ACCA - The global body for professional accountants
While the increase in capital spending looks good on paper and is certainly welcome, when taken along with the wide-spread cuts to the running costs of government departments and local government, the extra money is little more than shuffling the deckchairs around
—Gillian Fawcett, head of public sector, ACCA

Gillian Fawcett, ACCA head of public sector, said: 'There is a ticking time bomb of public sector cuts that have yet to be implemented from when they were announced in 2010. The full impact of the austerity measures have yet to be felt by households in Britain. However, the cuts of £11.5billion announced today in the Spending Review for 2015-16, in addition to those from 2010, will be felt with full force when they are eventually implemented. The protection of critical front-line services can no longer be guaranteed. No one knows yet what the impact the cuts will be and yet the Chancellor’s scythe keeps slicing away.

'A welcome move was the pooling of health and social care budgets to protect the most vulnerable in society. This provides local government with more flexibility in determining effective local service provision.

'While the increase in capital spending looks good on paper and is certainly welcome, when taken along with the wide-spread cuts to the running costs of government departments and local government, the extra money is little more than shuffling the deckchairs around.'

Welfare Cap: 

Gillian Fawcett, ACCA head of public sector, said: 'While the cap on the annually managed expenditure (AME), which totals £350 billion, almost half of all government expenditure, goes some way in getting a grip on this out of control element of public expenditure, that grip is loose. It is a short-term approach to tackling welfare spending, which forms a large chunk of AME expenditure. A cap is a quick and easy fix. There needs to be a more structural look at the AME budget – a review of the drivers behind each expenditure within the AME’s welfare expenditure. 

'The Chancellor had a golden opportunity to once and for all take a radical approach, possibly by devolving parts of AME and gaining a thorough understanding of the drivers behind AME so as to get a firm handle on what amounts to, at £350 billion, almost half of all government expenditure. He made the first tentative steps towards tightening the purse strings on AME, but much more needs to be done if we are to see more and more of that part of public finance becoming more accountable.'

'It is encouraging to see, however, the Chancellor make the right noises when it comes to managing this unaccountable and expensive part of the public purse. It is also a positive step that the Office of Budget Responsibility will have a role to play in warning that the Government was in danger of overspending.'

Treasury and Cabinet Office Cuts:

Gillian Fawcett, ACCA head of public sector, said: 'It seems unusual and illogical to makes cuts in the Treasury where financial leadership is needed most. Managing public expenditure needs more, not less expertise. While setting an example might seem like the right gesture, government needs stronger financial leadership at a time of on-going cuts and greater financial management.'

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For more information, please contact 

Steve Rudaini, ACCA Newsroom
+ 44 (0) 207 059 5622
+44 (0) 7801 133985
steve.rudaini@accaglobal.com  

Notes to Editors

  1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 
  2. We support our 162,000 members and 426,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 89 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. 
  3. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.