Michael Trickey, Director of the Wales Public Services 2025 programme, discusses the pressures facing public services in Wales ahead of the publication of two new reports.

The First Ministers’s announcement of a Commission on Public Service Governance and Delivery provides a welcome opportunity to look at the future of our public services. Beyond questions of the number of local authorities and the immediate pressures on the NHS looms an even bigger issue. Long-term financial projections, changes in population and other pressures mean that public services as we know them now may no longer be affordable or what is needed over the next 10 – 15 years. They will have to look and feel very different. In responding to this challenge, there is the chance for Wales to seize the opportunity in a way which is distinctive and transformative – but the momentum has to build now.

The issues are well-known. The squeeze on public spending is already biting. The Welsh Government’s budget will reduce significantly next year with the UK Coalition Government’s austerity programme extending to 2018 at least.

At the same time, service pressures are growing. Improved life expectancy is a cause for celebration but also means heavier demand for health and social care. Costs of providing care, new treatments and medical technology are rising. These pressures can be seen now and are expected to grow. The Kings Fund, a leading health research centre, has recently noted that on past trends, public health and social care could eventually consume nearly 20% of the UK’s total wealth (the current figure is 8%).

If we don’t change the ways that public services are shaped and delivered, the choices could be stark: higher taxes, chronically underfunded health and social care or deep cuts in other important services.

Nor are these the only challenges. Researchers warn that tax and welfare changes will result in higher levels of child and family poverty in Wales. Together with shifting demographics, this will have a big impact on demand for housing. Flood risk and other effects of climate change are increasing. Across the board, people’s expectations of service quality and availability are changing rapidly, mobile technology and social media are revolutionising communications and possibilities.

Two kinds of reaction open to us all.

One option is to dig in, rely on cutting budgets year-on-year and hope for something to turn up. The result is likely to be demoralised and increasingly patchy services. The second option is to try to rethink and seek to transform our public services.

As a contribution to this debate, the independent Wales Public Services 2025 programme, hosted by Cardiff Business School, is investigating some of the long-term issues and possible solutions. This week, it is launching the first in a series of reports, in partnership with Nesta, the UK innovation foundation, and Carnegie UK, at the SOLACE (local authority chief executives) Wales conference.

Our work with Nesta argues for a quantum shift in the level of innovation in Welsh public services. Geoff Mulgan, Nesta’s chief executive, will make the case that Wales, as a small country with a proud history and strong sense of shared values, is well-placed to pioneer a country-wide approach to public innovation that could make an impact beyond its borders.

Wales has a good record of public innovation – after all it was the cradle of the NHS. But local innovations aren’t always picked up and adopted nationally. We need more innovation in the way services work together to tackle some of the big challenges facing Wales and in the way they interact with the public. The report celebrates innovative projects - for example in early years, supporting young people into work, crime prevention and enabling older people to live independently – but argues that we need to be much more ambitious to make the most of these existing innovations and to stimulate and test new ones.

This requires a step-change in the levels of engagement between government at all levels, researchers and innovators (including front-line staff and communities). Public service leaders need to see innovation as a vital part of their role. We need to find ways to mobilise the capacity of civil society and the private sector, and financing and incentivising public innovation in a more strategic way.

Wales is not alone in facing these pressures. Our second report, produced in partnership with Carnegie UK, looks at how six other small countries are responding. There are inspiring examples of innovation and good practice to draw on – whether rethinking relationships between citizens and local government in Molenwaard in The Netherlands or co-operative models of care for older people in Quebec or the Early Years Collaborative in Scotland focussing on outcomes for vulnerable children. Wales is already doing good work in many such areas. It is not that Wales has missed the boat – but it must become a brilliant learner from the experience of others.

The future direction of public services poses a big challenge for government at all levels and for civil society, the public has to be involved in the change programme which will be needed. The establishment of the Commission signals a wish to tackle the difficult questions, its findings cannot come too soon.