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A new era for the public sector

It has been a roller-coaster 12 months for the public sector where each area has been affected by an array of changes which have been driven by legislative shifts, budget updates, and Brexit.  In the article we’ll look at the five key sectors and how they’ve been affected.

Housing

 
The housing sector remains at the forefront of change and it has had to adapt, be reactive and flexible, in light of wider micro and macroeconomic changes. In the last 18 months associations have had to adjust their accounting for the introduction of FRS 102 and have experienced a significant rent reduction of 1% for four subsequent years. This has meant there has been a massive overhaul in the sector where associations have had to re-examine their business plans, medium to long-term strategies, accounting treatment and structures. This, balanced with the Chancellor confirming funding for 40,000 new homes, investing £1.4bn in the autumn statement is heightening the pressure to continue development and growth of their housing portfolios, whilst ultimately receiving less rent. As a result the sector is having to engage in more commercial working practices in order to remain ahead of the changing environment and legislation. 
 

Education

 
The Education sector is transforming both on the higher and further education side. With the area review in colleges underway the benefits should include: 
 
  • Ensuring local education meets the areas economic needs, 
  • increases providers reputation and;
  • specialisation whilst ensuring access to exceptional quality education and training for all. 
 
The number of academies is increasing nationally and many believe that this is helping to keep standards maintained, empowering head teachers by providing them the freedom to innovate and opt out of the national curriculum. However, there are several challenges which converting academies may face: new financial systems, controls and procedures, and the requirements of the Companies Act.
 
Universities are facing extensive challenges post Brexit and have focus areas moving into 2017. This is centred on encouraging students worldwide to study in the UK, ensuring the UK is an attractive proposition for staff/students, encouraging international research partnerships and remaining at the cutting edge for innovation, and research which is determined from obtaining significant public investment. 
 
 

Charities

 
The charity sector has had to overcome several challenges in the last 12 months. The change in charity SORP has impacted charities accounting treatment and is significantly different from the 2005 SORP. There is now a stronger emphasis on identifying risk and uncertainties, and how these will be mitigated. Trustees must consider the level of risk and their risk management procedures in association with this. Brexit could lead to a change in legislation for the sector which could potentially provide organisations with more time and resource to support beneficiaries. Furthermore, many charities receive and rely on EU funding. In the last year alone the sector received over £200m.
 
The long-term impact of Brexit is not yet known but could result in the government opting to support the sector when the UK does leave. This will increase the already intense cost and funding pressures as they must ensure the quality is not compromised
 

NHS

 
The NHS is unique; a service which is admired throughout the world, and the main challenge is for it to be able to address the deficit of £2.5bn. The trusts and CCGs will need to continue to work together collaboratively in order to develop effective sustainability, and transformation plans. As the funding cuts continue and the service level expectation only increases, the success will be determined by the NHS’ ability to remain flexible and adjust to the ever-changing environment
 

Local Government

 
Councils are experiencing a mixture of pressures, including cuts in funding and the increasing demand for different services. They have focussed on devolution aiding growth and system reform, along with increasing the number of partnerships across the private and public sector. They may have to consider incorporating the power of the digital age and data to revolutionize services. Going forward, the local authorities will need to continue to transform themselves to ensure levels of the highest quality as the pressure increases.
 
 

Summary

 
As 2016 draws to a close the public sector remains resilient and continues to evolve. The question most people will ask will be, ‘What will 2017 hold for each sector?’ Change is inevitable and all sectors will require support as funding changes, and financial pressure intensifies. Remaining ahead of the change is imperative in ensuring that each sector has a robust commercial approach and transformation plan in their long-term strategy.
 
 
Danielle Farrell
T: +44 161 829 0378