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Thursday, July 28, 2005

Cuts or savings

Martin Shipton asks a very pertinent question in this morning's Western Mail - 'are we returning to the Thatcher years with cuts, cuts, cuts in the public sector?' What has prompted this query is the proposal by the Cardiff and Vale NHS Trust to close services and wards so as to eradicate a £6 million deficit.

It is certainly the case that under the Chancellor's Spending Reviews we have come to expect huge increases in public expenditure. The indications now are that this is starting to dry up and we are having to target spending much better.

The Gershon review and its equivalent in Wales envisaged year on year efficiency savings of 1% across the public sector so as to reinvest that money in vital front line services. However, the reality in Wales is that the Assembly Government has enforced that agenda by withholding the projected savings from bodies it funds, such as Local Government, so as to reinvest in its own priorities.

The outcome is that local government in particular are effectively being forced to make cuts in key services without any prospect of retaining that money for reinvestment. A good example of that is this story about Flintshire County Council yesterday - a Labour-run Authority, just in case you might think I am making excuses for Councils run by the Welsh Liberal Democrats.

Despite the fact that the health service has received substantial injections of cash as part of this process, much of that has been eaten up by new contracts for GPs, consultants etc whilst the failure to tackle long-term structural issues means that many Trusts are not getting value from the resources they have at their disposal. The outcome is the sort of cuts proposed by Cardiff and Vale NHS Trust yesterday.

Having raised expectations the Labour Assembly Government is now being forced to oversee a period of retrenchment and painful reorganisation. As a result the cuts that Martin Shipton highlights are very much back on the agenda.
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