Peter Riddell is Director of the Institute for Government.
Now it is back to work – and for ministers that means the spending review and seven weeks of negotiations before George Osborne’s statement on November 25th.
Curiously, few of these arguments surfaced in Manchester apart from the continued rumblings over the impact of cuts to welfare and tax credits. Yet the spending decisions will, the EU referendum apart, be central to defining the Government’s programme between now and 2020.
Neither the Prime Minister nor the Chancellor have yet done enough to prepare either the public or their party for the scale of cuts or their implications. David Cameron delivered an interesting speech on September 11th setting the context for the review under the title of the ‘smarter state’. But neither that phrase nor any of his arguments surfaced during the party conference. It was as it there was one theme for London and another for Manchester. There has so far been no follow-up to the speech. In particular, there have little or no signs of changes in the way the spending review is conducted, and Whitehall operates, to give substance to his goals and themes.
The debate Mr Cameron opened about the ‘smarter state’ needs to be pursued, since it raises fundamental questions about both the achievability of some of the Conservative manifesto promises and changes in the way the state operates. Last April’s manifesto contained 517 commitments, some of which (on employment, exports and housebuilding, let alone immigration) look so ambitious as to be out of reach. Ministers now have to decide what is doable, which pledges have to be scaled back and which out of the 517 are first rank priorities rather than on a long-term wish list.
If you talk to any of the many businessmen who either work in government or are non-executive directors (really advisers) on the boards of departments, they all say that the government has too many priorities and is trying to do too much. This is only partly about the size of the state but more about the number of new projects. The Major Projects Authority, a welcome innovation from the Francis Maude era in the Cabinet Office, is currently monitoring 188 major projects with a total cost of £489 billion, many of which are judged to be highly uncertain of success. While a lot has been done since 2010 to improve civil service skills in running big projects, adding new commitments without ending old ones increases the risk of expensive failures. Every department, and every interest group, has its favourite scheme but the current review will require clarity over priorities- in short deciding which activities are no longer possible. All easier said than done.
In his September speech, Mr Cameron listed three main themes: reform, devolution and efficiency. Reform was defined as bringing in new providers paid by the results they achieved, while opening up contracts to small businesses to drive innovation. Michael Gove, who was the potential to be a really innovative Justice Secretary and needs to be given his budgetary challenges, has already floated some radical ideas on prisons. But success is not straightforward, as the patchy record over offender tagging has shown. The Institute for Government’s work in this area shows the need for a proper market and a number of providers – with government acting as a steward to ensure long-term value for money for taxpayers and high-quality services.
On devolution, the Treasury is galvanising local government – under the threat of spending cuts – to come up with new ideas for collaborating. But this is not just a one-off shift of powers but requires a sustained drive from the Treasury and Number 10 to make the new relationships work in face of the scepticism and vested interests of big departments.
Efficiency, the third of the themes, is the most tantalising. A lot can be, and has been, saved through reducing the size of the civil service, sharing administrative services between departments and better use of government property. Just look at how many fewer buildings the civil service now occupies compared with 2010. Ministers should be wary of the frequent calls for abolishing departments or arms-length bodies/quangos without thinking through what happens to the functions they perform. Often, the work is simply moved around and the Prime Minister has been rightly cautious about machinery of government changes which have previously proved costly and ineffective.
The biggest challenge is making government more digital. There has been progress in making websites easier to use for the public (though not always for specialist users). Departments are seeing – and being bluntly told to see – extending digital as central to achieving spending reductions. The risk is that too much will be attempted too fast. You cannot just will the end. Getting the means right requires a lot of preparation and skill.
What matters is not just the spending numbers on November 25th but the resulting policies – how government is changed and what this means for the delivery of services. A lot is at stake. ‘Better value for taxpayers but better services too’, the PM’s definition of the ‘smarter state’, is a fine aspiration. But getting it even half right will require a willingness by senior ministers to take tough decisions and choices over the next few weeks.
Due to error at both ends, the wrong text by Peter Riddell was published this morning. This has now been replaced with the article above.