Surviving the storm of austerity

8 Aug 23

Whitehall cuts aren’t the only future for policy options, writes Nigel Ball.


Sometimes, in the words of Nobel prize-winning economist Milton Friedman, “the politically impossible becomes the politically inevitable”. It would once have been inconceivable that a party could win an election on the back of calls to cut public spending. Yet, for over a decade, the compelling idea that the nation “maxed out its credit card” in the lead up to the 2008 financial crisis has ensured support for exactly that policy.

Austerity necessitated a relentless focus on optimising public services to be efficient. But the downside of this is becoming ever more stark – a nation with no resilience. Public services tuned-up to tackle presenting demands and nothing more are reeling from the combined shocks of Brexit, the pandemic and persistent inflation. Never-ending strikes and recruitment crises give a window into a system being held standing only by the dedication of exhausted staff. Even so, the true scale of crisis in our systems of social care, housing and criminal justice is largely hidden from view.

Yet, the efficiency mentality is now so deeply embedded, and the apparent scarcity of public funding so acute, it has become hard to imagine a different approach. To break through this barrier, a group of leading thinkers convened in Oxford to come up with new ideas to adjust the dial towards resilience, which are now compiled in a report.

The ideas that emerged fell into four categories.

The first related to the delivery chain.

From Whitehall, through local public agencies, to frontline teams, the system is oriented to cure ills, not to prevent them. But instead of bemoaning a broken system, we need system thinking. We should move away from a transactional mindset that treats citizens like punters at a street market, and focus much more on the whole person, building long-term relationships and aligning the efforts of different services to help people before they hit crisis. The same mentality can be applied to public procurement with relational contracting.

The second category discussed was Treasury spending rules.

Short-term spending control is prized over long-term investment. But instead of saying ‘we can’t do that’, the Treasury needs to help find a way. Public accounting rules are mostly internationally mandated, but there is flexibility in their interpretation. Capital spending was only distinguished from current spending in the early 1990s, but today we can’t imagine any other way. And spending on resilience is not very different from capital spending – a high upfront cost with a long tail of benefits. Treasury could also be forced to be less secretive about certain classifications and submit to the scrutiny of parliament and civil society.

The third area of discussion related to a perceived lack of evidence of what works, and a reluctance to rely on it.

The government has invested intensively in nine What Works Centres, tasked with providing solid evidence upon which to make policy decisions. But the group agreed we need evidence not just on what works but how it works – and in different places and contexts. We must clearly define the desired outcomes while maintaining flexible means.

Lastly, the group discussed politics.

Investing for the long term can feel politically impossible. Yet metaphors like the maxed-out credit card show that even unlikely ideas can win support. We need new analogies that speak to the need for resilience, because a system with eased capacity will be there for you when you need it.

The right arguments could make the politically impossible politically inevitable again.

Image credit | iStock
  • Nigel Ball

    is executive director of the Government Outcomes Lab at the University of Oxford

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