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Spending Review: Chances are you’ll have to get smarter with budget, but how?

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PSE take a look at smarter, data-driven ways of working to improve value-based spending ahead of next year's Spending Review. 

It’s been almost 10 years since austerity measures first scythed through the public sector. In that time, all traditional methods of cutting costs have been tried and tried again. Reductions to budgets, headcount and services have gone hand in hand with procurement assessments, real estate rationalisations and productivity drives.

This approach, supplemented by emergency reactive cash injections when crises arise, has resulted in significant stress on services, as demonstrated by these key facts:

  • The NHS provider deficit for 2017-18 is set to be nearly double what was planned;
  • £12bn is still to be cut from benefits over the next three years;
  • In just one quarter of 2018, there were a record high 2,225 assaults on prison officers, a 189% increase from 2009.

All these traditional budget efficiency measures have been well and truly exploited. Therefore, the question is this: should your department see no budget rise in the 2019 Spending Review, what will your approach be to ‘making ends meet,’ or making further savings while still delivering value?

Alternatively, what if you are fortunate enough to receive a modest budget increase, how will you make sure it is spent in ways that deliver the best possible outcomes for citizens and organisations who rely on your services and resources?  

Discover a smart, data-driven way to develop value-based spending

There is most certainly a way to be smarter about squeezing more value from your budget, no matter what happens in the forthcoming Spending Review. It requires a more scientific, evidence-based approach to decisions about services, efficiencies, spending priorities and their outcomes.

In the world of business, organisations are using advanced analytics to identify spending and savings priorities. Specifically, to differentiate bad costs – in other words, activities that are negative or add limited value – from good costs, those that are essential or add meaningful value. Public sector leaders can then rapidly model scenarios to demonstrate the impacts of these savings on operational efficiency and citizen outcomes in relation to the predicted future demand for services. This is an absolutely critical capability for departments that are juggling many competing priorities and pulls claims on resources.

Can analytics boost public sector revenue?

Then of course, the same technology can be used to help effectively ‘generate’ income in certain ways. For instance, the difficult issue of fraud can and is being addressed through advanced analytics. By predicting and preventing fraud – whether that be internal from errors in procurement processes, or external from dishonest claimants, organisations such as the DWP are clawing back a proportion of their budgets that had effectively been ‘written off.’ This is because fraud had become so hidden in evasion techniques and convoluted processes that it was incredibly difficult to spot. HMRC is now able to generate additional revenue to the tune of billions of pounds by more accurately identifying deliberate tax evasion and avoidance.

How can one analytics capability do all this?

It’s incredibly important to note that one analytics ‘brain’ can be used in multiple ways to help central government organisations make better use of the financial resources available. What this means is that one investment in an advanced analytics platform, such as SAS, can be deployed to solve many kinds of financial and resourcing challenges, resulting in significant ROI. Insights, models and answers to complex challenges can be shared across cooperating departments, again yielding further value. Taking a platform approach, rather than using point analytics products, also facilitates improved data management with greater quantities and a broader range of data types becoming usable. This means that insights can be deeper and more contextually rich for greater decision-making accuracy. And when it comes to balancing the books, accuracy is the ultimate goal of every public sector leader in light of the ever-stretched pot of funds available.   

Taking action now, before the 2019 Spending Review, and well ahead of 2020 when new budgets will be disseminated, puts you ahead of the game. You already have a head start because the advanced analytics technology that makes this insight possible is already at work across many central government organisations.

Please do contact SAS to see how the work they have already accomplished with central government bodies could help yours. They certainly can help you to work smarter with the budget you do have.

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