All CIPFA wants for Christmas is public services back on a sustainable financial path


By Rob Whiteman, CIPFA CEO

After months of speculation over whether a general election would be called, we’re now approaching 12 December at a breakneck pace.

The fate of local authorities and UK public services will soon be decided for the foreseeable future.

The Conservative government has declared a formal end to austerity, and political parties are promising robust spending packages. CIPFA has identified the actions that must be taken by the new government, regardless of who is elected to run it, to put public services back on a sustainable financial path.

Government spending designed for the long term

Reliance on short-term cash injections comes at the cost of long-term financial sustainability and the real value for money that can be achieved by the ability to plan ahead.

While the latest spending round was a welcome step for public services, the fast-tracked scheduling meant the government’s fiscal promises weren’t informed by the latest figures from the Office for National Statistics, ultimately putting the government finance system at odds with the policy agenda.

This only adds to complexity across the sector. Spending Reviews and Budgets should also include a commitment to testing the drivers of spending (demand, pay, prices, efficiency, etc) to evaluate the validity of their assumptions. Public service leaders should be directly involved.

Increased capital budgets for the NHS

The capital funding system needs to be redesigned.

A simplified capital system should offer long-term certainty and sustainability, while also being transparent. To bring capital investment in healthcare services in line with other developed nations, the Department of Health & Social Care requires an additional £4bn per year – an increase of nearly 75% of the current annual budget. It is also essential for the government to recognise social care as a substantial part of the interdependency between spending on the NHS and public health.

Prevention at the forefront of central government planning

Prevention must be considered as a true investment, and be reported and protected as such, rather than being seen only as a way to generate savings. Whether it’s the NHS, the police force, or any other service area, the government should not only consider how we treat prevention but how we pay for it. Local authorities contribute significant resources executing the national prevention agenda, and current funding doesn’t recognise this.

Fewer conditions for funding settlements and allocations

Much funding allocated to local government is ringfenced. In many cases, authorities are fundamentally unable to manage any sort of demand, so additional funding is used to plug pre-existing financial holes. Providing local authorities with the flexibility to manage their unique service demands will minimise waste of resources and ensure funds are applied where they’re needed.

Enhanced devolution to reduce regional inequalities

We’ve seen successful devolution of powers to Northern Ireland, Wales and Scotland, and this should also be applied to English local authorities to reduce geographic inequalities and improve local decision-making. In the case of health and social care, it could allow local authorities to accelerate integration of services.

The mechanism for allocation and distribution of devolved funding must also be improved to better reflect actual need.

This general election is the first held during the Christmas season since 1923. Political debates, manifestos and adverts may not be on many people’s Christmas lists but, at CIPFA, a change in the way government works with and supports public services is, and will continue to be, at the top of our list. 

This article first appeared in Public Finance.

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