The rise (and some may say fall) of the public sector

Rise and fall of the public sector

The public service part of our economy touches every part of our lives, from the emptying of our bins at a local level, the defence of our realm on a global stage, the social services provided to the most vulnerable, through to open heart surgery and assurance of the cleanliness of the restaurants we eat in. Some services, such as the police and the education system, are very visible. Others, such as safeguarding children at risk, preventing neighbours from building monstrosities and ensuring financial probity, are invisible apart from when they go catastrophically wrong.

Now, at first glance today’s blog post may look like a brief history lesson. However I believe it’s important to understand the origins of the public sector – and then look at where is it headed.

Public services have been around in the UK a lot longer than people probably think – since as long ago as 1597, in fact. In that year, the Act for the Relief of the Poor established a system for collecting contributions and distributing clothes and food to the poor. Some would say little has changed in our society since then.

State education and old age pensions both came into being before the First World War, and most municipalities also provided varying degrees of public services well before universal access to a national welfare scheme. You have only to look at the many great examples of town halls up and down the land built during Victorian times – of which many are still in use.

What most people have in mind when they think about the start of public services is the rapid expansion in welfare services that came into being after the Second World War. The launch of the National Health Service and the National Assistance schemes in 1948 were aimed explicitly at tackling the five giants of ‘want, disease, idleness, squalor and ignorance’.

While the focus of the public sector has changed somewhat since then, those core giants remain to some degree today. And the scope, scale and financing have increased too. The OBR website will provide you with lots of links to a more detailed history of the rise of public sector since 1947 if you want it, but the brief version is:

  • The public sector has got much bigger.
  • The public sector has got much more complex.
  • Public sector productivity has not kept pace with increases in the rest of the economy.

This latter point is important. It is one of the most frequent criticisms of the public sector by those outside it as well as by a great many within it. The perceived poor performance of the public sector makes it an easy target for detractors, and an easy target for politicians too. The New Public Sector will seek to alter that perception, although it is clear the journey will be difficult for the public sector and the public alike.

So what are the basic facts and how much has public sector spending increased? The following graph shows the annual proportion of Gross Domestic Product (GDP) that has gone to public sector spending, using figures provided by the Office for National Statistics.

GDP1 copy

That growth has established people’s relationship with, and expectations of, what the state provides. But the current focus on austerity is changing all that. The OBR website, among others, provides the most up to date reports on the actual position and projections. It sets out what the New Public Sector will have to deliver and the significant structural and systemic shifts that will have to occur in order to support future service needs.

There are certainly going to be challenging times ahead…

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