Opinion/blog

Higher education challenge

The student loan system is in trouble, with three quarters of students unlikely to pay back their loans in full. A rethink is needed to make the system affordable and improve higher education access Read more

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Referendum? What referendum?

Scotland’s extra-parliamentary groups are carrying on as if polling never happened, while Lord Smith was given just three months to deliver a new constitution Read more

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The ticking clock on quango reform

Three years on from the passing of the coalition government’s Public Bodies Act, what more needs to be done to demonstrate that the system of arm’s-length government in the UK has been reformed for good? Read more

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IPSAS: coming of age

Publication by the International Public Sector Accounting Standards Board of a new conceptual framework for financial reporting is a milestone in its development as a mature standard setter Read more

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The NHS starts talking tough

NHS England’s Five Year Forward View sends a hard-hitting message to politicians: stop blocking service changes and find us some more funding. Read more

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The local authority graph of doom

What can councils expect as budgets get even tighter in 2015-16? A lot more pain, but also opportunities to do things in a different way Read more

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Ensuring robust audit in the future

A company set up by the Local Government Association will pick up statutory functions after the closure of the Audit Commission Read more

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Housing: solving the affordability crisis

Proposals in the Lyons Housing Review provide a roadmap for delivering the right type of housing in the right location Read more

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Councils: no more top-down reorganising

Now is not the time for further local government reorganisations. Councils in two tier authorities need time and space to develop local forms of collaboration Read more

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The new mediocre

Despite positive growth forecasts, the UK’s public finances look to be deteriorating ahead of chancellor George Osborne’s Autumn Statement. Welcome to the gloomy new normal

There should be uncontained excitement at HM Treasury right now. The UK economy is set to grow at the fastest rate in the G7. And unemployment is at its lowest level since 2008. All good news for a chancellor preparing his pre-election Autumn Statement.

Instead, there’s a distinct air of seasonal melancholia, with much talk of secular stagnation and dampening down of expectations.

The downbeat mood was summed up recently by IMF boss Christine Lagarde who has warned we face ‘a new mediocre’ – a sort of ‘meh whatever’ shrug about the state of global growth.

This autumnal chill is partly down to headwinds from the EU – particularly with Germany on the brink of recession – and from China’s rapid slowdown. Not to mention the geopolitical risks that have spooked the financial markets.

But the chancellor also faces some seasonal disorders of his own.

Top of the list is the deteriorating state of Britain’s public finances. With public borrowing up by £5.4bn on this time last year, the Treasury’s deficit reduction targets now look distinctly unrealistic.

The underlying shortfall in tax receipts is due in part to very weak pay growth – reflecting the ‘not worth it’ jobs culture unwittingly alluded to by welfare minister Lord Freud.

All of which points to a serious revenue problem for the Exchequer – and some migraine-inducing challenges for government bean-counters.

CIPFA’s 2015 manifesto – previewed in this issue – makes a plea for far greater honesty and realism about the fiscal position faced by the next government.

How, for example, does the Treasury chief secretary’s warning about stronger spending controls square with the burgeoning demands on vital services coming down the tracks?

How, in particular, should any future administration respond to the pitch by NHS England chief executive Simon Stevens – in his five-year ‘forward view’ – for an extra £8bn in the next parliament?

And if this special pleading for the NHS is successful, what does it mean for other less loved and protected areas of spend?

Answers will be required by the time of the 2015 spending review, whoever is in charge of the purse strings.

As the Institute for Government argues, with 50% of cuts still to come, it is this event – not the Autumn Statement – that will set the mood for our increasingly beleaguered public services.

Welcome to the gloomy new normal.

This opinion piece was first published in the November edition of Public Finance magazine

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