At what cost?
by Max Wind-Cowie
An interesting piece of gossip from Peter Hoskin who asserts that David Cameron rates Iain Duncan Smith’s CSJ report on benefits but balked at the upfront cost. Hoskin suggests that Cameron should look at the ‘break even’ model that the CSJ also proposes – under which there would be no additional static cost to the treasury – as it may be more palatable in hard times.
It is certainly true that money is short and that large, up-front costs cause outbreaks of blanching in political circles. But much of this is caused by an underlying reluctance to measure savings beyond the next fiscal year or pre-budget report. Politicians have become more and more shy about radical change that costs more today but could save tomorrow. Obviously, in a 24-hour political media cycle, it has become harder to gain kudos from making responsible decisions that will only bear fruit at some point in the future but, if we are to learn anything from the current economic black hole in which Government finds itself, politicians are going to have to get better at prescribing this kind of difficult medicine.
The Progressive Conservatism Project’s report Recapitalising the Poor proposes a series of measures which, whilst pricey up-front, would achieve long term savings whilst re-engaging the working poor in the economic life of our country. The report, which was launched by Tory welfare advisor David Freud, argues strongly for a recognition that reducing the long term cost of the state will involve investment in the here and now. We need politicians who are prepared to acknowledge this and are radical enough to act on it.
Max Wind-Cowie
Hi Peter, thanks for responding. Couldn't agree more that the appetite is lacking, I just wish it weren't. With that in mind you are right that it is better that the CSJ 'cost neutral' proposals are implemented than that the status quo is allowed to continue in perpetuity. I think we share the concern that the Tories need to face up to the importance of 'spending to save' if we are going to reduce the burden on the state.
Duncan
Max, I agree with your premise but I think it’s also time to start to reframe this is a policy question, not just a political problem. In other words, what are the policy ideas that provide routes round a lack of political will-power/spare cash to make long-term investments?
Social impact bonds are interesting, for example: http://www.cabinetoffice.gov.uk/media/63710/web_commentary.pdf
http://www.youngfoundation.org/social-innovation/tips/social-impact-bonds-and-social-value
...if there really are major savings to be made from early intervention programmes then why not invite private investors to fund them and share in the savings? Question is: is this workable and what are the other policy ideas that help address the problem. Over to you Demos...
Pete Hoskin
Max: completely agree that the Tories should be prepared to stomach some upfront costs for the sake of longer term savings - particularly in the case of welfare reform, for which there's a huge moral and economic imperative.
But the fact remains that, at present, they're not so keen to spend £3 billion on the recent CSJ proposals. That could, of course, change...