The Scottish Government’s Finance Committee recently requested external views be submitted to help with its input to prioritising the Holyrood budget strategy. The Committee felt its most appropriate contribution at this time was to conduct an inquiry into efficient public services. It therefore asked for views on:

“What preparation should be underway now by the public sector to ensure the efficient delivery of public services within a period of tightening public expenditure?”

As a long-term adviser operating across different segments of the public sector, Scott-Moncrieff contributed one of a total 55 written submissions. Our submission was produced by a team well versed in advising a wide range of public bodies on budgetary matters. Indeed, team leader Audit Manager James Thomson, has recently completed an Efficiencies Review for Audit Scotland while seconded to that body, which is responsible for checking that public money is spent properly, efficiently and effectively.

A summary of the main points of our submission follows:

In preparing for the forthcoming reductions in the Scottish budget, how can public sector bodies’ best take service users’ views and needs into account?

It is important that resources are allocated based on strategic priorities and objectives. Public sector bodies will need to stop providing some services and reduce the level of services in other areas. A ‘national conversation’ should take place with the public on service priorities using web based questionnaires supplemented by public focus groups.

there is a real need for a fundamental change in the structure and delivery of public services

Should any spending area be protected from real term cuts and, if so, what would the implications be for other areas of the public sector? Should there be an emphasis on seeking uniform efficiency savings, or are there particular bodies / spending areas that should be targeted?

Services which do not deliver against strategic priorities will need to be stopped and the funding used to meet the national priorities.

A whole system approach to looking for savings is required. For example, the connection between policing resources, the number of prosecutions, court availability and prison capacity needs to be considered as a whole. Without a full understanding of these inter-dependencies driving savings in one spending area may just lead to more unavoidable demand for public spending in another area.

How should the public sector best be organised to deliver the services for which it has responsibility and what barriers would have to be overcome to achieve this? What are the principles that should underpin any future strategic changes to the configuration of the Scottish public sector?

There needs to be a forced reduction in the number of public bodies in Scotland. Leaving the development of shared services to individual bodies will not deliver the level of savings required and the existing structures and number of public bodies must be reduced.

Funding bodies can play an important role in promoting and rewarding shared services and joint working arrangements. Public bodies who are using shared services or have merged with others to deliver enhanced services and value for money should receive additional funding.
 
What are the challenges to the successful delivery of the Scottish Government’s national performance framework if public spending is reduced?

The public sector must recognise the severity of the pensions issue and take action to address the unsustainable levels of pension liabilities. This will need to be led by the Scottish Parliament.

Have efficiency savings had an impact on the quality of public services? To what extent can efficiency savings continue to be made while maintaining current levels of service delivery?

Currently, bodies are looking to identify their own savings and demonstrate the best use of the resources allocated to them rather than making the best use of Scotland’s finite resources. The number of public bodies in Scotland and the existing arrangements do not represent the most effective use of resources. The Scottish Government should undertake a review of how public services are delivered and develop a structure that delivers value for money.

At present, opportunities exist for VAT initiatives that could generate significant levels of additional funding for the Scottish Government, but these are not being pursued.

Given reduced budgets, will the public sector have the capacity to deliver efficient public services while also responding to the longer-term challenge of demographic change?

Scotland’s public sector must ensure that short-term efficiency programmes are not to the detriment of the delivery of long-term public sector objectives.

There is a real need for a fundamental change in the structure and delivery of public services in Scotland.

Our conclusion
The Scottish Government must commission an independent review of the Scottish public sector structure. This review should be seen as free from political motivation and set out a framework for the public sector that ensures the best use of Scotland’s finite resources. The restructuring of the public sector should look at all areas and not look at health boards or councils in isolation. The best structure of public sector services may be the innovative linking of health and council services, rather than just an amalgamation of existing local authorities or health boards.

The current corporate spending review and the review of Scottish independent spending should highlight areas where savings can be made and costs reduced for the Government. The results of these reviews are expected in the autumn 2010.

Contact:

Nick Bennett, Public Sector Audit Partner
James Thomson, Audit Manager