Former DWP chief calls for independent body to scrutinise public spending cuts

Written by Richard Johnstone on 10 March 2017 in News

Leigh Lewis says the time has come to consider more effective ways to set spending levels

A former permanent secretary at the Department for Work and Pensions has called for the creation of an independent body in Whitehall to determine the maximum level of spending cuts that public services should face.

Writing for Civil Service World, Leigh Lewis highlighted some “short-sighted reductions” in areas such as social care and the prison service which had meant that emergency boosts in spending were later needed to tackle crises.

However, Lewis, who served as permanent secretary at the Department for Work and Pensions from 2005 to 2010, said a longer-lasting solution could be found through either expanding the Office for Budget Responsibility’s remit or creating an independent body to recommend maximum sustainable funding reductions.

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The OBR already provides independent forecast of economic indicators and public spending, he highlighted, while pay review bodies also provide an objective view of pay levels for different areas of the public sector.

Lewis asked: “Is it inconceivable that an expanded OBR – or a new body with a specific remit – could be charged with providing for each of the major public services each year not a recommendation of what the correct level of public expenditure should be but at least a view on what it believes to be a maximum sustainable level of reduction if existing service standards are to be maintained?”

Such a body could, for example, have highlighted the impact of the near £1bn budget reduction for the prison service between 2010/11 and 2014/15, Lewis said. 

There has since been increased disorder among prisoners and a collapse in staff morale, leading justice secretary Liz Truss to announce an immediate pay hike of up to £5,000 for prison officers at 31 jails last month.

Lewis’ recommendation comes after a review of Whitehall performance by the Institute for Government and the Chartered Institute of Public Finance and Accountancy called on ministers to create an Office for Budget Responsibility for public spending that would “prevent wishful thinking, and to stop pressures building to breaking point”.

Responding to the comments, CIPFA chief executive Rob Whiteman said that understanding the resilience of public sector bodies and their capability to deliver services should be key when the government is making decisions about expenditure cuts. 

"CIPFA would welcome an independent body that assesses service performance and matches spending in public services to an assessment of demand, scope and quality," he told CSW. "The independent body would work with government departmental finance professionals to develop a ‘performance tracker’. This should form a robust basis for developing and managing improvements in both efficiency and effectiveness over time, as recommended in the CIPFA and Institute for Government’s recently launched performance tracker.”  

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