The PSC news-insights: entry

18/11/2022
News, Insights

Digesting the Autumn statement: What you need to know

We brought together a roundtable to reflect on what the Autumn Statement means for public services and the upcoming challenges for public service leaders. From the NHS and adult social care to universities - find out what we discussed.

The Autumn Statement confirmed many of the anticipated changes to tax and spending:

- The UK is in recession, with the economy expected to shrink by 1.4% next year and then grow from 2024.
- Inflation remains high - predicted 9.1% in 2022, falling slightly to 7.4% in 2023.
- Tax thresholds for individuals remain frozen, although there are increases to state pensions, means-tested benefits and the National Living Wage

Digesting the Autumn statement: What you need to know

View our full analysis of what the Autumn Budget means for public services. 

 

This means that the next two years will be very challenging for public services, although the most drastic cuts in spending have been delayed to 2025:

  • Spending Review settlements are maintained up to 2024-25, but after that public spending growth is planned to slow to 1% above inflation
  • There are spending increases over the next 2 years for the NHS, adult social care, and schools - but these are unlikely to be sufficient to cover ongoing demand increases in the context of very high cost inflation
  • Most capital programmes are unchanged (e.g. continuation of the New Hospitals Programme was announced shortly before the Statement, and major rail projects have been confirmed) - but the Government has not yet given further details

There were some accompanying policy announcements:

  • Further devolution plans, continuing the pattern seen in recent years
  • The Skills agenda was prominent as a driver of growth - with an emphasis on T-Levels, Higher Technical Qualifications and the Lifelong Loan Entitlement. Michael Barber has been appointed as Adviser on Skills Reform.
  • The Digital Markets Unit in the Competition and Markets Authority (CMA) will be given additional powers to tackle subscription traps and fake reviews.
  • Patricia Hewitt will lead an independent review into how Integrated Care Boards (ICBs) can work ‘with appropriate autonomy and accountability’

Overall, this leads to a challenging picture - with individuals’ finances being squeezed in the context of substantially reduced growth in public spending. It is unlikely that pay rises will keep pace with inflation and this, combined with gradual tax rises, means that everyone’s standard of living will decrease.


Earlier today, we discussed what this means for public service leaders and reflected on some of the challenges of staffing and operating services in this environment.


Lord Bob Kerslake, former head of the Civil Service, encouraged us to think first about the public, and the impact on individuals, then to consider what this means for the workforce in our public services - before finally considering the services themselves. He encouraged our group of public service leaders to consider how they can best fulfill their role over the next two years - acknowledging the challenges to come but emphasising that the focus needs to be on delivering services as well as we can, as efficiently as we can.


Our group of public service leaders discussed:

  • Specific challenges for the NHS and adult social care - highlighting that the additional funding remains lower than the likely gap and that delivering services in a context where demand is already rising is likely to be very challenging.
  • The review of ICBs - querying how much practical impact this is likely to have but noting that there are opportunities for organisations to work together more in each locality.
  • Universities - where the demographic ‘bulge’ and consequent increase in Home student numbers may put the sector in a slightly better position than other public services, agreeing the need for closer collaboration at both a national and local level.

We enjoyed the conversation and look forward to working through the impact of these announcements with public service leaders in the coming weeks.

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