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The public sector leader view

The State of the State

Public sector leaders are uniquely placed to comment on government and public services - the challenges, successes and future outlook. Our interviews with fifty senior figures in England, Northern Ireland, Scotland and Wales form the most extensive qualitative research of its kind and allow for an unparalleled view of the public sector from the people who know it best.

The public sector needs to know what post-austerity looks like

Nine years of austerity, coupled with relentless rises in demand, have left the public sector stretched. Executives in every part of the sector told us about reductions in service scope and quality. However, most of the leaders we interviewed also made clear that austerity has been a force for change as a driver for innovation and transformation.

Many went on to say that national government should provide a post-austerity vision for the public sector. While local leaders prize their ability to shape services to meet local needs, they want central government to provide leadership and direction around reform priorities and the future of public services – not least to guide their technology and transformation choices.

The shift to digital technology remains one of the public sector’s central preoccupations. Interviewees told us about patchy progress in their own part of the sector that is often limited by the availability of funding to invest and the struggle to attract sought-after digital and programme leadership skills in a very competitive market.

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In the words of public sector leaders

"What’s needed is a clear direction for public services. There has been an abrogation of responsibility from the centre. We like devolving and doing things locally but from central government, we need a policy position. The public sector is drifting." – Chief Fire Officer

"Austerity has been good – not bad – when it comes to NHS revenue. It has forced people to do things differently. On the capital front, undeniably austerity has been unhelpful but the problems go way back." – Health Agency Chairman

"The NHS is on its knees but the problem with putting more money in is that it gets dissipated into keeping the lights on and doing things the same way they’ve always been done." – NHS Non-Executive

"If something fundamental isn’t done in the next couple of years, something will break off the edges but it won’t be a big shock, more like a gradual deterioration. All councils are on the same conveyor belt." – Council Chief Executive

"After nine years of austerity, some forces are heading towards failure in the standards and services you’d expect in the UK." – Chief Constable

"Technology used to assist organisations to do what they do. Now it is fundamentally changing what they do. Universities have been in a bubble and that’s got to change." – University Vice Chancellor

"There’s more we could do on tech and that’s where the money matters. We’ve had to rely on capital to drive investment and partly the problem is competing in the market for good people and paying the rates that are needed. Transformation is a curate’s egg across the sector." – Council Chief Executive

A new approach to skills is central to post-Brexit prosperity

Brexit is not the UK’s only economic issue. While debates about the economy inevitably focus on the risks and opportunities of leaving the EU, our interviews cast a spotlight on more long-standing, pervasive issues that have suppressed the UK economy for decades – and could jeopardise its post-Brexit success unless they are addressed.

Many public sector leaders told us about the UK’s regional imbalance, low productivity and income inequalities. They agreed that the skills agenda connects all of these challenges and the UK needs to invest more in further education to tackle them.

Most said that further education colleges need to be more systemically connected to local and regional economies, with a refreshed purpose to work with businesses and councils to meet the skills needs of the area. Some pointed to the Netherlands, Ireland, Singapore and Australia – as well as the ubiquitous example of Germany – as countries that have built adult skills provision around employability and regional economic priorities. Others argued that employers need to take greater responsibility for connecting with the education system to ensure their skills needs are met. However, senior figures in both further and higher education warned that this is a complex area – and policymakers should not assume students can simply be channelled into courses. All agreed that education should equip students with broader abilities than training for a job, especially given the increased career variability expected in the years ahead.

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In the words of public sector leaders

"As disruptive as Brexit is, it’s not the most important issue facing the country – those are low productivity, regional inequality and the regional skills and education challenges we have had for 30 or 40 years. Government has got to take them seriously." – Former Minister

"We’ve got too many colleges all competing for the same people and they are all offering the same courses because they need to get bums on seats to get paid." – Elected mayor

"We are out of kilter with Europe, and with places like Singapore and Australia, where they have recognised the connection between productivity and access to skills. In Ireland as well, they have a long-established model of institutes that are plugged into employers and regional economic priorities and that’s what we have neglected." – Senior Civil Servant

"I reject the notion that if you have a thousand jobs to fill somewhere, you just train a thousand local people for it. That’s lazy instrumentalism and people don’t behave like that. But yes, government should support colleges to offer skills pathways that reflect local priorities." – Further Education leader

"There are significant dangers in pipelining people into work-ready products. The variability of careers is likely to be greater in the future so we need to create people with the agility to perform well in that environment." – University Vice Chancellor

