Welsh public services face “significant pain”

The Welsh Audit Office (WAO) has issued a stark warning. Faced with the prospect of cuts worth £1.5 billion over three years, public services could find themselves running out of money if they do not undertake urgent reforms.

In its report, A Picture of Public Services, the WAO makes a number of conclusions and recommendations, which are likely to result in a period of painful restraint in the public sector. In particular:

• Wales has the second highest proportion of people working in the public sector behind Northern Ireland. In 2008 the figure stood at 24% compared with a UK average of 20%;

• In real terms, the assembly Budget, based on figures from the Institute for Fiscal Studies, looks set to fall by £1.5 billion between 2010/11 and 2013/14. This figure could, however, increase in the event of a double dip recession;

• “Public services will need to make a strategic commitment to radical change, and the innovation needed to deliver that change, if they are to respond effectively to the financial situation.”

• Public services in Wales may need to emulate practices in the private sector to address the challenges of rising staff costs without corresponding redundancies. As such, the WAO suggests that some staff may need to reduce their working hours, moving in some circumstances from full to part time hours; and

• Greater effort is needed to engage citizens with their public services more fully.

In publishing the report, Gillian Body, the auditor general for Wales, said:

“There are tough times ahead which require tough decisions. And, in order to deal effectively with these challenges, the public sector needs to change and innovate. It needs clear strategies and plans, based on good information to support difficult choices.

“Risk should be managed but the public sector must not be risk averse. Better use should be made of staff, resources and assets. And the public sector needs to work together more, in a joined up way. But, most importantly, it’s about finding new ways of working based around what matters for citizens.”

Reactions to the report were somewhat mixed. Broadly supporting it, Conservative AM Jonathan Morgan, chair of the assembly’s public accounts committee, said:

“Public bodies cannot expect to muddle through by doing the same things with less money.”

And for the Public and Commercial Services union in Wales, negotiations officer Sian Wiblin appeared to recognise that some reductions in working hours might be needed in the public sector. He said:

“So long as people reduce their working hours voluntarily, this could be an acceptable way to reduce costs, and an alternative to job losses.”

However, Unison took a more hostile approach to the WAO report, with Dominic MacKaskill, its head of local government in Wales, saying:

“Transposing a private sector solution to the public sector is fraught with difficulty. The reason why the private sector went to short-time working and reduced hours was a reduction in demand for manufacturing goods etc. With the public sector the demand is high and increasing. For example, social care demographics show an increase in demand.“

Reacting, first minister Carwyn Jones told assembly members the government was going through the budget line by line, adding:

“We are looking at a very tight budget indeed, we will have some very difficult decisions to take as a government, and I don’t shy away from that. But I would expect the public in Wales to expect us to formulate a rationale as to why some areas are seen as important and should be preserved, and other areas are seen as areas that cannot receive funding for the next year or so … it won’t be easy and it won’t be painless.”

Last month, the Mr Jones called for a big drive to improve efficiency across the public sector in Wales. Following the publication of the report, the BBC’s Welsh political editor, Betsan Powys wrote:

“The next few years are going to be all about balancing the books. If this is an opening chapter … it’s going to be a long and difficult read.”