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The 2020 Public Services Trust Blog

Thursday, July 1, 2010

Equality and Cohesion in an Age of Austerity

By Paul Buddery

Was the Budget fair?  The Chancellor characterised his measures as ‘progressive’ in that the rich stand to lose more than the poor.  But not everyone agrees.  The IFS calls the claim ‘debateable’ , largely because it leaves public services out of the equation.  It is poorer households that tend to be the biggest public service users, with in-kind benefits of £6,300pa for the bottom fifth compared with £3,900pa for the top fifth.  There is a clear and serious risk that a sharp reduction in the funding of public services over the next few years will widen social inequality.  

Can we organise our public services differently, so that an age of fiscal austerity doesn’t also become an age of accelerating inequality?  Yesterday we published Equality, Cohesion and Public Services, a research report that asks how to ensure that poor and disadvantaged individuals, families and communities are not left behind.  It looks at some of the many different approaches to reducing inequalities and improving social cohesion that have been deployed in recent years to ask what’s worked, what we should keep, and where we need to do much better. 

Some important strides have been made, but the evidence presented here is a sobering reminder of just how profoundly unequal we remain in many respects, despite years of reform and substantial investment, so that outcomes in education, health and criminal justice, for example, remain strongly related to social background, race and gender.  Public service interventions in support of equality and cohesion take place in a dynamic environment, often against considerable contrary economic and cultural pressures.  Even where gaps have narrowed, it can be hard to pin down what actually made the difference.  It appears both top down and bottom-up service reforms have made a contribution, although quasi-markets have the potential to exacerbate inequalities in some circumstances.   Targeted investment has helped, but targeting in a way that captures all – or even most – of those who need support is notoriously difficult. 

Our public services have focussed on the fair distribution of entitlements.  In itself this has been reasonable and necessary; but of itself it is clearly not sufficient to move us to a more equal society, underplaying as it does the importance of converting entitlements into valued outcomes.  Key to making this ‘conversion’ happen is a system of public services that gives all citizens a far greater say in deciding their own valued outcomes, and enables them to play a bigger role in achieving these.  The 2020 PST trust believes that our efforts to reduce inequality have been hampered by a besetting habit in public policy making which sees professionals defining the nature of the problem to be ‘solved’, finding the resources to address it, and directing how the resources are used.  In 2020 PST language, services have grounded themselves on ‘social security’, where they should be supporting ‘social productivity’, and never more so than with disadvantaged individuals and communities.

Polly Vizard’s chapter in the report is persuasive in this context.  She proposes that the capability approach, pioneered by Amartya Sen, offers a better framework for analysis and action to reduce equality than those in which debate and practice has traditionally been cast – such as resourcism or negative liberties.  It evaluates the position of individuals and groups in terms of their real freedoms and opportunities – the central and valuable things in life that they can actually do and be.  Linked to a clearer and more accessible rights and human rights framework, Polly argues that the capability approach can deliver benefits not only in equity, but in efficiency.

Many communities, activists and professionals have worked hard to put equality concerns at the centre of public service policy and practice over recent years.  The challenge today is to make sure that they become part of a credible narrative of sustainable reform.

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Posted by Paul Buddery at 1:24 pm
Wednesday, June 23, 2010

A budget for cuts but is it a budget for reform?

By Ben Lucas

This is a tough budget. It adds another £40bn to the already stringent consolidation planned by Labour.  We won’t know its full impact for some time to come. The real test will be what happens to the economy and to jobs.  If growth continues and gathers pace next year, then the Government will feel vindicated, if not then people will question whether the scale and timing of deficit reduction was right.

At least now we know the numbers – what we don’t yet know is what will be the impact on public services.  That will be set out in the spending review, which now assumes even greater importance given the challenge of trying to maintain and even improve social outcomes in the context of huge spending cuts.

A large part of the story is about welfare cuts.  Child benefit will be frozen for the next three years and all other benefits, except pensions, will be uprated only in line with the Consumer Price Index, rather than with RPI.  Housing benefit will be capped at £400 a week.. The principles which are being applied to welfare cuts are conditionality and means testing, with the aim being to target expenditure on those who need it the most and to incentivise work.  But this clearly does not explain the decision to uprate the state pension, which is a political decision.

By far the biggest inconsistency in the coalition government’s position on public expenditure is on health.  The government’s argument is that we face a moment of unprecedented fiscal crisis and so everyone will have to share in the pain of cuts.  In so far as there is a glimmer of hope at the end of the tunnel, it lies in the belief that a crisis can be an opportunity to reform public services to get more for less.  Both these considerations ought to apply to health, it bears a huge share of public expenditure and no service area better represents the concentrated power of institutional and vested interest than the NHS.  Either public services need to be reformed or they don’t. It makes no sense to exclude the most expensive service of all from this process.  The exemption risks undermining reform elsewhere as well as forcing other spending areas to shoulder a disproportionate level of cuts.

It is a measure of just how big the other departmental cuts are that what looked a savage reduction in capital spending under Labour now looks likes an infrastructure reprieve under the new government – even though this still corresponds to a 17% cut in building projects.  The previous Budget’s projection of 10% cuts in non-ring fenced department spending now looks like the good old days, when compared with the 25% cuts which these departments will now face.

What the Budget lacked, and the Spending Review will have to provide, is a coherent public service reform narrative and strategy.  This points to a dissonance at the heart of the Coalition Government.  Whilst the Prime Minister has proclaimed the Big Society as the Government’s big idea, this is not mentioned anywhere in the 120 pages of the Budget statement.  Yet, if the Big Society is to have substance then surely it must be relevant to the fiscal challenge, otherwise it is just a nice to have decorative adornment to the age of austerity.

