Eurfyl ap Gwilym says this week’s Wales Audit Office report forecasting £3 billion spending cuts will frame the May 2011 Assembly elections
The Wales Audit Office has provided a valuable public service in publishing this week a report on public expenditure in Wales including a forecast of the likely spending cuts in Wales over the next three years of the next Spending Review period 2011-12 to 2013-14. Inevitably the focus of attention has been on its forecast that public expenditure will decline in real terms by £500 million a year over the three years in question. Thus the cumulative total reduction is forecast to be £3 billion. In 2013-14 the level of public expenditure will be almost 10 per cent lower in real terms when compared with 2010-11.
Such a prediction should not come as any surprise to those who study these matters. It was clear from the fine print of the UK Budget of April 2009 that such cuts were planned. It was on the basis of that budget that I published a detailed analysis and forecast of the Wales Departmental Expenditure Limit in Winter 2009 edition of IWA’s journal Agenda. This showed that the in real terms the cumulative reduction would be approximately £2.8 billion.
Unless there is much more disclosure of the UK Government’s spending plans in next week’s 2010 Budget, and this is unlikely, citizens face the prospect of voting in the UK General Election in May without any of the political parties admitting either the extent of the overall cuts that they plan and even less providing any detail of where the cuts will fall. The picture will be markedly different when voters in Wales cast their votes in the 2011 National Assembly elections. By then plans and budgets for 2011-12 will be have to be in place and the impact of cuts will already start to be felt. In the case of the National Assembly elections the cuts will be those imposed by the UK Government and the political debate in Wales will be coloured by which party is in power in London.
One of the encouraging and valuable features of the Wales Audit Office report is that it provides specific examples of poor financial management in the public sector in Wales. Such examples and other practical suggestions in the report should offer encouragement to those responsible for mitigating the impact of the spending cuts. If the public sector was operating at a high level of efficiency then the probability of being able to maintain services, but at a reduced cost, would be much reduced.
It is inevitable there will be examples of poor practice and waste in the large and complex public sector. The rapid growth in funding in recent years will have led to waste. The corollary is that cuts in budgets should encourage greater efficiency. Current poor practice and inefficiency offers a lifeline provided those responsible for maintaining delivery standards in the public sector accept the challenge.
One of the characteristics of the public sector is that it does not have the efficiency disciplines inherent in the profit-driven private sector. Governments of all political persuasions struggle to embed feedback mechanisms that inexorably drive efficiency. And on the subject of savings, the Wales Audit Office notes that the national efficiency target of £600 million by 2010 will be “missed by some considerable margin”. It is to be hoped that the Wales Audit Office can play an increasingly important role in facilitating greater value for money in the public sector.