Spending squeeze a chance to shake up services

David Melding asks whether Welsh public services can thrive without the market






David-Melding

According to the French poet Paul Valèry “if the state is strong, it will crush us; if it is weak, we shall perish”.

The role of the state in industrial societies like Wales and Britain changed enormously in the 20th century. From Lloyd George’s people’s budget in 1909 to the heady days of economic planning in the 1960’s and 1970’s the state became pervasive in economic affairs. What British citizens expected of the state matched this massive shift. But why should we expect the state’s role in the 21st century not to change radically again? And is not the evidence of another radical shift not already evident?

The assumption that advanced states require a hyper-active government has, according to the Italian economist Vito Tanzi, been challenged. He argues that the role of the state must focus instead on regulation – preventing what is loosely called market failure not correcting it afterwards.

The Welsh Government, just like any other administration in Europe or North America, finds itself subject to these pressures and changes. In this context the work of the Welsh Government’s Commission on Public Service Governance and Delivery is to be welcomed.

However, in setting itself against market mechanisms the Welsh Government faces an enormous challenge in maintaining a rather 20th century view of the state.

The lack of choice and competition in the delivery of public services in Wales must end. A radical re-think in the way we fund and manage public services, like health and education, is urgently needed to deal with profound financial pressures we are facing.  The combination of spending cuts and growing costs from an ageing and rising population will leave Welsh services facing a potential shortfall of £4.6 billion by 2025.  This is according to a report by Wales public services 2025.

The Welsh Government have up until now been almost devoid of competition in their public services, this needs to change. Greater use of the independent sector and greater choice for the user will be crucial for success in allowing public services to thrive in Wales.

The Welsh Government would needs to enable public services in Wales to thrive in the future. To do this they must create:

  • Contestability with the checks and balances needed to promote effective and efficient public services,
  •  Citizen Consumers, allowing citizens more choice and influence in the delivery of public services,
  • Innovation and adaptability encouraging change and development in public service delivery,
  • Public funding with independent delivery to achieve a mixed economy in Welsh public services.

All of this could be achieved with what the Welsh Government calls an optimal model, but it will be no small task. In particular, greater use of the independent sector and greater choice for the user will be crucial for success.

David Melding AM is President of the independent non-party think tank, Gorwel.