Scottish public sector needs radical reform – NESTA Report

In a report published today, National Endowment for Science, Technology and the Arts (Nesta) called for a different approach to public sector reforms in Scotland to deliver for higher demand with limited resources.

Spending reduction strategy must incorporate radical reforms of scottish public services especially in three key areas: health, justice and social care. The report argued for more freedoms for local authorities and health boards to innovate public services in the three key areas.

More focus should be given towards prevention rather than tackling consequences it argued at a time when the Scottish Government is facing a budget crunch of almost £42 billion.  Without radical reform the costs of providing current levels of services in Scotland are set to rise by £27 billion over the next 15 years, due in particular to an ageing society and the prevalence of certain ill-health conditions.

Current responses to the UK Government’s spending plans are not sustainable given the limits of traditional efficiency measures and the cost of rising demand for public services.  The report reviews a range of highly contentious money-saving measures discussed in the Independent Budget Review, and demonstrates that they would still require the Scottish Government to find a further £1 billion in spending reductions by 2014-15.

The report highlights a number of innovative approaches in Scotland that can save money by better managing demand and preventing problems (see Notes to Editors for examples).  In the areas of health, social care and justice alone, even a small shift towards more effective approaches could make substantial savings, for example:

– In health, a reduction of 1 per cent in the costs associated with drug and alcohol-related abuse would generate savings of around £200 million.
– In Social Care, even a 1 per cent reduction in the cost of emergency hospital admissions each year would save £560 million.
– In Justice, a 10 per cent reduction in the costs of the prison system would suggest savings of £200m.

In order to achieve this, NESTA’s report envisages a new relationship between central government, deliverers of public services and local communities.  The proposed ‘New Community Status’ between certain public bodies and the Scottish Government would grant new freedoms to local service providers such as local authorities and health boards.  They would have access to investment, support and greater independence to innovate, in return for a commitment to return a proportion of the projected savings from innovation to central government and to share their experiences with others.