The case for spending to save has been made and won, so do it already


By Joe Randall of Community Links

Nearly all charities seem make a case for savings from preventative action these days. The argument tends to go something like ‘invest early in my youth scheme now, and save much more later on from your criminal justice and welfare budgets’.

Child-povertyThis would seem to be a common sense principle for policy making, but David Cameron appeared to pour cold water on it in front of the liaison committee last week:

“Generally speaking, if you go to the Treasury and say it is a spend-to-save scheme, they will say ‘thank you very much, but we have got a budget deficit’.

Whilst the individual business case for a scheme which acts early is often questioned like this, the wider economic case is more widely accepted.

For example, the Department for Education’s introduction to its early intervention grant states:

It is common sense that intervening early to stop problems developing has to be the best way of preventing bigger and more expensive problems.

It is not only the coalition that has recognised the sense in early action. Tony Blair deemed the subject so important he dedicated a section of his first ever speech as prime minister to it.

He warned:

“Government must not fall into the trap of short-termism. Huge sums are spent dealing with this year’s problems, but very little on preventing the problems that will arise in five years time…

“We need to go further if we are to avoid the double jeopardy of worsening social problems and escalating tax bills.

“We will be calling on departments to draw up plans for shifting energy and resources from cure to prevention, from clearing problems up to anticipating them, and I will judge their success by how far this is done.”

The strong rhetoric of the power of prevention is not based on conjecture. While the prime minister may question the business case evidence for specific interventions, the findings of numerous reports and reviews echo the broader message articulated by politicians, that earlier investment and intervention can result better long term outcomes, and considerable savings.

Take a glance, for instance, at the Stern review into the economics of climate change, Derek Wanless’s 2002 and 2004 studies of public health policy, or more recently Graham Allen’s reports on early intervention (pdf).

Alternatively, this, from a 2009 Audit Commission report:

A young person who starts showing behavioural problems at age five, and is dealt with through the criminal justice system will cost the taxpayer around £207,000 by the age of 16. Alternative interventions to support changes in behaviour would cost about £47,000.

Over £113 million a year would be saved if just one in ten young offenders was diverted towards effective support.

Most can agree that the powerful language of Tony Blair in 1997 was not backed up by sufficient action in the subsequent thirteen years of New Labour government.

It seems too that the current government is hardly prioritising early action. An IFS study estimates that the early intervention grant, which has been cut by 10.5 per cent from its preceding funding streams, will be worth 21.7 per cent less in real terms by 2014-5.

The removal of ring-fences from these early action funds, and significant cuts to local authority budgets seem to have made for a worrying trend towards disinvestment in early action.

Haringey Council for example has felt it necessary to cut 40 per cent from its early years budget, 75 per cent from youth services, and 23 per cent from youth offending services. The temptation to cut back on those vital, prompt interventions which pick up and respond to the first signs of difficulty, is one which is only increased in a time of austerity, where budget silos become hardened and long-term investment appears a luxury.

The first report of the Early Action Task Force, launched this week, attempts to counter this temptation. Our case is simple – earlier action isn’t only cheaper than later action and important for social well being; it helps to reduce the deficit and to increase growth.

A population that is well supported and “ready for everything” contributes more, public spending goes down and growth goes up. If we look North, across the border to Scotland, a situation is developing in which politicians’ rhetoric is beginning to more closely resemble actual policy making.

The finance committee of the Scottish parliament concluded a report earlier this year, which argued that:

The current reactive approach to public spending is unsustainable. There must be a shift away from reacting to crises to a greater focus on prevention and early intervention.

The political interest this has engendered for early action in Scotland has culminated in a draft budget proposed this September containing a £500m increase in preventative spending, despite a 9.2 per cent reduction in funding from Westminster.

The SNP minister Angela Constance has recently remarked:

“Apart from independence, preventative spend is the most radical and exciting agenda that this government is pursuing.”

Westminster must follow the Scottish government’s lead. The case has been made and won for too long, now we need real action to match the rhetoric.

See also:

Forget “child poverty”; just fight for a decent childhood for allKate Bell and Jason Strelitz, November 15th 2011

Teflon Teather dodges the key question about Sure StartAlex Hern, October 17th 2011

The coalition is actively increasing child povertyFelicity Dennistoun, October 11th 2011

Toby Young is wrong about the cuts and wrong about the marchNicola Smith, March 29th 2011

On legal aid, the government has chosen the wrong pathLord Willy Bach, February 3rd 2011

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