On the morning after the biggest spending cuts in living memory have been announced, convening a panel of principal partners from the public, private and voluntary sectors isn’t exactly a recipe for sweetness and light. Strange, then, that we should come away from The Work Foundation’s Public Policy Exchange Forum meeting on the Spending Review armed with a range of positive ideas for leading Britain out of recession.
Innovation and cooperation – the answers to the Spending Review?
Authors: Andrew Sissons
22 October 2010
On the evidence of the discussion, we need optimism rather than gloom from the government. We want to hear about growth rather than austerity.
The discussion covered many of the most salient questions left by the Spending Review. Does the public sector have time to respond effectively to the cuts? How will areas that rely on public spending cope? How can businesses keep going (and growing) in the short term? The answers to these questions were many and diverse, but most were united by a common theme: the public, private and voluntary sectors need to work together more often and more creatively if we are to turn austerity into prosperity.
With the public sector facing large-scale job losses, the ability of the private sector to create new jobs has come under serious scrutiny. The OBR’s forecasts for job creation have been described as optimistic by a range of commentators. Much has been made of the government’s assumptions about the public sector “crowding out” the private sector, with the idea being that rolling back public spending will lead directly to a boost in private activity. But, according to our panel, it’s not quite that simple. As one panellist put it, businesses don’t want an empty space left behind as the public sector is rolled back – they are looking for support from and cooperation with the government.
Our panel highlighted several examples of successful cross-sector cooperation: graduate internships funded by the public sector and supported by universities; private sector support for charities and start-up businesses; work by the voluntary sector to give people the skills that employers need. Some of the best examples were drawn from the creative sector, where interaction between public and private can yield impressive results. However, the barriers to this type of cooperation can be stifling; the government must look at how it can create the right incentives to promote this type of activity.
This type of cooperation will be particularly important at local government level. Will Hutton declared local authorities the “biggest losers” from the Spending Review, facing cuts of 7.1% each year. In return, local government will be granted more freedom in how they spend their considerably smaller pile of money – less ring-fencing, more power to borrow. The only way that councils can hope to continue providing all of the services they do at present is to completely rethink the way they operate, to become more like businesses. This, of course, will mean working far more closely with businesses and voluntary groups. In some cases, this might mean outsourcing services in their entirety. In others, more imaginative partnerships between the three sectors, which provide incentives for other groups to get involved in providing services, could allow councils to keep benefiting their communities even after the cuts take force.
The need for cooperation at local level is made all the more pressing by the geographic mis-match bequeathed by the spending review – the (public) job losses are unlikely to be in the same parts of the country as the (private) jobs will be created. Between local government, the new LEPs and the business community, each part of the UK will need to take its fate into its own hands; only those that are ambitious and creative will succeed.
David Cameron’s Big Society idea was supposed to be the optimistic tonic to much of the gloom surrounding the austerity programme. But it does not seem to have caught the popular imagination, despite its apparently worthy aims. What’s missing, I think, is innovation – the Prime Minister invited people to do some of the same things that the state does at the moment, but not anything new.
At its heart, the cross-sector cooperation we need is about innovation, about different groups finding new ways of doing things with fewer resources. There is no better encapsulation of this innovative cooperation than the elite network of intensive technology and innovation centres, an idea championed by The Work Foundation and adopted by the government. When public, private and voluntary sectors are brought together by shared interests, they should be better disposed towards optimism and – hopefully – growth.
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