Four megatrends shaping government – and what they mean for the future

By on 19/09/2022 | Updated on 19/09/2022
A man in a suit and tie juggling colourful balls.
Governments around the world are having to juggle a number of major priorities and challenges. Photo by Mohamed Hassan via Pixabay

From dealing with the fallout from a global pandemic and implementing plans to reach net zero, to trying to cushion people from an energy and inflation crisis and adapt to changes in the way citizens receive public services, the challenges governments face have never been greater.

Last month, two Global Government Forum experts – executive editor Richard Johnstone and event moderator and former UK senior civil servant Siobhan Benita – hosted a webinar setting out the four key trends facing governments, touching on the economy and finance; resilience and sustainability; procurement; and digital transformation.

Here, we summarise the trends discussed in the webinar, providing a snapshot of governments’ priorities as we move into post-pandemic recovery mode and a future that will look – in many ways – very different to the past.

Economy and finance: the balance sheet impact of COVID-19

The webinar began with a look at the economy and finance. It will come as no surprise that the rest of this decade is set to be dominated by the fiscal fallout from the COVID-19 pandemic – both the impact on public sector balance sheets from the various stimulus packages and support schemes rolled out to populations across the world, and the direct economic impact of the pandemic itself.  

“The immediate post-COVID response was what both the UK and US governments are calling a ‘Build Back Better’ agenda, and the International Monetary Fund was calling for something similar – urging governments to prioritise the transformation of the economy to make it smarter, greener, and more resilient and inclusive,” Johnstone said. “But then came Russia’s invasion of Ukraine, which sparked an inflation and cost of living crisis in many countries, and put talk of building back better on the backburner.”

As a result, Johnstone said, tackling inflation has become the biggest single priority for governments. At it should be, according to the IMF’s analysis. Governments around the world need to implement tighter monetary policy through higher interest rates. While the IMF acknowledges this “will inevitably have real economic costs” it said that “delay will only exacerbate them”.

Sign up for our free webinar: The root of all reform: how can public finance help unlock the government of the future

Support for the vulnerable will need to be offset by increased taxes or lower government spending. And tighter monetary conditions will affect financial stability, increasing the interest paid on government debt. As a result, Johnstone identified governments working to restrain public spending in the years ahead as the first trend of the webinar.

“Though we will see investment spending, especially around climate change – like in the recent legislation passed in the United States – in many countries with ageing societies, there will be increased pressure from treasuries to rein in day-to-day spending. This will mean an increased focus on how to cut costs through things like shared services,” he said.  

Resilience and sustainability: Preparing for more of the unexpected

Next, talk turned to resilience and sustainability. As Benita highlighted, the pandemic illustrated the need for resilience in the public sector, just as the recent heatwave seen across much of the globe underscored the need to take action on climate change.

She pointed to GGF’s Responsive Government Survey, launched last year, which aimed to measure how quickly governments respond to changing circumstances.

Four in five civil servants responding to the survey across nine countries said their organisation’s response to the COVID-19 pandemic helped it to develop significant new capabilities. But, while it found that almost three quarters (72%) of the 873 respondents agreed with the statement “My organisation excels at learning and responding rapidly to meet evolving citizen and end-user needs”, it also found that systems and cultures don’t always make it easy.

Read more: Seven things we learned from the Responsive Government Survey

As Benita explained: “Indeed, civil servants in most countries identified room for improvement in collaboration between departments, communication of decisions through the ranks, empowerment of staff and giving permission to try and fail, and ensuring end-user input to the making of policy. But the most negative scores related to organisations’ ability to move at pace – respondents in most countries complained about being hamstrung by unnecessary bureaucracy.”

The pandemic has shown us that governments are capable of moving quickly when the stakes are high – streamlining processes to deliver financial support to millions of people almost overnight and, in the case of the UK, for example, accelerating policymaking by getting ministerial and administrative approvals in parallel rather than sequentially.

