordable housing must be a top priority
Sufficient and affordable housing underpins social stability and economic growth. An increased reliance on housing benefit over the last 20 years has seen long term housing investment replaced by short-term subsidisation. This imbalance has created a vulnerability that was exposed under welfare reform – there was evidence the reforms are contributing to increasing levels of homelessness for households.
6. Greater investment in affordable housing is needed, alongside more innovative financial solutions that support economic growth
Housing associations and councils need to play a central role in providing affordable housing for rent or to buy. It is a necessary and long term investment that requires certainty and full control of assets. To achieve the goal of one million new homes future housing policy must be focused on flexible investment, sustainable and consistent rent policies and effective replacement of assets. Councils must be allowed greater freedoms and flexibility to build new homes and replace existing stock reduced under right to buy; and they need surety and stability in rent policies.
Notes to editors
CIPFA Chief Executive, Rob Whiteman, will be discussing his immediate reactions to the results of the General Election at the CIPFA Local Government Finance Conference, which will take place in London, 12 June 2017 – full details here.