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Public services face further squeeze

Getting ready for the pips to squeak: Funding won't cover the cost of public services

PUBLIC services were under pressure before the pandemic and the coming years will offer little chance for them to recover.

After a decade of squeezed budgets and rising demands, public services are grappling with three over-arching crises of global proportion.

That’s the conclusion of a report from Audit Wales, which published its ‘Picture of Public Services’ report on Wednesday, September 15.

The report is split into three parts – what happened with public services between 2010 and 2020, how they have responded to COVID-19, and what Audit Wales thinks are the biggest challenges and opportunities for public services in future.

As well as facing the pandemic and economic uncertainty, public services in Wales must respond to the global crisis of climate change.

The Welsh Government has already allocated £5.1 billion to the COVID-19 response in 2020-21 and has at least an additional £2.6 billion available in 2021-22.

Public finances are uncertain but are likely to be tight for some time; and for services that were already stretched, the pandemic has created new challenges.

For example, it has been estimated that the Welsh NHS will need between £152 million and £292 million each year for 4 years to address the waiting list backlog.

Despite this, Audit Wales’s report emphasises that there is a chance to learn from aspects of the pandemic response to change the way services are provided for the better.
It highlights five areas of public service transformation:

• Systems and culture to support new approaches to service delivery.
• Purposeful collaboration.
• Long-term financial and service planning that supports a rigorous and realistic approach to prevention.
• Harnessing digital technology to make services more accessible.
• Using data and information to learn and improve across the whole public service system.

Ultimately, each of those propositions boils down to making less money go farther for longer and relying on the vain hope that savings in services already cut to the bone won’t need an amputation.

Choices made by the governments in Wales and England are reflected in the cuts experienced by different parts of the public services in the decade prior to the pandemic.

Audit Wales’s analysis of HM Treasury spending data shows that spending per person by local government in England fell by 24% between 2010-11 and 2019-20 compared to 10% in Wales.

Spending per person on health in Wales increased by 7% over the same period but went up by 10% in England.

However, almost all of the expansion in overall health spending in Wales – which rose by 16% in real terms over the last decade has been offset by cuts to local government budgets.

Cuts have not fallen equally across local services.

Real terms spending on social care for families has increased by 43% and for older people by 14%, while spending on schools fell by 3%.

The deepest cuts have come in leisure and culture and library services which have seen cuts of over 40% and regulatory services, such as development control, building control, trading standards and consumer protection which have seen cuts of over 30% over that period.

Meanwhile, on health spending, Audit Wales’s analysis shows some intriguing patterns that suggest that increased Welsh Government spending on the NHS is not all it might superficially appear.

In 2010, the Holtham Commission estimated Wales’s level of need compared to England to be around 115%.

In other words, for every £1 spent on services in England, per head of population, £1.15 would be needed for Wales.

That difference is due to different demographics, for examples Wales’s disproportionately larger number of older people living for longer in poor health.

In its 2019 report on public spending trends, Audit Wales estimated Wales’s relative needs for healthcare compared to England were around 118%, or £1.18 for every pound spent in England.

Since the start of devolution, the Welsh Government has received at least 115% of funding per head in England, with the exception of 2008-09 and 2009-10 when funding dropped to 114% and 113% respectively.

In 2019-20, Wales received around 120% of funding per head of levels in England.
That relative level of funding has not translated through to equivalent levels of spending on the two largest service areas: health and education.

In 2019-20, Wales spent £1.05 for every £1 spent on health and education in England.
Nevertheless, The flip side of different spending priorities on health and education is that spending in Wales on other areas of service is much higher than in England.

For example, Wales spends more on social care, agriculture, general services, economic affairs, housing and community and culture, recreation, and religion.

Social care is in crisis in Wales. However, deep, savage, and continuing cuts to local government budgets by the Westminster Government have placed local authorities’ ability to provide even basic social care on the brink of collapse.

Several English councils have either plunged into insolvency, been propped up by backdoor government funding, or (as in Surrey) bought off from introducing the sort of Council Tax rises needed to maintain public services.

Meanwhile, the way in which former Health Secretary Matt Hancock dramatically wrote off £13.4bn of accumulated debt in the English NHS last year leaves hospitals liable to make millions of pounds in charges on their assets to the Westminster Government each year.

The gap between hospitals’ income from providing services paid by NHS England and the cost of providing those services by hospital trusts will serve only to build up further debt in the system.
Auditor General, Adrian Crompton said: “This report tells a story of public service pressure and delivery over the last decade and sets out some of the most important areas where I will be expecting to see progress in the coming years.

“The pandemic has had a devastating impact on people and communities, yet it has also demonstrated great strengths in our public services.

“Now, more than ever, it is essential that public services squeeze the most value out of the available resources to improve the well-being of individuals and communities.”