Beware false spending cuts
There I was, all prepared with a blog showing how cancelling ID cards would only save a fraction of their top line cost when exactly the same issue was the lead story on the Today Programme. There is disagreement, but the mid range estimate of how much could be saved on ID Cards themselves – as distinct from biometric passports which will soon be required internationally – seems to be around £1.5 billion, which works out at £150 million a year over the ten year programme. This is a lot of money but a different order of contribution to the looming spending gap than the £5 billion figure that tends to be thrown about.
In the face of the looming public spending squeeze we are already seeing politicians and commentators coming up with lists of projects that can be scrapped. By providing the top line figure for schemes (which often involves rolling several years up into one) the implication is that all this money can be saved at the flick of a Treasury red pen. My experience in Government suggests otherwise.
In both capital and revenue spending the choice is often between an existing programme, which is deemed not to be successful, and a replacement. For example, the choice may be between an old school which needs comprehensive refurbishment and a new build. There will be a gap between the cost of the old and new programme but it will be only a proportion of the total cost.
The costs of dropping a scheme could include money spent winding it down, compensation for cancelled contracts or redundancy payments. These costs are rarely counted in claimed savings.
A figure is often given for the savings of the cost of an agency, for example Regional Development Agencies. This may fail to distinguish between the running costs of the agency and the costs of its programmes, many of which would continue under a successor arrangement.
I have even seen cases where the ‘cost savings’ fail to take into account that a large proportion of the expenditure is coming from European Union funding.
None of this means projects can’t be cut and real savings made. But we should be very suspicious of anyone who claims that we can close the funding gap simply by getting rid of unpopular one-off programmes. The reality is – as I argued last week – that the coming spending crisis will only be tackled if we are also willing to look bravely and creatively at the way we deliver core public services.
Global interdependence must change the way politics works
Today’s the day. In terms of the G20, may it’s worth me repeating what I said in The Observer:
The G20 will end with smiling leaders and a grandly worded statement but the level of expectation and scrutiny are too high for a lack of substance to go undetected. The agreement of new global regulatory architecture, the strengthening and refinancing of the IMF and a commitment to help the most vulnerable countries are important goals which go well beyond the generally bland outcomes of such summits.
But people are suffering now and they want to see action now. The two hard tests, therefore, are globally coordinated action in the short term to get the economy moving again, and a genuine and binding commitment to resist the siren call of protectionism.
If the G20 is seen to have failed it could undermine the national case for global solidarity and engagement with potentially calamitous political consequences. If it succeeds it could give people around the world the one thing they most need right now – a reason to believe in better times ahead.
In all the comment on the G20 I was struck by a point made by Jeffrey Sachs, the development economist (and recent RSA speaker). He said, on this morning’s Today programme, that the governance of globalisation could not take place simply through periodic summits and communiqués. Instead, those who lead, and those who advise them need to ‘intermingle’ much more continuously. I am sure this is right. It represents a third way between the traditional pursuit of national interests in foreign relations and the limited effectiveness of multinational institutions, in particular the UN. Looking at the progress that seems to have been made between the US and Russia on reducing nuclear warhead stockpiles we can see what can happen when national heads have the opportunity and the incentive to show they can be global leaders.
If global governance and responsibility is to catch up with globalisation of trade, finance, organised crime, and population movement we need a new national elite made up of people who see their role in making the world work as on a par with their national responsibilities. As I know from my own time in Downing Street, when the summit has passed, the tendency is for international issues to drop off the agenda completely and to become again the specialist concern of a small group of advisors until there is another summit or international emergency. When I used to be involved in manifesto drafting, we viewed the writing of the (inevitably final) ‘Britain in the World’ chapter as a duty not an opportunity.
The G20 circus will roll out of town, but in a world of profound interdependence the security, prosperity and sustainability of the world must never be allowed to fall far down the day to day agenda of politics and government.
Foreign workers, miserable children and the state we’re in
The Children’s Society assault on modernity, and public sympathy for the idea behind the Lindsey and Sellafield protests that we put ‘our own’ workers ahead of the principles of free market capitalism, show that we are moving into a period of social and cultural transition. Voices that had been considered unrealistic or extreme will be given a hearing.
The danger of this new burst of egalitarian pessimism is that it lays the basis for an appeal to authoritarian hierarchism.
By all means, let us discuss how progress may be hurting our children. Let’s think carefully about how we might start to craft a more humane way of living. But in this spirit of compassion, let’s also listen for the sound of the baby being thrown out with the bathwater.
Today we have the strikes against foreign workers at Sellafield and the Lindsey refinery, which seem less a xenophobic outburst, more a backlash against European integration and globalisation. Predictably, the economic downturn is firing protectionist sentiment.
Also there is the report from a Commission sponsored by the Children’s Society which appears to be a denunciation of almost every aspect of modern society and culture, from materialism to school league tables, from working mothers to video games.
The Children’s Society report needs careful reading. Its gloomy findings seem to be substantially based on two sources: attitudinal research, which is notoriously unreliable, and evidence submitted to the Commission, which is bound to some extent to reflect a self selecting sample. The conclusions drawn seem also to be somewhat slanted by the predispositions of the Commissioners. Much is made of the decline in trust as revealed by attitude surveys, and this is linked to individualism. But I haven’t so far heard the more uncomfortable fact for the progressively inclined: low trust is strongly correlated with living in diverse areas with high population turnover.
The Children’s Society has clearly decided its goals are best served by being as alarmist as possible. But even a cursory reading of the report summary finds the actual conclusions are more balanced. While the headlines today shout about stressed out kids in pressurised schools, the report summary is much more balanced:
“Whilst leisure and fun were clearly important to young people, the value of education was also recognised. A good quality of education was cited by many as one of the key factors of a good childhood. Young people also recognised the importance of their own commitment to working hard and achieving for their future well-being.
However, this generally positive picture was balanced by substantial comment about the negative impact of school pressure. There were both positive and negative comments about teachers. Positive comments emphasised support, help and understanding; negative comments tended to refer to pressure at school. Finally there was comment about the importance of wider learning about life and the need for positive role models. Over half (58%) of young people surveyed were worried about their exams at school, and almost half (47%) said that they often worried about school work.”
As I said on the Today programme, some of the things the report is most concerned about – working mothers and pressure on school performance, for example, can be seen as strategies to address some of the report’s other concerns: persistent poverty and low social mobility. The Scandinavian countries most often cited as being great for children have even higher levels of maternal employment and similar levels of family breakdown.
Using the framework of cultural theory, I have been predicting an egalitarian backlash against the dominant individualism of the last thirty years. The challenge is to welcome these big debates but not to abandon reason in the process. From greater tolerance of difference to the incredible opportunities afforded by modern technology, there is much to celebrate in our modern world. Opinion formers must beware pandering to social pessimism. After all, the most powerful attitudinal statistic may be how much more optimistic about our own lives, families and communities we are than as about society as a whole.
The period between the end of the second world war and the oil shocks of the seventies was dominated by hierarchical thinking; a time of the big corporation, national planning, a faith in expertise and technological progress. The protest movements of the sixties were the egalitarian backlash, but while the hippies and leftists shook the branches it was the free marketeers and champions of individualism who caught the fruit.
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