public spending

Adrian Fieldhouse, Managing Director for Government at Sopra Steria explores how the deployment of technology can help to bridge the public spending gap

Day in, day out, the news headlines tell us that public services are under ever greater strain. While the government recognises the need to modernise and transform services, it does so against the constraints of a tightly constrained public purse. Add to this the increasing demands of citizens, who expect premium service delivered at the mere click of a finger and you realise the true challenge facing government.

A recent report by the National Institute of Economic and Social Research (NIESR), commissioned by Sopra Steria, warns that the pressure on the public finances could be greater than the government realises. The report predicts the emergence of a public spending gap of £300 billion over the next seven years. A hard Brexit and the threat of deteriorating economic conditions would only add to the gap, potentially contributing a further £50 billion by 2025.

Analysing the gap

NIESR’s analysis looks at so-called “warranted” spending – the amount of funding needed to deliver public services that satisfy public and political demand. It suggests a shortfall will open up between warranted spending and the government’s plans for funding key public services.

One explanation for this is the increasing proportion of people aged over 65, which is projected to rise from 18% in 2017 to 26% by 2067. This will create the need for extra resources to cover rising health and social care costs and to serve a larger number of pensioners.

A second explanation is that low levels of public spending might be affecting the quality of public services. There has been a marked deterioration in key government targets, including for health, where NHS operation waiting lists have reached a 10 year high. Even with the birthday funding settlement of an additional £20 billion a year, the NHS will continue to grapple with rising and more complex demands.

So, the government seems to face a stark choice – tax increases or even more cuts to public spending – if it is to avoid government borrowing rising to unsustainable levels.

Changing the outcome

Another alternative and one more likely to be accepted by the public, is reshaping the way in which public services are delivered through business process improvements and greater innovation.

The last decade has seen significant improvements in the way information is delivered and public services are made accessible. The next wave of digital transformation will meet public needs at less cost through enhanced insights (using data and analytics to influence decisions), effectiveness (applying platform approaches to achieve better and more consistent outcomes), people (leveraging data and mobile technologies to build the workforce of the future), engagement (realtime, interactive feedback to engage and co-create services) and risk management (managing cybersecurity and building government resilience).

It also means adopting new ways for the government to operate, using agile principles and putting user experience at the forefront. This includes adopting new commercial models, such as handing choice back to the customer via a Netflix model of government, with service upgrades, options and enhancements being made available as convenient ‘bolt-ons’.

Cleary, there are multiple uses for such technology, which we have only just started to explore – the possibilities and benefits for government and citizens are endless. The answer lies in transforming and uplifting services through new technologies. This approach will enhance the services provided by government beyond what it would and could normally afford to offer.

Unless our government continues to embrace these innovations, the UK’s public services may face an untenable situation, where they cannot deliver services in the way they have always done.


Adrian Fieldhouse

Managing Director for Government

Sopra Steria


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