 also evidence of learning from the past: any funding increases need to be properly costed and accompanied by reform.
Politicians and public servants had little option but to make services more efficient to meet citizen needs. Police numbers were cut by 20,000, or 14 percent, between 2009 and 2016 and yet, crime fell by up to 40 percent. In 2018, the only British police force to be rated “outstanding” had a 20 percent cut in funding and 23 percent drop in staff since 2010. As one police officer put it, austerity “shocked us out of bad habits.”
This effect of the austerity mindset is also illustrated by public sector performance during plump times.
Between 1997 and 2007, the Blair government presided over the second largest increase in public spending out of 28 industrial countries and yet public sector productivity fell. In contrast, there was a rise of 27.9 percent in private sector productivity over the same time.
The U.K. deficit may be lower, but this does not mean the government can neglect longer-term reform of public services. In fact, demographic trends demand its acceleration.
By 2025, there will be a 25 percent increase in those aged over 65, who will need nursing and social care. Spending on state pensions for this group is expected to be £96.6 billion this year, a 50 percent rise in cash terms over ten years. For these reasons, the U.K.’s independent fiscal watchdog has labeled public services “unsustainable.”
The national debt has risen from 62 per cent of GDP in 2010, to 86 per cent of GDP today. The Chancellor, Phillip Hammond, is rightly concerned by this because the IMF has identified “the critical threshold beyond which debt sustainability is at high risk as 85 per cent for advanced economies.”
The opportunity for reform is huge. One recent report claimed digitalization across the U.K. public sector could save £46 billion annually. Another has shown that if 40 percent of management and administration in the health sector used Internet technologies, £7 billion could be saved every year – the equivalent of 192,000 junior doctors’ salaries. At the same time, the IMF estimates that adopting digital solutions at the border could increase annual tax collection by up to 2 percent of GDP.
The U.K. can also learn from other countries on practical measures to digitize public services. In Estonia, it takes five minutes to file taxes, and 99 percent of government services are available online. In South Africa, the use of electronic tax declarations, and payments has risen from below 20 percent to close to 100 percent over the past decade.
These opportunities build on the austerity mindset set in train since 2010. Policy-makers have an opportunity to reinvent public service delivery because of the pressures of mounting debt and long-term rising demand. In doing so, they have the chance to sustainably transform outcomes for all.