The State of the State 2012, a major new report by Deloitte and Reform, provides a fresh analysis of the UK’s public finances and public services. It sets out additional challenges facing Government, and potential savings that will be critical to economic recovery.
Applying a business lens to over 500 sets of Government data, the report creates the first ever snapshot of the state of the state and asks what Government should do if it were a big business.
The report identifies five rarely acknowledged areas for urgent public sector reform. It suggests the Government can improve its financial and business management to:
- Save up to £8.5 billion per annum by bringing public sector fraud prevention and detection rates in line with the private sector;
- Save up to £10.2 billion per year by improving cash management in Government. This includes reducing levels of aged and written off debt and improving working capital management to repairs its balance sheet;
- Reform areas of spending under pressure from demographic change, such as welfare and health, and examine further asset sales, including infrastructure, to reduce the UK’s net liabilities and achieve budget surpluses in the next Parliament;
- Target a public sector productivity growth rate of at least 0.3 per cent this year by improving flexibility and accelerating reform of the workforce and capital spending. Government must press ahead with reducing the public sector headcount and transferring workers to mutuals, but ensure this is sustainable with improvements to skills and capability;
- Increase the proportion of locally-raised council spending year on year and improve financial management skills the local level to support the move of service delivery to the local level.