"There’s a fairness issue when you think that we allow fifty thousand pounds of investment in someone, even if it is through a loan, to go to university and nothing for people who don’t." – Further Education leader

Regions feel re-energised but economic development skills are in short supply

Local government and other leaders committed to regional devolution have been buoyed by renewed political interest in Westminster. After the 2016 EU referendum, the agenda seemed to lose momentum as Whitehall shifted its focus and champions for the Northern Powerhouse left government. But from the start of his administration in July 2019, Boris Johnson committed to ‘unleash the productive power’ of the UK’s regions through more equitable investment across the country – sending a wave of cautious optimism across those in the public sector committed to regional devolution.

In our interviews, local and regional leaders told us about the barriers they face in driving economic growth. They talked about the bureaucracy of working with multiple agencies while several said councils, including those in combined authorities, do not have people with skills and experience in economic development. Some added that Greater Manchester’s stand-out capability originates from a decision several years ago to hire economists and strategists to understand the city council’s connection to local growth.

Several interviewees mentioned Local Economic Partnerships (LEPs) as part of the regional development landscape. Perceptions of LEPs varied across our interviews, reflecting their variable success across England. We interviewed a LEP chair who agreed that not all are as good as the best, and that government might consider refreshing LEP leadership and standardising their management to help maximise their impact.

Commentary on regional devolution can tend to focus on the Northern Powerhouse and some interviewees were quick to point out that there are more regions than the north of England – and more to the north than its cities. One northern regional leader warned that London-based policymakers fail to recognise the region’s geographic scope and diversity, arguing that for many people in rural areas, Manchester is as remote to them as London.

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In the words of public sector leaders

"My big issue is the speed of delivery. When you’re trying to deliver a plan, it can all become very bureaucratic, usually because of multi-agency delivery." – Elected mayor

"To do economic development properly, you’ve got to be bold and brave and make funky decisions and you don’t always find that in the public sector." – Council head of property

"People in London talk about devolving powers and funding but the danger is that money gets focused on Manchester, Liverpool and Leeds. What about towns and rural places all across the North? Manchester is a metropolitan city and people in other parts of the North of England see it as just as remote to them as London." – Elected mayor

"Civil servants won’t hand over money to people not capable of dealing with it. They will point out to ministers where there are people who aren’t capable." – Former minister

"The aspiration is there. There is no lack of ambition. But there’s a capability gap. We’re strong in political buy-in and we’ve got the right people around the table – but in their organisations, they haven’t got the capability to deliver." – Regional chief executive

"LEPs could use refreshed leadership and centralised back offices. That would make sure they stay relevant and standardise what they do, which should free the business membership to get out into the economy." – LEP Chair

The time is right to invest in the UK’s infrastructure and its public sector estate

A strong area of consensus in our interviews was around investment – both in our national infrastructure and in the public sector estate.

Many of our interviewees argued that the time is right for the government to invest at scale in the UK’s infrastructure, and not least its transport network. Their view is that our physical infrastructure is lagging behind comparable countries and a major, long-term investment programme would deliver immediate economic benefits, an uplift in productivity and an increase in the UK’s competitiveness.

More specifically, some interviewees told us that years of under-investment in capital projects have taken their toll on the public sector estate. NHS leaders in particular warned that some hospital buildings are no longer fit for purpose and therefore welcome recent spending announcements.

Council chief executives and leaders told us that housing remains a critical issue and that government investment levels – while higher than in recent years – need to increase. One housing leader in our interviews acknowledged that housing comes with additional societal benefits as people in decent, secure and permanent homes are less likely to need additional state support.

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In the words of public sector leaders

"The NHS has been starved of capital funding for years. There are hospitals that were built in the 50s and 60s to serve 25 per cent of the population they serve now and using completely different techniques. So there’s an urgent need to spend money. I know that announcements of £100 million seem like a lot of money, but for the entire NHS, you’re not touching the sides." – NHS Non-Executive

"We’ve made progress in getting government to commit to investment but turning that into reality is different. There is investment that has been announced but the paperwork for getting it signed off is still sat on ministers’ desks." – Council Leader

"Some buildings are in a parlous condition, often outside of London where senior people don’t see them." – Senior Civil Servant

"The Treasury understand the need to spend money and they are reasonably generous, but they are awfully short-term. You can’t run major infrastructure investments on an annual basis." – Senior Civil Servant

