14 July 2006
Sure Start, tax credits, baby bonds. Gordon Brown has not been idle on the social policy front while he waits for his chance at the premiership. But what kind of legacy will the longest-serving Labour chancellor leave behind? Tash Shifrin reads the runes
1997 and all that: it seems so long ago. Back then, Tony Blair still had his Bambi tag – and Gordon Brown had Prudence. Brown was dubbed the Iron Chancellor, eyes fixed on the goal of a strong economy, 'prudent' with the public purse.
Blair's Disney image is a far-off memory now – the Iraq war, the zeal for public service reform and tough criminal justice measures have seen to that. Public perceptions of Brown have perhaps not changed as sharply, but he too has shown there is more to his political endeavour than the old one-dimensional image suggested.
As Blair's premiership moves towards its end game, much attention has focused on his supposed quest for a 'legacy'. But this is no less a concern for his neighbour at Number 11. What will have been the lasting achievements of this longest-serving Labour chancellor?
The would-be prime minister has moved well beyond the confines of the traditional chancellor's role. When he leaves the Treasury, his performance will doubtless be measured by the economic balance sheet. But he will leave a legacy of social welfare policy, too. Brown is heavily associated with the government's pledges on child poverty: to reduce it by 25% by 2005, halve it by 2010 and eradicate it by 2020. And flagship government social policies such as tax credits, the Sure Start early years programme and child trust funds all emanated from the Treasury and bear his fingerprints.
The chancellor's wider policy role has come with a dose of ideology too: measures such as tax credits and Sure Start are based on a philosophy of 'progressive universalism' – everyone benefits, but the poorest gain the most. Brown is also an advocate of 'asset-based welfare' – the idea that boosting assets as well as income helps reduce relative disadvantage.
Before Brown's arrival at Number 11, the Treasury's interest in social policy lay mainly in 'keeping the cost of it down', says Norman Glass, who was deputy director of the Treasury between 1995 and 2001 and is now chief executive of NatCen, the National Centre for Social Research. The idea that the Treasury should be more active on its own account was 'very much a Gordon Brown initiative', Glass says.
Observers note the success of the shift. The Treasury became 'a social policy powerhouse after 1997, very concerned and interested in things... historically done in other departments', says Nick Pearce, director of think-tank the Institute for Public Policy Research.
A Treasury source explains that the department's newly interventionist role arose 'in recognition of the massive amount of money put in'. But he adds: 'Part of this comes very personally from the chancellor.'
Brown's legacy might be judged in future by whether his social policy initiatives have borne fruit. But it is already under scrutiny – and the chancellor's assumption of extra duties has not gone unnoticed by the Conservatives.
Last month's damning Treasury select committee report on tax credits and the crisis-ridden IT system responsible for huge overpayments was seized on by Conservative leader David Cameron. 'In each of the past two years, almost 2 million households have been overpaid tax credits by £2bn. Some of the poorest households in Britain are now having that money painfully clawed back,' he declared across the despatch box.
'The Treasury select committee says the department was incompetent. Can the prime minister tell us which member of the Cabinet is responsible for this piece of incompetence?' Although Blair refused a direct answer, Cameron's point was horribly clear. But despite this attack, the verdict on tax credits is not clear cut. The Conservatives fully intend to retain tax credits 'in one form or another', says shadow paymaster-general Mark Francois.
'We've come to the conclusion that tax credits need to be reformed and made simpler to administrate and operate so they can continue to provide assistance to those people who need it – but without driving them to distraction in the process,' Francois says.
Kate Green, chief executive of the Child Poverty Action Group, is a lot less keen on the credits, although she does believe that Brown's drive on child poverty reduction has made a difference. She praises his 'absolute personal commitment' to cutting child poverty. Having a big hitter batting for poor children has been a bonus, she says.
And while she is disappointed at the government's failure to hit the 2005 anti-poverty target, she says it has done well in reducing the number of children in hardship by 700,000.
But she adds: 'We're concerned that the administrative problems with tax credits have meant some families have really struggled. We do think a lot of the hardship with tax credits could have been avoided if more money had gone on universal benefits.'
The idea that it is intrinsically difficult to implement tax credits – a system of in-work benefits payable through earnings – is one that the IPPR's Nick Pearce rejects. 'I don't believe that to be the case,' he says. 'Broadly speaking, I think it's been successful.' Unlike benefits, the tax credit system 'makes work attractive and makes work pay', he says. While there is a need for reform, Pearce believes, tax credits are here to stay.
Robert Chote, director of the Institute for Fiscal Studies, sees tax credits as 'an important mechanism through which redistribution has taken place'. But he says this could also have been done through social security benefits – the systems Brown inherited. The difference is that tax credits, by linking benefits to work, have possibly given Brown more political leverage. 'Maybe by moving to the tax credit system, he made an extended period of redistribution politically practical.'
The Treasury is now upgrading the IT system, and changes to the rules mean families can now earn an extra £25,000 before they need to declare a change in income – a move that should trigger fewer demands for repayments than the previous £2,500 threshold.
Interestingly, should Brown snap up his neighbour's job in the next year or so, he will be the one to face Cameron across the despatch box when the reform programme is complete.
The tax credit system is not the only area of Brown's social policy on which the jury is still out. The Sure Start scheme has won friends – and attracted criticism too. Aimed at bringing together health, education and support for parents to help young children in deprived areas, the programme has been rapidly expanded. But with the expansion, the partnership-run schemes will now become part of council-run children's centres.
