Investing in early action is fiscally responsible as well as socially just

A government that looked at least ten years ahead would surely operate differently, investing more now and saving more later.

Will Horwitz is a policy and media coordinator for Community Links

An old tale has resurfaced again recently, most noticeably in David Cameron’s conference speech earlier this month.

An Oxford college, when scouring around for oak beams to replace the ones rotting in its roof, discovered that forward-thinking college authorities 500 years previously had planted some trees for just this occasion, now ready to be felled and hoisted into place.

It’s a good story (despite its dubious accuracy), although if it directly illustrates anything it’s surely the folly of a doggedly short-sighted approach to the climate and the environment.

A government with both eyes firmly fixed half a millennia ahead would clearly struggle – a 500 year vision for the NHS is unlikely to win many votes – but a government with both eyes staring straight down, blinkered completely to the next decade let alone the next century will make bad decisions in the present.

Sadly there is a puzzling disconnect between the respect with which long-term thinking is held in society and our inability to embed this in institutions – particularly the state. With a few reluctant exceptions (pensions, perhaps energy provision, capital investment) public policy is at its most comfortable this year or next.

The Early Action Task Force has argued that this is one of the most significant barriers to the adoption of preventative social policy which ensures that everyone able to thrive. From healthcare to prison to social care and even within education we tend to wait until problems have escalated and then intervene at considerable cost. A government that looked at least ten years ahead would surely operate differently, investing more now and saving more later.

But how do we embed this in public institutions?

The next parliament presents a good opportunity through a process such as the zero-based spending review which Labour have committed to.

First, a zero-based spending review process should begin by identifying and classifying early action spend (the National Audit Office have made a start; they estimated 6 per cent of spending across four major government departments). This would shine new light on spending decisions helping ministers, parliament and the public prioritise areas for cuts or investment based not just on this year’s spending but on their impact in future years.

Secondly, the review process would require all departments to examine rigorously the impact of every item of spending now and in ten year’s time. Particular attention should be paid to spending which is traditionally rolled forward year after year, some of which is astoundingly ineffective (prisons that increase reoffending rates etc). Some acute services are of course vital even if they contribute nothing in ten years, but that debate should be aired in public.

Thirdly, start to target an incremental shift in investment over the Spending Review period from acute interventions to early action within departmental budgets – what we have called Early Action Transition Plans.

Fourthly, begin treating early action as an investment, where it forestalls future liabilities and creates growth. We recommend protecting it – in the same way as capital investment – against raids to fund short-term pressures in-year. For example, in the area of public health, ring-fenced budgets were established in April. Steps could be taken immediately for those areas where early action can already be clearly defined, as in public health or on early years education.

Finally, to help achieve the shift in spending, incentives should be put in place to encourage departments and others to invest in early action, just as the government is seeking to encourage social investors. It hopes eventually to raise some £2bn from social investment, but already has at its disposal some £377bn of its own social spending – a significant proportion of which could be better invested in future growth and reducing future liabilities.

Spending more now on early action is, we think, fiscally responsible as well as socially transformational.

Of course it will leave any government open to the charge that it is spending with insufficient evidence for future savings. But just as Ed Balls has suggested the OBR be involved in assessing the opposition’s spending plans, so the OBR should also be involved in this process.

One Response to “Investing in early action is fiscally responsible as well as socially just”

  1. patricia

    The 24 hour news cycle encourages new projects and activities, new announcements, new initiatives – long term, sustainable, incremental is not news. Politics that is media driven can’t be long term, it would be boring!!

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