The spending review will need to develop a strategy for public service reform and transformation and not just for expenditure cuts. The challenge is even greater than that faced by countries like Canada, because the scale of potential cuts is greater and the expected level of economic growth is lower.  The question will be how can cuts on this scale be delivered without unsustainable public sector job losses, particularly in the north? And how can communities and neighbourhoods prosper and develop greater autonomy, when the support they will need to enable this will be under pressure as never before.  The spending review will need to put the emphasis on structural and institutional reforms and on building social productivity – focussing on neighbourhoods, service integration at local level,  more for less budgets for local areas and the social finance mechanisms which can enable scarce funding to be reprioritised on prevention and early intervention.  Without this, retrenchment will quickly turn into residualisation.

Tuesday, April 28, 2009

The Meaning of (post-budget) Life

By Henry Kippin

Happily for us, the budget has spurred the UKs opinion-formers into action over the need to think creatively about public services. On Saturday, the Guardian pointed to the lack of a guiding vision underpinning the Conservatives’ response to our fiscal crisis, arguing that

“Nobody doubts that the Conservatives have the stomach to axe services. But they are strangely silent about the principles that would guide them when deciding what to spare.”

Maybe true, but the government is hardly in a position to offer us a coherent set of principles for a post-cuts future either.

Yesterday’s FT editorial picked up on this, calling for a ‘contest of ideas’ on the future of UK public services. But it would be naive to think that our political parties will share the same stomach for this fight, particularly during an election campaign.

This reluctance is borne of a fear of being outflanked or overtaken by economic events, but is also, as the editor suggests, in part ideological. Although both Labour and the Conservatives are clear as to the need for parsimony in public spending, neither party can yet claim a united front, nor a coherent vision of the future.

Yet it is precisely this kind of joined-up approach that is required to get us through the coming era of austerity. Decisions on public spending must be underpinned by long-term thinking, grounded in a better understanding of the relationships, resources and responsibilities that will shape our society.

For either party to move forward without such a vision would be disastrous – yet to expect this all to come from within the parties themselves is unrealistic. Hopefully the 2020 Commission can do some of this groundwork for them.

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Posted by Henry Kippin at 9:07 am
Friday, April 24, 2009

In place of denial

By Ben Lucas

The Budget has removed the last excuse for continuing with the era of mutually assured denial (MAD) between the main political parties. There can now be no denying the scale of the challenge which Britain faces. The Budget set out the top lines about the scale of borrowing and public debt levels, which by any measure are pretty frightening.

Public services will go through the toughest period of retrenchment for at least a generation. Cutting the rate of public sector spending growth to just 0.7% from 2011 will be hard enough. The IFS have since revealed that when cuts in capital spending and the costs of borrowing and increased unemployment benefit are taken into account, this becomes not just a freeze but an actual reduction in expenditure.

This much both the Opposition and the Government accept. What neither will talk about openly is what are the real choices which will have to be made about public services in the future? As Nye Bevan said, “Politics is the language of priorities”, yet with the exception of Vince Cable, who has started to talk in these terms, none of Britain’s major politicians are yet setting out their stall about what their priorities will be for public spending after the next election.

Neither the Government nor the Opposition wants to surrender any ground to the other, they are like two crabs locked in battle standing at the edge of a cliff. Yet what might seem a safety first policy is fraught with danger. The next election will not be 1979 all over again. Whichever party loses this election is not likely to gift the Government with a clear run, whilst they get on with the more important business of tearing themselves apart, as Labour did in the early 1980s. Moreover, the causes of the current crisis cannot be all pinned on the Government and its wider hinterland – the bankers not the unions are the pantomime villains this time. So the danger for the Conservatives, should they win, is that if they haven’t prepared the way for and built a constituency for radical change in public services, then as soon as they try to signal a clearer direction they could quickly find themselves on a collision course with both public service workers and the public.

What both the Government and Opposition need to do now is move beyond the safety net of efficiency reviews and rhetoric about investment and debt levels to starting to spell out what a progressive approach to public service retrenchment would look like. This will involve setting out priorities and identifying where the pain will have to be felt.

A progressive approach to this ought to combine fairness with responsibility. The priority should be on spending which achieves the objectives of reducing inequality, and promoting social cohesion, security and sustainability. This will need to be balanced with people needing to take greater individual and social responsibility both for their own behaviour and for the contribution which they make to achieving social outcomes through taxation, co-payment and their own time. There is a growing sense that the public are ready for a very different type of debate about how we can emerge from this crash with a more sustainable society. All of this suggests that the important thing is not just to signal where one off cuts can be made but what the elements of a new deal between the citizen and the state might be. This is about the role of the state of markets and of society.

In terms of new directions, by far the most interesting development in the Budget was Sir Michael Bichard’s proposals in his Chapter of the Efficiency Review on Local Incentives and Empowerment. The era of the big, central British state trying to run ever more public services from Whitehall is surely now over and Bichard’s paper starts to set out an alternative direction. This is based on pooling local public services and effectively re-creating accountable local strategic government, which can make joined up resource and spending decisions at a level where they can really understand the impact these will have on people’s lives.

12 pilots are to be established to look at how public service can be better co-ordinated and more accountably run at a local level. At the same time, the Budget itself announced Manchester and Leeds will get the go-ahead to develop themselves as City Regions, along the lines of London. The Conservatives are committed to these City Regions having directly elected Mayors, which is still the missing piece of the local accountability jog saw. Below the radar a new model for decentralised public service administration and strategic local government is starting to emerge which will be more efficient, deliver better outcomes and finally offer the basis of an answer to the English question which devolution has posed since 1997.

But this is only one element of what will need to be an entirely new public service landscape. If politicians want to rebuild trust then they should start with being honest about what the real choices are which society will have to face over the next decade.


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