Spend early, spend less, by Graham Allen

31 May 07
Pre-school intervention programmes reap huge rewards for society. But the government needs to use the next Comprehensive Spending Review to do some joined-up funding of local initiatives, argues Graham Allen

01 June 2007

Pre-school intervention programmes reap huge rewards for society. But the government needs to use the next Comprehensive Spending Review to do some joined-up funding of local initiatives, argues Graham Allen

Give me a child for the first seven years, goes the old saying, and you may do what you like with him afterwards. With a few slight amendments, it still makes great sense today. 'Give me a child for the first seven years, and provide the right interventions, and you may save huge sums of public money afterwards.' Common sense and practical experience suggest that early benign influences on a child's life can have a decisive impact – and the earlier the better.

It's a simple proposition, and one that this government has paid some attention to – notably through its successful Sure Start programme. However, Sure Start has its limitations. It is mainly focused on disadvantaged families, and usually not on very young children. Yet there is growing evidence that a more wide-ranging, universal approach – aimed at pre-schoolers and even younger children – could pay enormous social and economic dividends.

James Heckman, the Nobel prizewinner for economics, has demonstrated that pre-school intervention programmes have an economic payback three to six times higher than similarly intentioned programmes post-school. Pre-school intervention produces lasting favourable outcomes on children's lives. They are better prepared for school and achieve more throughout their education. They have fewer physical, emotional and mental problems in childhood and later life. They are more likely to be employable and to earn more throughout their working lives. They are less likely to engage in antisocial behaviour or crime.

All these outcomes are hugely benign – not only for the children but for their families, their neighbourhoods, their fellow citizens and taxpayers. Early intervention reduces future spending on health, social work, policing and criminal justice, social security, training and preparations for employment – and it produces higher future tax yields from higher lifetime earnings.

These are just some of the reasons why my own city of Nottingham aspires to be an Early Intervention City, and our Local Strategic Partnership, One Nottingham, has as its mission 'prevention, pre-emption and early intervention'. It has brought together local and national partners in a city renewal programme that relies significantly on early intervention, and has established many individual pilot programmes. Our initiatives include teaching social behaviour in every primary school, and tackling the city's 50 most difficult families.

It is encouraging that the Treasury has begun to think along similar lines. The Comprehensive Spending Review's January paper on the policy review of children and young people suggested a potential saving of £6bn 'if children with poor education could be raised to the average'. It also estimated the additional costs of not doing so – in terms of the 16–18 year-olds who would not be engaged in education, employment or training – to be at least £8.1bn.

This is likely to be an underestimation, as the costs that children, and indeed adults, with problems impose on society are very hard to quantify. But there is a growing consensus between national and local government, professional practitioners, academics, the voluntary sector and, not least, local families, that early intervention can be an immensely productive long-term capital investment. Unfortunately, our country has not yet found a way of translating that consensus into public policy, especially in the realm of public finance.

Broadly speaking, early intervention programmes suffer from two major problems. First, their funding stems from many different departments and agencies, national and local, each with its own priorities, targets and expenditure cycles. Each separate funder often has its own immediate ambitions and is reluctant to fund cross-cutting programmes that might benefit other agencies far in the future. Secondly, it is all too frequently impossible to translate a successful local pilot into a city-wide or nationwide programme because the funding or the mechanism is not there to achieve the necessary change of scale.

In Nottingham, we are wrestling with these problems. Our pilot programmes are either funded by local partners or assisted by One Nottingham's £15m Neighbourhood Renewal Fund. In the medium term, over the next three to four years, the early intervention elements of these programmes could be sustained through mainstream funds from local partners such as the police, primary care trust and city council.

But it is one thing for local partners to maintain pilots from mainstreamed funds. It is asking too much of them to roll out a successful pilot over the entire city. Local funding simply cannot sustain this, particularly now that public sector settlements are likely to be tougher than in recent years.

For example, One Nottingham is willing to fund a nurse-family partnership as part of the early intervention package. It will cost £700,000 over two years, after which we anticipate that the PCT and other local partners will take over the commitment. But to roll this out across the whole of Nottingham would cost ten times as much, which local partners simply could not afford.

When we transform a local pilot into a permanent programme we need to transform its funding from local finance into permanent public spending. Unfortunately, too little work has been done on how to achieve this transition.

Short-term organisational fixes are not the answer – such as turning the Cabinet Office into a big cross-cutting spender (although we should urgently remedy the lack of any specific budget for social exclusion). The right vehicle for early intervention spending is the Comprehensive Spending Review. It should incorporate a permanent and fundamental comparison of the costs and benefits of early versus no intervention. Such a review would generate a productive shift in public spending towards tackling the causes of national problems at an early stage rather than spending ever-increasing sums of money trying to mitigate their consequences.

A stunning example of the benefits of such a shift is the pay-off from the government's measures to get people into work. For a relatively small amount of initial expenditure, these have converted thousands of unemployed people – a direct drain on the taxpayer and a source of other indirect costs in health and social problems – into working taxpayers, making a positive contribution to the Exchequer. Yet it is far easier and cheaper to change the life of a child than that of an unemployed adult. If we applied the same effort into early intervention programmes as we have done for employment, the pay-off could be even more dramatic.

Such an approach will require two major steps from the Treasury. The first is to analyse and quantify all the positive outcomes of early intervention and use this to create cross-cutting Public Service Agreement targets to reduce social disadvantage. The Treasury will then have to impose these new targets, fiercely if necessary, on individual spending departments.

The second step is to revitalise the concept of 'invest to save', which has been downgraded in recent years. It should establish robust financial tools to enable early intervention investment to be discounted against later savings.

With such tools, we could identify successful early intervention programmes with quantifiable successful outcomes, including the teaching of social behaviour at primary schools, nurse-family partnerships and parenting skills courses. Such programmes could then be treated as prudent investments in human capital. They could be financed by long-term borrowing and safeguarded from the vagaries of revenue spending and the sectional interests of individual funders.

The ability to develop people is now recognised to be a key determinant of national and business success, and much work is in hand to measure the benefits of investment in human development.

In places such as Nottingham we must smash – not merely service – the intergenerational cycle of under-achievement. That can only be done with a substantial early intervention package with the very young. The benefits for individuals, society and our economy will be immense and sustained.

Graham Allen is the Labour MP for Nottingham North and chair of the One Nottingham Local Strategic Partnership


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