Public expenditure pressures will be as great as ever this year, and for many across the public sector the financial challenges will be even more severe than before.
Any easy tactical cuts have all been made, yet more reductions will be required as the government presses on with its austerity programme. It has signalled that there will be at least another five years of cuts and constraint.
The wider economy shows no sign of recovery and the hope that the private sector would lead economic growth is beginning to look fantastical. This, while perhaps not surprising, is unwelcome. Economic pressures add to the strain on public services and will contribute to growing demand generated by demographic change and changing public expectations.
Faced with these financial and demand pressures, public sector leaders will have to face up to some difficult decisions. They will, of course, need to be strategic.
There is a need for clarity about the key outcomes that public agencies are seeking to achieve – and preferably these will have been determined after consultation with service users, the wider public, staff and other stakeholders. Decisions will have to be taken on what services to stop; which to deliver or procure in very different forms; and which to charge for and on what basis. Services will need to be willing to cede power and resources to others in the public, voluntary and community sectors.
Public sector leaders will have to show strong leadership – explaining and listening to the public and service users but also shaping public opinion – and be ready to take unpopular decisions.
This will not be a time for timidity or self-pity. Nor must it be dominated by short-termism.
Setting the 2012-13 budgets will be critical, as these will shape the future of many public services. The wrong decisions could so easily add to future pressures or lead to unintended consequences, with their own future demands on ever-decreasing financial resources. It would be too easy to reduce expenditure on preventive programmes – the long-term financial forecasts actually require more such investment. Innovation and initiatives to meet new demands should not be squeezed off the agenda.
It will be important to ensure that staff, whether directly employed in the public sector or in private and third sector organisations delivering public services, are well rewarded, have access to personal development programmes, are engaged in critical decision making and supported through periods of intense change. Expenditure pressures must not become cover for cutting terms and conditions or ignoring the needs of people delivering public services. Of course it may not be possible to sustain every job or every term and every condition but there must be fairness. Talent will be needed as never before and will need to be fostered.
Public sector leaders will have to be ready to consider new approaches to financing, including social investment and the release of the value of public assets. They will also have to be prepared to consider new forms of collaboration across the public sector, and with the voluntary and community sector, social enterprises and the private sector.
Devolution and decentralisation to communities and community organisations as well as more empowerment of service users will be required. Public sector leaders will have to adopt a collaborative leadership culture.
The coming year will demand the most of our public leaders – politicians and managers. They have an opportunity to rise to the challenge and offer hope and protection to the public. It is to be hoped that this opportunity will be seized, however great the challenges. The alternative is too ghastly to consider.