Cutback Management in the United Kingdom: Challenges of Fiscal Consolidation for the Administrative System

Abstract

This article reviews the administrative implications of the fiscal gap that has opened up in all OECD countries as a result of the financial crisis. It outlines the pressures for fiscal consolidation, which will lead to deep and prolonged real cuts in public spending. The article examines the political debate in the United Kingdom and stresses the exceptional difficulties facing all administrative systems over what might be a decade of spending restraint. Accordingly, it anticipates an emphasis on cutback management as last seen in the United Kingdom in the 1980s, and reflects on the successful Canadian experience. Three hypotheses are advanced: failure to control spending; success based on the New Public Management; and the need to adapt government capabilities to manage cutbacks. Implementing large real cuts in the face of political and administrative pressures for budget maximization will require extraordinary political determination. Intelligent and constructive definition and implementation of spending priorities will require a reconfiguration of administrative systems, which may amount to a new paradigm.