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Eliminating false economies

By David Robinson

Alarming rumours were trickling out of Whitehall last night. Could it be true that the 2015 Spending review will cut £2bn from children’s services?

It could be mischievous, it could be simply mistaken but we think it is unlikely to be very far from the truth. Cuts of the magnitude now being sought across government can only dodge the ring fenced school budgets by biting deep into related activities.

It is difficult to imagine a more perfect example of the proverbial false economy. You cannot take a sum of this size out of services which predominantly support the most at risk without incurring much greater costs, social and financial, within a short time and then for many years there after.

We know, say officials, but cuts of this sort, and there will be more in this one year Review, are inevitable.

Indeed. We pointed out in this blog that a very foolish question inevitably attracts a very foolish answer. A one year Spending Review asks a lot of very foolish questions.

A shortsighted cut of this sort can look almost manageable over a twelve month frame: raise the threshold for an essential service and short term costs will fall quickly. Job done, money saved for this year but, of course, the original problem hasn’t gone away. On the contrary it becomes steadily more serious before soon reaching the new threshold. Resolution is then more difficult and almost certainly more expensive, albeit perhaps next year, not this.

Budgeting and planning over a longer period – we recommend 10 years but even 5 would be a big improvement – would produce an entirely different set of answers. Ten year planning is not a cavalier “spend more” approach – the total spending envelope for the extended period could adhere to existing targets – but the policies would need to take account of all the consequences, wherever they may fall, costs and benefits, over 10 years. In short policy would have to add up over the longer term, not fix the books for the next few months. Early action and preventative projects would shoot up the agenda with benefits for everybody eliminating the false economies and, instead, supporting and incentivising the reduction of need.

A £2bn cut in services that support our most vulnerable children? What more has to happen before politicians on all sides recognise the need for long term planning?


EVENT: Investing in Prevention: 

Jon Cruddas is leading the Labour policy review. Referencing our work, he told the Local Government Association last week and NCVO yesterday that a Labour government would work on 3 principles:
1) Power for local people, to shape their services and communities,
2) Investment for prevention, to avoid the costs of failure,
3) Collaboration between public bodies, not wasting money on bureaucratic duplication.

There is an opportunity to discuss and contribute to the development of this approach at an event this Monday 24th June. Three Early Action Task Force members will be speaking. Come and have your say. It’s free but you need to book:

Innovation and Community: How should Labour govern in 2015?

4.30pm – 6pm
Committee Room 6
Speakers: Dan Corry (Chief Executive, New Philanthropy Capital), Caroline Slocock (Director, Civil Exchange), Ben Jupp (Director, Social Finance)
Chair: Ivan Lewis (Shadow Minister for Overseas Development)

Given the fiscal constraints, what kind of statecraft does Labour need to develop for governing in 2015?

If you would like to attend please email and write STATE REFORM in subject header.

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