Copied from Local Government Chronicle online
13 December 2012 | By Michael Bichard

The Public Services Hub at the RSA together with the Social Market Foundation (SMF) recently produced an important report entitled ‘Fiscal Fallout’, which is worth a read…but is not for the fainthearted.

It spells out the scale of the continuing financial crisis and makes a strong case for much greater coherence between the national strategies for fiscal sustainability,sustainable growth and public service reform.

The report – co-authored by Ben Lucas and Ian Mulheirn – explains how growth has been weaker than expected, social security expenditure continues to grow and government borrowing is, this year, running at 10% above forecast.

As a result, using HM Treasury’s method for estimating the structural part of the deficit, the SMF suggests that to remain on it’s planned fiscal path the government will need to make a further £22bn of cuts or tax rises by 2017/18 on top of the already planned £26bn of cuts announced in the last Autumn Statement.

Looked at in Departmental terms, if the NHS, Education and International Development remain ring-fenced then the consequences for other departments, including DCLG will be brutal.

Stay calm and carry on?
In the face of such forecasts the future is alarming if all we do is ’stay calm and carry on’.

As I have argued before,and the report reinforces,we have to be more radical than that not least because of other unavoidable pressures. After all,the LSE predict that an additional 6% of GDP will need to be spent on public services by 2020 to meet the social costs of an ageing society and the LGA estimate that the cost of meeting increased demand for statutory services will leave a funding gap of £16.5bn by the end of the decade.

What we need is for the next spending review to point the way towards a new Public Service model with a very different starting point. As the RSA report concludes, we need to redefine the relationship between citizens and services because value in public services is not transactional; it is about enabling people to achieve their goals to be capable, autonomous and socially responsible’In the language of the RSA you need to build social productivity by shifting resources away from traditional departmental priorities and silos towards the the things that citizens need to build strong and capable communities.

We have to move away from social protection to social productivity and we need to move on from a philosophy primarily concerned with response to one which gives much greater emphasis to prevention,early intervention and demand management; and we should know that this approach works because it is already happening in some local authority areas.

Councils like Oldham and Sunderland have begun to develop innovative approaches based on decentralising services,developing local commissioning capacity and taking a community leadership role in brokering and catalysing neighbourhood behaviour change thereby reducing demand for public/state services.

The question for me is whether the centre understands the importance of these radical initiatives and is capable of redesigning a public service model that has been shown to be expensively flawed.

Lord Bichard, senior fellow, Institute for Government