Counting the cost of social problems

This week the Early Action Task Force released a report calling for greater understanding of the cost of social problems.


Will Horwitz is a policy and media coordinator for Community Links

The Social Justice Policy Group estimated in 2007 (albeit with plenty of caveats) that ‘social breakdown’ costs the economy £100 billion a year, equivalent to 14% of annual public sector spending, or 7% of GDP.

Barclays Wealth and New Philanthropy Capital found figures of similar magnitude earlier this year when they looked in detail at just three areas, chaotic families (£12bn per year), children with conduct disorders (£51bn), and mental health problems which lead to employment difficulties (£45bn).

There is an insatiable media thirst for exposing ‘public sector waste’ – every £500 of spending is now open to scrutiny. And yet this £100bn waste – socially destructive as well as economically profligate – is largely ignored in favour of hunting down the first-class flight or the expensive biscuits.

Perhaps it’s too large to comprehend, or thought too complicated to grasp or maybe the figures just aren’t robust enough to be credible (I suspect it’s a combination of all three).

Yet if these figures are true, the social benefits of acting earlier to prevent social problems from arising go hand in hand with economic necessity. If we could ever afford to wait so late and then spend so much, we certainly can’t now.

In our report (pdf) this week, the Early Action Task Force suggests a whole package of measures to overcome the barriers that stand in the way of this preventative, early action. To overcome the lack of credible information on the costs of social problems we recommend the Office for Budget Responsibility begin providing authoritative estimates of the costs of acting too late, and of the assets that could be created through an early action programme.

They are already required to produce an analysis of the sustainability of public finances once a year. The Fiscal Sustainability Report looks at the long-term impact of government policies on debt, taking into account trends in revenue.

The last report (pdf) considered the impact of an ageing population and related health, social care and pension costs and already noted a major problem with sustainability. They should widen this out, gradually if necessary, to encompass health, the environment and social policy.

With this information, not only could we accurately know the costs but begin to plot the savings and the benefits of doing things differently. It would allow us to make the case for a gradual shift in spending away from acute provision. And to do that, we need a second set of information – how much we spend now.

In a short paper (pdf), also published today, the Taskforce collated examples of where public spending has been classified on some form of spectrum from early to late in the past. It didn’t take us long because we could only find three.

The OECD’s system for classifying health expenditure includes a ‘prevention’ category, which Health England used in 2009 (pdf) – 3.8% of the UK’s health budget is preventative. The NSPCC have published a report (pdf) looking at how children’s social care spending breaks down (75% ‘protective’ and 25% ‘preventative’).

The Youth Justice Board spent 7% of its funding on prevention in 2010 (pdf) and the amount has decreased since (pdf). We applied a rough analysis to the total public sector budget and arrived at a figure of 40% spending on acute services, with only 20% going towards early action. We suggest the Office for National Statistics begins this analysis in depth.

Good independently-sourced and trusted information can drive progress and underpin reform. We do not know enough about the costs of social problems or about how we spend our money now. Once we know both we can begin to plot a transition. Let’s start finding out.

6 Responses to “Counting the cost of social problems”

  1. treborc1

    I suppose it takes your mind off the banking crises, and MP’s cheating at expenses, Libor, and the rest of the media mess, lets all look at social breakdown.

  2. Newsbot9

    Yes, right, you can’t possibly spend to prevent crisis, you just have to dump the worthless when it happens. Never mind it’s people…

  3. treborc1

    Still a pratt

  4. vfvew

    immigration has caused social breakdown. look at Japan after the tsunami and look at england after a few bongos had their EMA removed. that’s social breakdown for you and its due to millions of people coming here from places where they never managed to create a decent society.

  5. Newsbot9

    Yes, you are.

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