In his Autumn Statement today, the Chancellor has announced that Whitehall department resource budgets are to be cut by 1 percent next year and 2 percent in 2014, with the NHS and schools exempt.
Alan Downey, UK and Europe Head of Public Sector at KPMG, says:
“With the fragile state of the economy the Chancellor clearly wanted to spend more on capital programmes in an effort to stimulate economic growth and fund investment in infrastructure. The big question now is how government departments will respond? Will they just trim at the margins, or will they opt for more radical change?
“The hope must be that this turns to advantage by using it as an opportunity to drive fundamental reform of our public services, and invest the money that is saved in capital programmes.
“As the Chancellor stated, Michael Gove at Education has led the way by proposing a fundamental restructuring of his department, moving away from the old model of fixed teams within a static hierarchy. Instead he is pushing for a flatter, leaner structure, with flexible policy teams that will form, disband and re-form as government policies change and develop. This is both brave and risky. If it works, the Education Department will be cheaper to run and better suited to its new role, which is not to run the education system, but rather to set policy and regulate provision by academies and free schools. If it fails, the Department could find itself short-staffed and under-skilled.
“It is far from clear that other parts of Whitehall will follow suit. There are certainly risks as well as potential benefits. But if ever there was a time to think and act bold, this is it.”
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