UK Autumn Budget & Spending Review: The moral case for post-pandemic public service innovation

"Pandora’s Box is open, the cat is out of the bag – during the pandemic people have seen the capacity of the state and public services to evolve, adapt and innovate at pace."

Although the pandemic is not over, many of the most dramatic economic interventions by government brought about by the health emergency have concluded: job support schemes shut, tax reliefs tapered away, and grants gone. Today’s UK Government Autumn Budget and Spending Review totted up the cost of some of those schemes for the first time with a sense of certainty.

Overall, the spending watchdog, the Office for Budget Responsibility (OBR), estimates that £315 billion was spent on ‘pandemic-related rescue measures’. Almost half – £142 billion (45%) – was spent on ‘support for public services’, £102 billion (32%) on support for households, and £71 billion (23%) on support for businesses.  

There has been a sense of foreboding, after the funding taps were opened during the pandemic, that this Budget and Spending Review would see them firmly shut off. But this was not the case. Rishi Sunak’s reputation as a tax and spend Chancellor has only been cemented by today’s announcements.

Departmental budgets are set to rise by 3% and most planned pre-pandemic cuts have been reversed. Lower than expected expenditure during the worst of the crisis and a better than predicted recovery has given the UK Government financial headroom. But the real fiscal firepower on offer to the Chancellor has come from increased taxes. Not since the 1950s – and the post-World War II Labour Government of Clement Atlee – has the UK’s tax burden as a percentage of GDP been so high. Mr Sunak is of course a Conservative politician, so whilst taxes are rising, he was keen to emphasise to his Parliamentary colleagues that he remained on a ‘moral’ mission to limit the size of the state and cut taxes in the longer term. But given that public services have had such a significant impact on people’s lives in recent history, there were no real signs of a shrinking state in today’s figures.

The political balancing act is one thing, but the economic tightrope still needs to be navigated by the Chancellor. Staring up from the abyss is the threat of ever-increasing inflation and continuing uncertainty about whether or when Covid-19 might necessitate large-scale state intervention once again.

Despite these economic cross-winds, following 18 months of pandemic-induced pressure, the services citizens rely on will see further funding. Is it enough? We won’t know for some time. But the importance of public services has perhaps penetrated the mind of the citizen and state as a result of our reliance on them in the health emergency.

The agility of public services in responding to Covid-19 has shown how the state can change at pace. It has created a new relationship between citizens, services, and the organisations behind their delivery. The power of public services has been immense, and we must learn the lessons of how successful collaboration between the state, voluntary, academic and private sectors led to real-world miracles in the last year and a half; from pop-up Nightingale Hospitals being built almost overnight to the life-saving vaccines and their roll-out that is seeing this elixir enter arms all over the world.

The necessity of the pandemic brought about innovation on a scale we have not seen for generations, if ever. This thirst for new approaches and our ability to translate them into better outcomes on the frontline of public services must be one of the few positive lasting legacies of the pandemic.

It would it be a moral failure for us not to use the skills and insights we have learnt over the last eighteen months when creating the public services of the future. Not only that, governments would fail to meet the standards that have now been set. Although budgets continue to rise, the expectations of citizens continue to increase. Pandora’s Box is open, the cat is out of the bag – people have seen the capacity of the state and public services to evolve, adapt and innovate at pace.

At the Serco Institute, we have started a quarterly tracker of public sentiment towards services. As the UK ‘builds back better’ and we grow accustomed to the ‘new normal’, we will see how citizens feel about the public services they use. How people think about public services has changed dramatically over the last eighteen months – the state and its delivery partners must respond.

Today’s Autumn Budget must mark not only the beginning of a post-pandemic fiscal system, but a new norm for public services – driven by the innovation, agility and cross-sector collaboration we saw at the height of the health crisis.

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