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30.11.15

A new narrative for government and the public sector

732 CIPFAHamza Yusuf, head of finance at LB Hackney, writes for PSE on the need for creating a new narrative for government and the public sector.

Everyone loves a story, particularly when it’s short enough to be digestible and follows a familiar pattern, but in the current political and economic climate, agreed conventions are being flouted as the ‘story’ of government and the public sector gets more and more complex.

As part of my CIPFA qualification I completed a Governance, Public Policy and Ethics (GPPE) module, which looked at UK economic and political approaches since World War II, all the way from the development of the welfare state in 1945 through to the social democratic consensus of the 60s and 70s, Thatcherism in the 80s and New Labour’s ‘Third Way’ in the late 90s. Each period had a broadly agreed beginning, middle and end, and each had a limited number of characters and a straightforward plot.

The rule seems to be that the merit of a particular economic and political approach to government and the public sector is often decided in hindsight and in the context of the approach taken immediately afterwards. For example, it can be argued that Thatcherism was the antidote to the unions and New Labour was the solution to neo-liberalism.

Thinking about this made me reflect on what GPPE students of the future will learn about the ‘austerity of the 2010s’. Will it be seen as a correction to the expansionist public sector-spending policies of the Labour government? The result of the 2015 general election might indicate this. Or will it be perceived as dominated by a poorly thought-out, ideologically driven agenda, as the hindsight rule could suggest?

It also made me reflect on the ‘what next?’ question. The chancellor’s recent fiscal charter seems to go some way to answering this by committing the government of the day to running a budget surplus in ‘normal economic times’. We are now halfway through a 10-year economic plan with the Treasury forecasting a UK budget surplus in 2019-20, the first since 2001, but at present it seems unlikely that budget surplus will be used to finance public sector growth.

The ‘what next’ question is also very important when considering the public sector workforce. At its most recent highpoint, in 2010, the public sector employed about 6.1 million people or 21% of all UK workers. According to the Office of Budget Responsibility, this will shrink by 1.1 million as a result of expected 2010 to 2019 cuts to public spending. A recent study by Manpower Group also found that between 2010 and 2014 civil service workers aged 20 to 29 fell from 14% to 9%, while those aged 50 to 59 rose from 26% to 31%. To date, private sector employment growth seems to be soaking up the newly unemployed from the public sector, but can this continue when we are only halfway through a 1.1 million reduction?

So does this mean a bleak ending to the austerity story of the 2010s? I would contend not, because after a decade of financial prudence, the public sector of the 2020s will be made of different stuff. Tight control from the centre over IT, property, procurement and finance will be matched by looser control over operations and spin-outs, with some services being commissioned from the fringes of the public sector. A greater role for digital and fostering innovation in all its guises is also a given – properly managed risk, pioneering, original and transformative.

However, a true twist in the tale requires a realisation that the government and public sector should not be slave to the political and economic narrative. Viewing the previous decade with hindsight and damning the administration for its profligacy with public resources, or indeed lack of investment in essential services, is unhelpful and obfuscatory. Recasting an old narrative clouds the horizon with retrospection when the focus should be on the future – a new story is as important as an acceptance of the past.

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