The latest pledge is to expand from around 850 schemes to 3,500 children's centres by 2010. So it was something of a blow when the national evaluation of Sure Start, carried out by Birkbeck College's Institute for the Study of Children, Families and Social Issues, revealed last month that the most deprived children had actually been negatively affected by the scheme.
And in an unscripted addition to a speech in May, Blair himself was less than supportive. 'When we started Sure Start, I was always a bit sceptical that in the end that we could do this. There was an idea it would lift all the boats on a rising tide. It has not worked like that,' he said.
But Sure Start's supporters argue that early years support is a long-term means of tackling deprivation. Reports of its failure are 'very premature and misguided', says CPAG's Kate Green. It is a 'brilliant, very bold, important initiative' that will prove to have been money well spent, she believes, adding: 'That's not to say we don't think more is needed to get to the hardest to reach families.'
Nick Pearce agrees. 'Sure Start needs time to mature. We should hold fast to its promise,' he says. Pearce also suggests that with huge pressure on social services budgets and overstretched social work teams, local authorities 'have started to roll up some of their most intensive work with families into it'. This reduction in traditional social work support might have contributed to the scheme being less effective, he says.
The team that produced the national evaluation is not rushing to give a final verdict on Sure Start either. Professor Jay Belsky, director of the Institute for the Study of Children, Families and Social Issues, begins by praising Sure Start as 'an important and valuable effort'.
He confirms that the evaluation found 'among the majority in Sure Start there were small positive effects detectable', while for 'a not insubstantial minority there were some adverse effects'. It was 'apparently the most disadvantaged of the disadvantaged who had the most adverse effects'.
But he adds an important caveat. 'Mostly, there were no detectable effects.' The projects were studied when they were semi-embedded, he points out. 'People expect to change the course of mighty rivers overnight. In some ways, expectations have been unrealistically raised... certainly among the chattering classes.'
Glass, who in his time at the Treasury was a key architect of the scheme, says: 'There are going to be 3,500 children's centres by 2010 – there was nothing like this in 1997.' He is surprised the government has not made more of it. But he believes it would have been wiser to see the results of evaluation before increasing the programme from Brown's initial 200 schemes to 850 and now 3,500. 'I think the children's centre programme was expanded far too fast. It could have been evaluated much more carefully,' he says.
He suggests that the poorer than expected initial results from Sure Start and teething troubles with tax credits might have had the same cause. 'Part of the problem is that, a lot of the time, the Treasury doesn't know anything,' he says.
'They may be very clever, but they don't have daily dealings with professional groups, pressure groups... so the policies might not be so thought through... sometimes these things can go off a bit at half-cock and get carried away by people who are not held down by knowledge.' He adds: 'Maybe the rush to get the tax credit system in place has led to the IT problems.'
The third key element of Brown's poverty-busting programme has been child trust funds – the manifestation of his asset-based welfare policy. The scheme, introduced in 2002, gave every child £250 – or £500 in lower income families – in an individual trust fund account.
A quarter of the funds have remained untouched so far. Green points out that as children can't access their trust funds until they reach adulthood, they don't mean much as a child poverty measure. 'Perhaps the money could have been better spent... while children are children,' she says.
But Pearce defends the policy – not surprisingly as the IPPR urged the government to take up asset-based welfare. The think-tank's research has found that ownership of assets has an independent positive effect on life chances, he says. 'It would be a profound shift for everyone in this country to have some serious financial assets, and not just the middle classes.'
But Chote sides bluntly with Green. 'This is a policy that's not at all well focused on child poverty or as a poverty reduction method anyway. It's more about contributing to a savings culture.'
He is not impressed by the asset-based welfare measure. 'I'm not sure that given the size of the payments we're talking about at the moment that you can make that argument very strongly.' The scale of the payments is nothing compared with the value of an inherited house. Heavier taxation on inheritance and redistributing the proceeds would do more to equalise assets, he suggests.
So what will the future make of Brown's social welfare chancellorship? The long-term measure of its success may well be the child poverty targets and whether they will be met.
Pearce says meeting the targets is 'about to get tougher, because it will cost'. Chote agrees, saying it is an open question whether the UK can 'achieve Scandinavian levels of child poverty without Scandinavian levels of public expenditure'.
The government might need either to fall back on cash transfers through traditional benefits to hit the targets, or say sorry and admit that the targets might not be fully met, he says.
This is a view borne out by the Joseph Rowntree Foundation in a report published last week, which said the government would have to spend at least an extra £4bn a year on benefits to meet its pledge to halve child poverty by 2010. If government policies remain unchanged, the report warned, it would take until 2020 just to meet the 2005 target of cutting child poverty.
Pearce suggests, however, that while Sure Start's effectiveness is still an open question, it could have an impact on the child poverty targets because its effects will be felt more in the long term.
'There's one question mark over having clear targets for child poverty in 2005, 2010 and 2020. If you're having regular short-term mileposts to meet, there's a natural tendency to take the easiest route, which is cash transfers,' he says. 'But you could make the argument that investment in services – Sure Start – might well be the best way to get where you want to be in 2020.'
That date is still a long way off. Perhaps, as with the final instalment of the Blair-Brown soap opera, we will have to wait and see.
PFjul2006
