30 October 2014

  |  CBI Press Team


Government should not spend more than it earns on public services - CBI

Set up cross-party commission to unlock future reforms.

Government should not spend more than it earns on public services - CBI

The Government should establish a new fiscal rule once the deficit has been eliminated ensuring that public spending never outstrips revenue receipts, according to a new CBI report.

‘Our future public services: a challenge for us all’ warns that politicians of all parties have yet to grasp the pace and scale of change required if the UK is to live within its means and provide the services people expect after next year’s general election.

The report argues that public services require fundamental re-shaping to better meet public needs, rather than simply cutting budgets – leading to poorer quality services. For example, increasing the number of services available online and encouraging the physical co-location of some services would combine greater efficiency with joining up services. The report also calls for a gradual switch away from high levels of welfare spending to policies that tackle underlying problems.

Following the NHS Five Year Forward View, the report says that integrating social care and health services by combining budgets and commissioning systems would save money and improve clinical outcomes by moving care from hospitals into homes and communities. Research from the University of the Aberdeen shows that treating minor ailments such as coughs and cold at pharmacies could save the NHS more than £1bn a year.

Katja Hall, CBI Deputy Director-General, said:

“All parties must recognise that serious structural changes are required to prevent public services suffering inevitable decline through a thousand cuts. Tinkering around the edges of public service reform will not meet the challenges we face.
“It will take bold decisions like integrating health and social care to help address the pressures that an ageing population places on our public services, especially the NHS.

“Managing public spending within acceptable limits will demand re-shaping of public services to better meet people’s needs, including increasing the number of services available online.”
“We want to see reform underpinned by a new fiscal rule ensuring that public spending never outstrips revenue receipts once the deficit is eliminated in 2018/19. And a cross-party commission, with citizen representation, should be set up to answer tough questions about how we overhaul our public services for the 21st Century and beyond.”

The CBI believes that Government should hold public spending at 38 per cent of GDP over the economic cycle. Our future public services: a challenge for us all’ recommends that a number of services should be digitised by 2020, including:

• appointment booking for all GPs,
• e-prescriptions for smart phones,
• online GP consultations,
• all government forms and applications,
• trackable planning applications,
• school profiles by area, including ranking, pupil satisfaction, transport links and application tracking.

A number of services are already available online, but access is not yet widespread across the country. The Government Digital Service should lead on developing digital routes as the primary way citizens interact with public services.  

The report notes that citizens both fund and use public services, and therefore should be part of a national conversation about their future. Attempts to secure significant changes to the way services are delivered will falter without public backing. Therefore the CBI recommends:

• establishing a cross-party commission, with citizen representation (similar to Lord Turner’s  Pensions Commission) to secure a mandate for unlocking long-term reforms;
• embedding transparency about costs and performance among all providers;
• creating a political environment where new approaches can be tested.

Establishing baseline performance metrics for all public services early in the next Parliament, for example having certainty regarding annual operating costs for prisons and hospitals, will also help to identify where and how improvements can be made through greater transparency.