The 2020 Public Services Trust Blog

There’s an interesting public policy question in the NY Times this morning.  An editorial details a dilemma in Albany, New York State over the application of a ‘soda tax’ – a ‘penny-per-ounce’ tax on sugary drinks.  Here are the arguments:

• The tax would give a recession-hit city a new way of raising revenue without recourse to increased direct taxation.
• The tax would fulfil public health goals, discouraging the consumption of sugary drinks.  This would have a long-term positive impact on the city’s obesity problem.
• The tax would raise public awareness of the dangers of poor food and drink choices, which would also have a long-term beneficial impact.

But….

• Indirect taxation is regressive.  Poorer households will pay a disproportionate cost.
• And why should choices be made on people’s behalf about what is good or bad for them?
• In this particular case, there is a powerful commercial lobbying interest too.

What to do?  Our own work with Volterra revealed how difficult more indirect taxation (through user charges or taxes similar to the above on tobacco, alcohol etc) would be to apply progressively in an already quite redistributive system.  But on the other hand, how can socially responsible behaviour be encouraged without using these kind of ‘hard’ levers? (less a ‘nudge’, and more like a shove!).

In the end, the issue comes down to choices.  No right answer.  And this brings us back to the age-old question of political legitimacy.  How connected are local decision-makers to the people for whom they are making decisions?  To what extent are the perspectives of those consuming fizzy drinks and those legislating on them aligned?  Tough decisions are surely more legitimate (and palatable) if they are made close to the people they affect – and in proper consultation with them.

But in order to make this consultation work, people need good information.  That is where the power of the commercial lobby can be distortive and malign.  And that is what can turn dilemmas of this type into mud fights where self-interest, public good and mandated political authority are hard to disentangle.

This morning’s outcry about the increase in the number of councils installing microchips in people’s bins is a heap of rubbish (pun absolutely intended). Privacy campaign group Big Brother Watch denounced the growing numbers of these microchips, now installed in 2.6 million bins across 68 local authorities. But why?

We clearly consume and chuck too much. "Pay as you throw" is a great idea.

BBW’s argument makes no sense. First of all, they claim councils are gearing up for “pay as you throw” (and they are presumably against this). But at the same time, BBW’s director is quoted as saying, “If local authorities have no intention to monitor our waste then they should end the surreptitious installation of these bin microchips.” So what is the problem? The existence of the chips as preparation for a charge on rubbish disposal or their existence for no good reason?

In any case, these microchips and any schemes being plotted by councils are a good idea. If people refuse to reduce their refuse out of concern for our common environment and future generations, then maybe they will do it in order to earn vouchers to spend on the high street (simultaneously stimulating local businesses – everyone wins!). One woman interviewed on BBC this morning who is against the scheme claimed that people should not be forced to recycle. But rewarding those who do recycle is hardly ‘forcing’. And charging those who throw away a lot of rubbish, is, frankly, simply asking them to bear the cost of the externality that would otherwise be borne collectively (which is completely unfair).

Other arguments against such schemes include: “my neighbour might try to put their rubbish in my bin” and “bigger families will suffer”. On the first, my reaction is, SERIOUSLY??? I highly doubt anyone would go to that much trouble to conceal their excesses, and even if they did, well, there are already plenty of disputes between neighbours already that councils help resolve. On the second, bigger families do consume more, so I don’t see why it is unfair to ask them to bear the cost of this large amount of consumption.

Our Commission has been consistently clear that public services have to find ways to get citizens to help create the outcomes desired from those services. These new bin schemes are a great way of incentivising this kind of behavioural change. The Commission also believes people should be more aware of the costs they impose and the benefits they receive from public services, and “pay as you throw” makes this completely transparent in the case of waste disposal. Those who oppose microchips and accompanying rubbish reduction incentive schemes have a massive chip on their shoulder and need to wake up to the reality that everyone without exception has to play an active role in taking care of our common environment.

Todays figures on NHS primary healthcare trust overspends are a sharp corrective to the idea that cuts to public spending will hit the back room only.  Chief Secretary to the Treasury Liam Byrne is apparently impressing upon department heads the need to find big savings, but the scale of overspend in some trusts (Enfield being the largest) illustrates the challenges of making this happen – and the likelihood that institutions will feel the pain as well as service users. 

In the same article, the Kings Fund’s John Appleby uses Manchester as an example – “in Manchester you have 25 acute hospitals.  That is probably too many and it underlines what big questions the real funding cuts entail.” 

These are massive choices to be made, with real human consequences and long-term (social and behavioural) impacts for communities.  

This speaks to a key tension in the current debate on public services – and one that has not really been explored in depth by any of the parties.  Cuts as an end in themselves seem to be necessary in the short term.  But the question is: how do they fit into a longer term perspective? 

In the next couple of weeks the Commission will publish its interim report, which will set out such a vision.  It wont be everyone’s cup of tea, but it will at least try to force a conversation that gets beyond the short term, and asks politicians and the public to think about ten years time as well as tomorrow.  If this really is a ‘moment of historical discontinuity’ as Vernon Bogdanor has said, we need to do both.

Buried in the Financial Times today is an interesting piece by Quentin Peel on a row erupting in Germany over the extent and scope of the welfare state.  He writes that

“It is a classic debate between liberals, conservatives and social democrats over the right and wrongs of welfare for the long-term unemployed, and about who pays to fund Germany’s generous but over-burdened system.”

Worth a quick read, if you can tear yourself away from the Royal Rumble of letters going on between of the most prominent UK & international economists.  Two letters in the FT today (including Skidelsky & Stiglitz as signatories) to rebut one in the Sunday Times – and most remarkably, each shadowing a distinct party line on appropriate timing.  So after months of trying to convince the voters of distinct dividing lines, it looks like the economists have done the job for the parties. 

I am not an economist (big disclaimer), but after reading Shiller, Taleb etc last year I would be deeply suspicious of the ability of either side to predict with anything with certainty – though that seems to be instinctively closer to today’s position than Sunday’s.  Tim Harford has written saying something similar, but (perhaps sensibly) doesn’t take sides.  The FT leader, however, was much stronger – read here. 

hat tip: Alisdair & Becca

Today ive been writing a short piece with my colleague Paul.  It is an introduction to a report we are co-publishing with the RSA, which is based around a review of public opinion on public services put together by Ipsos MORI. 

The review pulls together qual & quant data on what citizens want, need and value from public services, and engages with live debates on fairness, localism, choice and engagement.  We are publishing the whole thing on March 18^th. 

The 2020 Commission’s interim report will emerge on the same day.  And although a lot of the citizen opinion work has influenced what is said in the interim report, the documents will feel very different.  Writing the intro, I wondered whether this is a problem.  Our commission is broad, with a range of political and vocational interests. So its interim recommendations are also broad, and reflect a way of thinking that could be applied in different ways by different people. 

But working around the hard numbers of citizen opinion is slightly different.  The public overwhelmingly dislike the idea of local variation in public services – yet our commission is likely to advocate a less centralised system.  75% of the public think that efficiency savings will suffice in the face of a spending squeeze, yet our commission will suggest otherwise.

The question is how to interpret what people value.  Our report suggests that we a fearful of postcode lotteries, yet we really value the idea of local engagement and influence.  So: a more nuanced reading of the figures, taking some chances and reading between the lines, and trusting the public is what I think. As one interviewee told me last week, in enabling change, ‘framing is everything’.