In respect to local government, health and social care, infrastructure and growth, and energy and net zero, there are key actions that can be taken to bolster resilience through upcoming challenges.
Claire Hampson on local government
“What the Autumn Statement didn’t do is reduce the scale or complexity of issues local government is facing at the moment”
The Autumn Statement has not delivered for local government regarding the fact that funding of local government is not keeping up with inflation and soaring demand for services. The Chancellor announced increased ‘council tax flexibility’, raising tax thresholds increases from 2.99% to 4.99% before needing a referendum, but this still presents challenges. The full rise in council taxes, if taken up by three-quarters of all councils, would raise around £2 billion by 2026, but this would still leave an overall financing gap of £5.3 billion to £7 billion in four years’ time.
So, what are the practical steps local government leaders can take for 2023?
What services can councils deliver within their affordability envelope? It is important to align finances to ambitions to identify opportunities for disinvestment and stopping non-essential activities.
How can councils deliver more efficiently both in engagement with customers but also internal operations? Councils should quickly identify and quantify benefits from reducing manual and analogue processes.
Fundamental review of service delivery is required rather than making small adjustment at the edges. Before considering ‘how’ services are delivered (which is the usual starting point), it's important that councils take a step back to consider ‘what’ they deliver and what outcomes they want to achieve.
Overall, local government leaders should think about capacity, both strategic and operational, to deal with the huge range of both internal and external pressures facing local government. Council leaders need to strongly consider where they focus resources and energy to have the most impact.
Christine Armistead on health and social care
“Trying to balance the books next year is going to be a real challenge.”
The NHS faces a challenging winter. The Autumn Statement announced that existing departmental spending under the 2021 Spending Review (SR) will remain with an additional £3.3 billion for the NHS in 2023 and 2024 to respond to key challenges including elective recovery, emergency demand and primary care. However, the additional funding for health and social care is not as generous as it seems. The Autumn Statement represented a careful balance between recognising the critical role for the NHS but also balancing the books.
What should health and social care leaders do next?
Review all Covid costs and ensure these are reversed out as best as they can. Re-establish the pre-Covid productivity disciplines that were in place: theatres, flow and outpatients.
Think whole system solutions
Problems will not be solved until 1/3 of those medically fit for discharge are sorted and front door demand is managed better. Improvements can be made via a pathway approach and streamlining pathways (GIRFT useful for this), or by looking at functional areas such as community nursing: what services are provided and do these need to develop for the future.
Focus on digital and data
Use control centres and data better to inform decision-making. Digital came in rapidly during Covid but are providers really maximising the benefits of virtual wards, outpatients etc.
This is particularly pertinent in social care to enable discharges. Consider how some of the innovative models adopted during Covid can be scaled across the country and support delivery of the plan for next year.
In short, the key takeaway for health and social care leaders in planning for next year is to focus on social care capacity to free up hospital space for elective recovery or emergency/acute patients coming from A&E.
Wayne Butcher on infrastructure and growth
“Will there be more losers, so there can be more winners?”
In the Autumn Statement, while there was a clear focus on health and social care and mitigating the impacts of the cost-of-living pressures, there is still a desire to support growth. Assets, capital and infrastructure remain important with the statement maintaining a commitment to spend, although there is no planned uplift for inflationary pressures. Investment zones will have a ‘re-focus’ but it is not entirely clear what this means – although efforts to create strategic alliances between the public, private and third sector will be used to build upon the devolution deals announced.
So, what next steps should be taken for planning 2023?
Focus on contingency planning
Risk management remains important and the need to have a 'plan B' in place. Reviewing and continuously turning over assumptions will remain key given the economic turbulence and the limited degree to which central government can support.
Find the right partners
Collaboration with other public, private partners and the third sector is still fundamental for structuring transactions, unlocking effective funding/financing regimes and working with agencies like UKIB where needed.
Leaders are going to have to think outside the box and this is not a time for a ‘cookie cutter’ approach. It is important to bring together integrated thinking to drive bespoke solutions to optimise the structuring and funding of projects.
The final two points are key for preserving private sector appetite to work with the public sector. This is underpinned by areas such as options appraisal and soft market testing through to full project development.
Alasdair Grainger on energy and net zero
“Energy efficiency policy has long been the forgotten child”
Energy bills will be top of mind for everyone – both in a personal and a professional capacity. No one should expect price reductions any time soon. As we have seen in recent weeks, physical energy systems are a target of war, and it is likely that the Russian regime will continue to put pressure directly and indirectly on European energy markets. This will continue to have a direct effect on the prices we pay for energy.
What should those in the public sector consider in 2023 when it comes to energy?
Consider generation alternatives
All organisations should be considering solar PV, heat pumps and district heating, if available. Previous Cost Benefit Analysis should be re-run, and expect to see a considerable improvement (reduction) in pay back periods.
Keep in mind devolution
The Government wants to increase the number of regional mayors which should lead to greater local investment. Levelling up has returned as a theme, which should help making the case for local investment at the centre.
Invest for growth
Major infrastructure projects will continue (Hinkley Point C, rapid charging fund and HS2), some of which will directly benefit local authorities (LEVI fund for EV charging infrastructure and rural broadband rollout).
Next year will be challenging. The Government clearly hopes that wider economic prospects will improve in the latter half of 2023 as inflation comes under control. This could lead to cost reductions compared to 2022, but the early parts of the new year will be challenging for all.