If the PM’s speech on September 11th hadn’t happened to coincide with the final act of an extraordinary summer for her majesty’s opposition, it could have made the front pages. Here are some of the headlines:
“Early intervention is key whether it’s investing in things like health visitors or improving the provision of childcare. We have got to stop picking up the pieces when things have already reached crisis point – with all the misery, and extra costs, that brings…
And for those who are hardest to reach, there should be a whole government approach rather than a series of piecemeal and inconsistent interventions…
We need to do more of this. And we need to do more to encourage departments, local authorities and charities to work together collaboratively. Put simply: it’s now time to progress these ideas further and faster.
Another big step forwards has been our pioneering use of interventions like Social Impact Bonds, which pay private and voluntary sector organisations with some of the savings they deliver to the taxpayer. …I want to take this much further by bringing models like this to scale – in areas like homelessness, mental health and looked after children too.”
I don’t imagine that that these passages really were a cut and paste job from an earlier landmark speech by a recently elected PM with a healthy democratic mandate, but they almost could have been. In his first major outing as PM in July 1997 Tony Blair spoke about “the double jeopardy – worsening social problems and escalating tax bills… government must not fall into the trap of short termism… we know that many problems in later life stem from problems in the family, from poor parenting and lack of support. We have to learn to work more coherently . In every housing estate you can encounter literally dozens of public agencies all often doing good work but all often working at cross purposes or without adequate communication. This matters because it leads to poor policy and wasted resources… our challenge must be to overcome those barriers, liberating funds from their budget silos so that they can be used to deliver the best result.”
I mention the similarity not to belittle either speech, both conveyed an important message, but to demonstrate the scale of the challenge. Blair did useful things on this territory, particularly in his first term, but as we showed in “Triple Dividend” and “The Deciding Time” progress has been very slow and patchy. Deep and enduring change needs determined and persistent leadership and, above all beyond the fine words, a gritty commitment to the kind of bold reforms in systems and structures that will, in practice, shift the dial on behaviour, culture and ultimately services on the ground.
“It is now time to progress these ideas further and faster” says Mr Cameron. How much does he mean it? The Spending review is an early test. In our submission to the Chancellor the Early Action Task Force argued that an “Early Action Loan Fund would help deal with the problem of running acute services while early action takes effect and the particular difficulties which exist where costs fall to one budget and savings to another. The Fund would offer interest free loans to public sector agencies to invest in early action. The loans would be paid back over 3 – 7 years through savings in acute provision or welfare spending and would be available to promote innovation and system change within public provision. Loans would be interest free because of the bias toward the status quo and the culture of risk aversion.”
We suggested that “the Fund could be financed by top-slicing existing budgets and/or through a tax on social polluters such as the gambling, alcohol and payday loan industries. It would be administered independently to add accountability and new discipline and ensure that loans remain binding if the Government changes. It would quickly become a reservoir of best practice – both in terms of programme design and implementation challenges. Acting outside of government, it could more easily focus on the delivery of multi year programs across spending and electoral cycles. Critically, while oiling the wheels, the Fund would inject more discipline into the design and delivery of preventative, demand management spending and invest to save projects.”*
At first the Fund might be limited – say £200-250m. This would create the impression of scarcity and prompt the more forward thinking . We would envisage 10-20 programs of £10-20 million – with spend spread over a number of years. But this should be just the beginning: An Early Action Fund should be part of a wider strategy to set up funds that break down silo working and encourage joint investment. We also recommended in our submission pooled budgets and social profit sharing agreements, where different parties agree to invest in early action on the understanding that any future savings are shared to a pre-agreed formula.
The Spending Review is the first major opportunity for the new government to demonstrate the substance of the Prime ministers September rhetoric. We hope that early action really does make the headlines this time around.
* In order to draw the loan, borrowers would have to present a credible plan for the delivery of outcomes and savings. The Borrower would be required to report regularly and failure to deliver would trigger a stop on further drawings of the loan and a liability to repay early. The requirement to repay passes the responsibility for assessing attribution and cost savings to the Borrower and away from the Fund.
In some cases, sufficient benefits and savings may arise within the local authority or Departments to deliver savings over and above the cost of the loan and the local authority would be responsible for repaying the loan.
In order to make this incentive work, there should be a protocol for future spending reviews to enable borrowers to retain the benefit of additional, evidenced savings for a defined period of time before they are claimed by the Treasury to reduce the borrowing requirement.
However, where the savings predominantly fell to the welfare budget in AME, the Treasury would need to be a party to the loan and would have to agree to repay the loan and share a proportion of any additional savings beyond the cost of the loan with the public sector entity that had delivered the saving.