"With interest rates the way they are, it’s time for investment of fifty to a hundred years in infrastructure whether that’s railways, roads, airports, energy or hospitals. We should invest to put Britain back on track with infrastructure that’s fit for purpose. Let’s start now rather than continue the deterioration." – Public Sector Non-Executive

"People don’t get the virtuous circle of investment. Investment spend creates jobs, drives regeneration and it plays to the whole decarbonisation agenda." – Transport Non-Executive

"Government should have greater policy awareness of the true value of affordable homes. If someone goes into permanent housing instead of temporary housing, they are more likely to secure a job, their children are more likely to attend school, they are less likely to turn up at A&R. It makes financial sense." – Housing Chief Executive

Brexit has enhanced government capability

For civil servants in Whitehall and the devolved administrations, leaving the EU is an era-defining challenge. This year, as in the past three years, they told us that Brexit has diverted their attention from other policy areas. To put that into context, one permanent secretary estimated that eighty 80 per cent of his time is spent on Brexit issues.

Most Whitehall leaders we interviewed spoke with pride about their department’s progress to deliver Brexit against a backdrop of ongoing political uncertainty. They also alluded to the scale of the challenge in some high profile areas. The UK’s existing model for managing its borders, for example, will need to change fundamentally according to one interviewee.

Senior civil servants told us about some unanticipated benefits of Brexit to the operation of government, including a boost to Whitehall’s programme delivery capability. Leaving the EU is a substantial task that straddles policy – historically Whitehall’s strength – and delivery, and so it has triggered an uplift in project execution skills. Some also said that leaving the EU, as a cross-government undertaking, has given the Cabinet Office and Downing Street a clearer view of activity across departments than they have had for decades.

Both in departments and in the wider public services, two issues came up as major concerns in our interviews over Brexit. First, leaders in health and local government told us that it has created a sense of unwelcome for non-UK staff which is unhelpful because the health and care workforces are already in short supply. Second, leaders from across the sector said that the uncertainty around Brexit has been economically damaging – particularly in terms of business and inward investment.

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In the words of public sector leaders

"We now have a better understanding of how the UK runs than ever before – on supply chains, on interactions between industry and Europe." – Senior Civil Servant

"The issue with Brexit is the delay. It’s the potential deferment of investment and the opportunities lost because of the delay. There are companies that don’t care if we leave or remain, but they want stability." – Elected Mayor

"The UK has been stuck in a quagmire for three years and we’ve got to get out of it." – Departmental Non-Executive

"Brexit colours everything we’re doing and it fundamentally alters the border model. It’s a seismic shift." – Senior Civil Servant

"Brexit has demonstrated the need for changes we’ve been putting in place and accelerated then – mainly the reintroduction of execution and delivery skills into the Civil Service. Brexit has been an enormous accelerator." – Senior Civil Servant

"We’ve had staffing issues where non-UK EU staff have been very upset. And in the main, they are homecare and other frontline staff so they are low-paid." – Council Chief Executive

"Brexit is both a policy and a delivery problem. We have to decide what needs doing and then do it. Brexit has brought the thinking and the doing together." – Senior Civil Servant

"Brexit is a whole of government portfolio, and it has driven transparency across government. The centre can see what’s happening across the board." – Senior Civil Servant

Social care remains a crisis in need of political will

Each of our interviewees from health and local government warned of the worsening crisis in social care for older people. Several talked about the relationship between care and the NHS, recognising the significant strain put on health services from older patients who would be better cared for in other settings.

All of them agreed that a long-term solution for funding social care is needed and that it should be a higher political priority. They argued that the challenge is to define a new model of funding that balances personal financial contributions with wider taxation to pay for care, and some referenced models around the world that the UK government could consider as a starting point.

Some council chief executives told us that their social care concerns went beyond care for older people – one said that the local authority was struggling to cope with increased demand for its children’s services and another warned of an emerging funding crisis in care for vulnerable adults who are, thankfully, living longer than ever before.