“Agile policymaking such as this will be needed if governments are to tackle climate change and ensure environmental sustainability,” Benita said.

Read more: Vote of confidence: how climate-conscious electorates are forcing governments to get serious about going green

According to the website Net Zero Tracker, 136 countries have pledged to achieve net zero – most of them by 2050. This equates to 83% of global carbon emissions. But the pledges are just the start, Benita said, pointing to evidence that many of the countries that have committed to net zero don’t yet have adequate plans in place to reach it.

According to Joy Aeree Kim, the green fiscal policy team lead in the economy division of the United Nations Environment Programme (UNEP) who spoke at our webinar A sustainable income: fiscal policies for a green economy, governments spent US$3.11 trillion on recovery from the coronavirus pandemic, but less than one third (31.2%) could be classed as green spending.

This represents a missed opportunity, Kim said, and as Benita added “the timeline to 2050 will not allow many more – and nor, perhaps, will people”. According to a World Economic Forum study released in February, more than half of global citizens believe governments are doing too little to address climate change. And as recent elections in countries such as Australia, Canada and Germany have shown, it is becoming an important election issue.

The next big climate change milestone for governments, Benita pointed out, will be the COP27 event in Egypt in November, where countries will be brought together to set out their latest pledges.

Free Global Government Forum webinars in the lead up to COP27:

What governments can do to tackle climate change by setting policy to reduce carbon reductions

How governments are planning to adapt to deal with the impacts of climate change

Money for net zero, looking at how finance ministries can help support global climate action

Playing by the Paris rulebook – what countries need to do now to measure their climate change goals

Procurement: can governments get more strategic about what it buys?

One of the key ways that governments can drive sustainability – and indeed maintain resilience – is through procurement.

“Government purchasing has long been an important part of what they do, accounting for almost one-third of government expenditure, but taking a strategic approach to government purchasing is relatively new,” said Johnstone, pointing out that it was only in 2008 that the then 30 developed countries in the Organisation for Economic Co-operation and Development (OECD) committed to “reforming public procurement in order to promote good governance in the whole procurement cycle”.  

Improving procurement in government had been a long-standing challenge since, he said. In a July 2019 update to that 2008 pledge, the OECD highlighted that “the challenges of implementing strategic public procurement are many”, ranging from reducing risk aversion, difficulty setting up new forms of coordination and collaboration, problems improving skills and capacity, and barriers to enhancing data collection.

Sign up for our free webinar: Buying right: getting procurement right in the digital age

“The economic think tank also said these were compounded by the most prominent weakness in public procurement systems worldwide – the workforce’s lack of both capability and capacity, with the lack of professionalisation a recurring issue,” Johnstone said, adding that the pandemic exacerbated many of these problems, at least in the short term.

“Governments are now working to use procurement to create that more resilient and sustainable state and are working to create a strategic role for public procurement and public investment to join up with sustainability goals,” he said.

Digital transformation: the key to unlocking the services of the future

Last but not least came a segment on the fourth major trend for governments: digital transformation.

“Much government transformation occurred during COVID-19, with moves to homeworking requiring many governments to change how they operated at speed whilst moving services online and increasing the use of automation and artificial intelligence in the deployment of support payments and other measures,” Benita said.

Such activity is only going to increase as governments strive to digitise services in order to improve the citizen experience and drive efficiencies.

Benita gave the example of the UK government’s digital strategy which pledged that by 2025, at least 50 of the government’s top 75 identified services would move to a ‘great’ standard of service delivery by embedding digital approaches and cross-functional teams into policy design and delivery.

However, Global Government Forum research has identified a number of barriers to realising digital transformations such as this. As part of its Digital Leaders Study, GGF interviewed senior digital leaders from seven countries to gather insights into what is holding back innovation, and found that while many governments set out ‘visions’ like that of the UK, they often don’t detail the levers, resources and reforms required to realise their goals – and without these, progress is typically slow and shallow.

