Is Government Cost-Cutting Really Starting To Hurt the UK?

By Peter Smith posted 06-20-2017 12:41

  

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A series of terrible events in the UK in the past few weeks has put the spotlight on government expenditure, as well as raising many other issues of course. The Manchester bombing at the Arianne Grande concert, the London Bridge terrorist attack, and the tragic fire in west London have all led to discussion, much of it political, around “austerity” and whether the “cuts” in public expenditure are in any way to blame for these events.

There have been accusations for instance that cuts to police forces have meant potential terrorists have not been scrutinised as they should have been. Cost-cutting in building refurbishment might end up being partly to blame for the fire. A general sense that the poor in the UK are being treated badly while the rich get richer might yet lead to the collapse of the newly elected government.

One irony is that the government expenditure has not even dropped in recent years. In 2010, the UK government spend some £670 billion. By 2016, that figure is around £760 billion. So why does it feel like austerity and cuts have been significant? Well, the population has grown by some 5% in that time, so that is a factor. The cost of servicing the national debt has grown; and spend in areas such as overseas aid and health has been protected, putting more pressure on other areas.

What that means is some services have seen major cuts. Much of the burden has fallen on the areas managed by local government, with pressure on spend in areas such as roads, social care, and libraries. That also includes the police and related areas such as the border force – the police workforce in England and Wales fell by some 34,000 staff between 2010 and 2015.

In other areas such as defence and health, expenditure has had some protection but inflationary cost pressures are intense (defence equipment in the military sphere; increasingly amazing but expensive treatments in health). So it does feel to the citizen and those involved as if there has been a squeeze. But for some years, it seemed to have been relatively painless to many – until recently, when problems in the health service and those incidents we mentioned earlier have hit the headlines.  

Bringing this back to procurement, we would suggest this all demonstrates that eventually, cost-cutting will have an impact. It is amazing really that crime has decreased whilst police spend has reduced, but eventually in any spend area, cost reduction will have an impact. It might be that fewer police out walking “the beat” means they miss the important local information - “that man in apartment 22 has gone a bit weird and shouts about killing people”.  Or it might be a local authority using cheaper materials in a building, or roads not being repaired so more accidents and damage to cars.

In the case of the UK, much of the cost-cutting seems to have been fairly broad-brush. We have tended to see across the board cuts, except for the protected areas, rather than an informed debate about exactly where and how better value could be obtained.

We’re not saying that government should not watch spend very carefully, and to be clear, it was a combination of the last Labour government’s profligacy and the financial crash of 2008/9 that almost bankrupted the UK. And of course public expenditure is still far greater than it was for most of our country’s history!  

But equally, it is naïve to assume that cuts, often applied without a lot of real analysis, won’t ultimately have a real effect on the lives, security and health of the nation. It feels in recent weeks that the UK is now really and painfully seeing some of the outcomes from the cost-cutting of recent years. That should (we would hope) put more focus on better policy making, prioritisation of spend and effective procurement of course to make sure public money is used as well as humanly possible.

 



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