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"Unless the government and politicians of all parties find consensus in ways to provide, fund and resource social care, the NHS will remain fragile and vulnerable to the ever-increasing cost of social care. This conundrum has been around for decades but governments dodge it." – NHS Trust Chief Executive

"The issue with social care is fundamentally a funding issue and solving it would be a snip compared to what’s promised to the NHS. We’ve got to look at it in terms of the pain people will endure out of their pockets, so it’s a taxation issue." – Council Chief Executive

"You wouldn’t want your kids putting you in some of the care that’s available. Local authorities don’t want to do that but they have no alternative providers to go to. If social care was properly funded, care providers would invest and the ones that didn’t invest would struggle and go out of business. You’d get a market solution." – NHS Non-Executive

"We don’t need a green paper. We need a permanent funding solution where we decide where to be on a continuum of what is paid for out of general taxation and what people pay themselves. We need decisive leadership." – Healthcare Agency Non-Executive

"The big issue for us in social care isn’t older people, it’s vulnerable adults with complex needs who are living longer than they ever did and that creates exponential budget pressure." – Council Chief Executive

"Our main priority as a council is around social care and our children because we’re seeing the number of children referred to social services is increasing. We’re letting our children down." – Council Chief Executive

The UK has been outstanding on climate change but modest about its achievements

This year, our research team spoke to leaders in climate change to assess the UK government’s achievements to date. Each of our interviewees were clear that the UK has shown exceptional leadership as the first major economy in the world to pass legislation committing to net zero emissions by 2050 and in producing electricity without coal for the first time since the 1880s.

Next year, Glasgow is hosting the Conference of the Parties – known as COP26 – which is considered the most important climate summit since COP21 in Paris in 2015. While the Paris summit focused on agreements to tackle the climate emergency, the Glasgow summit will explore how governments are meeting their pledges. Our interviewees see COP26 has an extraordinary opportunity for the UK to extend its international influence and environmental leadership in hosting 200 world leaders.

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In the words of public sector leaders

"It is pretty remarkable that the government has signed up to the net zero target. I can’t express how amazing that is. Government could be better at telling the story. Maybe it doesn’t sit within the overall narrative." – Chief Executive of Non-Departmental Body

"The UK is in a remarkably good place on the climate. But it’s one of many issues where the government shouldn’t move too quickly in ways that aren’t economically or societally viable." – Higher Education leader

The future of government is doing less

All of our interviews explored what the future of government and public services could – or should – look like. Most leaders suggested that the state should focus its resources on impact and shape its development around productivity, doing less but achieving more in three ways.

First, senior figures in Whitehall told us that government needs to prioritise the breadth and depth of what it wants to achieve. One argued that no multinational company would attempt to deliver concurrent plans at the same scale as the UK government that include leaving the EU, rolling out an Industrial Strategy, delivering the biggest increase in housing supply since the 1970s and putting in place the policies, regulations and inspection regimes needed to tackle climate change. In addition to those epic endeavours, new administrations come with further manifesto commitments and ministers generate their own initiatives. All of our Whitehall interviews agreed that departmental plans should be shaped around outcomes and the resources needed to deliver them, some adding that the new look Single Departmental Plans expected soon might go a long way to achieving that.

Second, leaders told us that government should keep pursuing smarter working in order to achieve more with less. Importantly, Whitehall leaders told us that plans to consolidate office space were being driven by a need for modern, collaborative working environments. They are confident that plans for regional hubs, relocating civil servants outside London, are moving ahead on that basis. The third way that leaders told us the wider public sector should do less is through greater replication, co-ordination and collaboration. In all parts of the local services – not least the NHS, councils and the police – leaders told us that too many organisations invent their own technology solutions rather than replicate from their peers or pursue shared initiatives.

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In the words of public sector leaders

"There’s a whole chapter to come and it’s all about prioritisation and deliverability. We have enough insight now to look at the agenda in a department and say ‘you can’t do all that in that time’." – Senior Civil Servant

"Government has really embraced smarter working. Okay, it’s behind where some big companies have been for a few years, but it gets it." – Senior Civil Servant

"Consolidation of the estate is not the driver – productivity, better use of space and staff engagement are the drivers. One of the knock-on effects is the ability to consolidate, and savings come with that." – Senior Civil Servant

"The Civil Service is imbalanced. We’ve got far too many people in London and the South East, particularly in senior staff. Now is the time to grasp that nettle." – Senior Civil Servant

"There are solutions that the NHS and social care seem unable to grasp, especially using technology, and there is a massive amount of reinvention of the wheel. It’s a mindset thing mostly born out of frustration because it takes time to recreate something so people think ‘let’s do our own’ and that’s understandable but false." – NHS Agency Non-Executive

"They say ‘it won’t work here’. Well it won’t with that attitude." – Chief Fire Officer

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