One quote that came from that research – which was conducted for GGF by the former head of the UK Government Digital Service Kevin Cunnington – was that most strategies “contain nothing objectionable, and also nothing actionable”.

Read more: Former UK GDS chief lists biggest digital challenges

“Closing the gap between strategy and action is now one of governments’ most pressing priorities, as if services continue to lag behind citizen expectations then it will undermine trust and confidence in government overall,” Benita noted. “Indeed, President Joe Biden has said that proving government still works by improving citizen experiences is one of the key tasks of his administration, and other countries – many facing populist political challenges amid the cost of living crisis – need to do likewise.”

The Digital Leaders research also revealed two key capabilities that governments need to focus on developing to truly unlock the potential of digital transformation: strong digital ID systems, and high-quality, cross-government data management. “The former represents a great digital divide between governments around the world,” Benita said. “Those that have cracked citizen digital identity are able to move ahead and create joined up, transformational services, whereas the countries that have yet to crack digital identity simply won’t be able to.”

Read more:  Digital ID – what is it, why is it needed, and how are governments developing it

Another aspect of digital transformation is linked to remote and flexible working, which since the onset of the pandemic has become a feature of the way government works.

While the longer-term impact of how such a change affects government is yet to be seen, Benita pointed out that if the public sector offers employees more flexible working arrangements than the private sector does, that may help in the ‘war for talent’ at a time when many organisations are facing recruitment difficulties.   

“We know from our webinar discussions that the Canadian public service is removing some geographical restrictions on jobs because people don’t need to be in the office as much, and it helps widen the pool of applicants,” she said.  

Read more: Expanding the talent pool: how hybrid work can make public sector jobs a better fit for everyone

Another digital challenge governments are facing, Benita said, is keeping cyber security up to date. Flexible working increases the risk as people log on to work devices on less secure networks while geopolitical instability increases the threat from countries like Russia.

And then of course there is the issue of data. As Benita said, governments are collecting huge amounts of information, but most aren’t yet using that information effectively enough to enable them to become more responsive. “Again, the pandemic provided moves in this direction – real time information was key to monitoring the effectiveness of lockdowns, for example – but now governments are looking at how can they access and then act on more real time economic data.”

As the webinar drew to a close, Benita touched on one final point: diversity and inclusion. There is evidence, including from the US Office of Personnel Management, that diverse and inclusive civil services help ensure that public services are attuned to the needs of the populations they serve.

“As we’ve seen in the 10 years of tracking diversity data through GGF’s Women Leaders Index (our 2022 index is to be published soon), many governments are making explicit efforts to increase the diversity of their public services, both to harness the ideas and solutions that come from different perspectives, and to ensure they retain public trust by matching the diversity in their populations,” Benita said.

The webinar provided a whistlestop tour of the key issues facing governments. Having to deal with the fallout of the pandemic, geopolitical instability and the knock-on effect on energy prices, the climate crisis and waning trust in institutions, and all while striving to modernise through digital transformation, clearly governments have got a lot on their plate. But while there are big challenges and barriers to overcome, there is no shortage of evidence that civil and public services are working hard to tackle the issues head-on.

Free upcoming Global Government Forum webinars and events on digital:

How can AI help public authorities save money and deliver better outcomes? – a webinar from our colleagues at Global Government Fintech, who also cover government transformation

AccelerateGov and the Global Government Digital Summit (5-6 October 2022 – Ottawa, Canada)

Getting the most out of government data

How governments can work with automation and AI

All of the topics mentioned in this article will be covered in upcoming Global Government Forum webinars – each of which features a panel of public and/or private sector experts and is free to attend. View our webinars list here.

The webinar ‘Government megatrends: understand the issues shaping the future’ was hosted by Global Government Forum on 18 August 2022. You can watch the one-hour webinar via our dedicated events page.

About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

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