1. The context and outlook for public expenditure Tony Travers London School of Economics

2. The wider public sector and local government  The government’s decision to cut the deficit to zero by 2015-16 will lead to accelerated public spending reductions  80 per cent of the reduction will be achieved by real-terms public spending reductions  IFS = sharpest public spending reduction since 1945?

3. Local government spending to fall sharply, especially capital  Labour and Conservative Chancellors set plans to cut government capital spending by over 50% by 2014-15  Current expenditure to be protected in some service areas, with will require far deeper cuts elsewhere  Chancellor Osborne has demanded exemplifications of 25% to 40% reductions by 2015-16

4. June Budget plans ODR estimates, based on previous government’s plans £bn - cash 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Dept Exp Limits 342.7343.1341.4341.2337.7340.0 Travers estimates, based on NHS+Overseas Development spending ‘Protected’ exp110.0112.8115.7118.5121.4124.5 DEL minus ‘protected232.7230.3225.7222.7216.3215.5 £bn - real DEL minus ‘protected’ - Real terms232.7227.0214.7206.8195.9190.5 Local government is all within DEL; Social services are within LG

5. A broad range of possibilities  LG current spending appears likely to be affected in the following – per annum impacts A)Labour’s plans, all services treated the same Cash: -0.5%Real terms: -3% B)June Budget 10 plans Cash: -2.5%Real terms: -5% C)June Budget 10, but with schools etc partly protected Cash: up to -5%Real terms: up to -7.5% Social services are not ‘protected’ in any way

6. Service impacts for ‘unprotected’ services, and others…  Need, from now on, to do far more than immediate responses such as:  Freezing posts; pay freeze; ‘efficiencies’; use of reserves; delays to capital programmes etc  Near-future possibilities likely to include:  Decentralised pay bargaining  Pay freeze to extend for more than two years  Radical re-thinking of need for joint service provision (LG and other local providers)  Essex, Barnet, Suffolk, Lambeth etc radicalism  Stopping doing some things?  Rise in fees, charges and scope of charging

7. Developing long term strategic plans to secure adult social services’ survival  Clear and present need to work with other local services to secure the future of adult services  Thinking previously-difficult things, eg:  Could social services move (in part) to semi- independent status?  Might more volunteers have to be used to supplement staffing?  How far can adult social services be co-located in other public service buildings?  Sales of assets to re-use them to ensure capital development

8. Determining what is to be expected of local public services in the future  Can existing service patterns and providers be maintained?  Can services be co-located?  Can more provision be ‘out-sourced’?  Can the ‘Big Society’ deliver anything?  Councils and other service providers may see a move to a single local budget of some kind

9. Securing the future  Speed of reaction will be of the essence  From this autumn, change will occur rapidly within town and county halls  Need to secure the objectives of the service within different buildings, structures and, possibly, with different people  Public tolerance will be tested by cuts in expenditure  However, adult social service will continue to exist – but they will inevitably change

10. The context and outlook for public expenditure Tony Travers London School of Economics