tag:theconversation.com,2011:/global/topics/spending-review-6202/articlesspending review – The Conversation2020-11-26T17:18:20Ztag:theconversation.com,2011:article/1509832020-11-26T17:18:20Z2020-11-26T17:18:20ZUK government’s foreign aid cuts put girls’ education at risk<figure><img src="https://images.theconversation.com/files/371580/original/file-20201126-21-z25ad4.jpg?ixlib=rb-1.1.0&rect=32%2C24%2C5310%2C3532&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/girl-listening-during-lesson-elementary-school-667978993">Monkey Business Images/Shutterstock</a></span></figcaption></figure><p>The UK government’s 2020 spending review includes a cut in international aid, from 0.7% of gross national income to 0.5%. My research shows that this will have severe effects on the lives of girls worldwide.</p>
<p>Earlier this year, my colleagues and I at the University of Cambridge published <a href="https://www.educ.cam.ac.uk/centres/real/publications/PoliticalLeadershipPaper_FINAL_With%20Forward_Website.pdf">a report</a> highlighting the urgent need for political leadership to address a global learning crisis in girls’ education in low and middle-income countries.</p>
<p>That review was commissioned by what is now the UK’s Foreign, Commonwealth and Development Office. It contained powerful reflections by the foreign secretary, Dominic Raab, who commented: “This problem has a real cost – not only in loss of talent and potential – but on communities, societies, and the global economy … It is time for leaders to step up and act.” </p>
<p>Despite this, the spending review released on November 25 outlined the cut in the 0.7% of national income allocated to foreign aid, a principle supposedly enshrined in law. Chancellor Rishi Sunak stated that this cut was temporary and would return to 0.7% when the UK’s finances allowed.</p>
<p>But cutting this aid, even before one considers the devastating effects of COVID-19, will have real implications for the life chances of millions of young women.</p>
<h2>An urgent issue</h2>
<p>Prior to this year, <a href="https://www.globalpartnership.org/results/education-data-highlights">130 million girls</a> were out of school. This number will have increased as inequality gaps have widened as a result of the COVID-19 pandemic.</p>
<p>The UK’s recent record in addressing girls’ education and that of marginalised children in the world’s poorest countries has rightly gained considerable praise and respect.</p>
<p>The Foreign, Commonwealth and Development Office is responsible for the <a href="https://girlseducationchallenge.org/#/">Girls’ Education Challenge</a> programme, which began in 2012. It has worked across 18 countries to ensure girls there can actually complete their education, through support from communities, stronger school management, and engagement with partner governments. </p>
<p>In September last year, the prime minister himself <a href="https://www.gov.uk/government/news/pm-steps-up-uk-effort-to-get-every-girl-in-the-world-into-school">renewed his personal commitment</a> to supporting the empowerment of women and girls around the world by boosting funding aimed at ensuring they receive a quality education. However, the decision to cut foreign aid leaves a question mark hanging over significant programmes. </p>
<p>Baroness Liz Sugg, who resigned from her ministerial role following the announcement, was the UK’s special envoy for girls’ education. </p>
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<p>In that role, she had been leading an action plan on girls’ education, engaging with a range of researchers and practitioners for its preparation. The plan may still be launched, but the UK’s commitment to stepping up action for the most marginalised girls is called into question in the context of an overall cut in aid funding.</p>
<p>These direct effects are only part of the issue here. Detailed research in low and middle-income countries has emphasised that girls’ education cannot be supported in a vacuum.</p>
<h2>Interlocking factors</h2>
<p>The global <a href="https://www.globalpartnership.org/blog/tackling-covid-19-education-emergency-through-progressive-universalism-approach-public">Save Our Future</a> campaign, which calls for education to be prioritised in responses to the COVID-19 pandemic, focuses on the importance of mobilising resources in general for the poorest countries in the world. </p>
<p>The only way to help girls access school and stay there is to adopt that whole-system approach. That means that foreign aid must also address wider issues that currently limit women’s life chances beyond education. <a href="https://www.dlprog.org/opinions/transformative-political-leadership-for-girls-education">Research shows</a> that progress within girls’ education requires action to support gender equality beyond it.</p>
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<p>So even if the prime minister stands by his commitment to protect girls’ education directly, he will still put it in danger by cutting budgets elsewhere. As researchers in international development increasingly understand, if you remove one part of the programme, the entire structure begins to fall apart.</p>
<p>Where access to education is low, incidents of forced marriage, female genital mutilation, gender violence, teenage pregnancies, and poor family health are high. <a href="https://www.gage.odi.org/publication/they-did-not-take-me-to-a-clinic-ethiopian-adolescents-access-to-health-and-nutrition-information-and-services/">New data</a> shows that before COVID-19, one in three adolescent girls in Ethiopia were likely to be married, compared to one in 15 adolescent boys. These risks are likely to be exacerbated in the context of the current pandemic.</p>
<p>Some commentators have, of course, suggested that foreign aid is often wasted money, and fails to reach the people it is designed to help. The government’s commitment to date to promoting <a href="https://www.gci.cam.ac.uk/dfid-and-fco-merger-open-letter">evidence-based approaches</a> to what works in international development has ensured this is not the case. </p>
<p>Research at the University of Cambridge also indicates that this is a false argument. We recently published research showing that while getting the most disadvantaged girls into school might require a large financial investment, there are massive benefits, with positive <a href="https://www.educ.cam.ac.uk/facultyweb_content/news/spill-over-effects-poorest-children-marginalised-girls">spillover effects</a> for boys too.</p>
<p>Andrew Mitchell, the previous international development secretary, stated in parliament after the announcement of the aid cut that “the 30% further reduction in cash as a result of the cut in [international aid] will be the cause of <a href="https://www.politicshome.com/news/article/minister-resigned-international-aid-baroness-sugg-andrew-mitchell-spending-review">100,000 preventable deaths</a>, mainly among children”. </p>
<p>That echoes the warning of nearly <a href="https://www.bond.org.uk/press-releases/2020/11/nearly-200-charities-call-on-pm-not-to-do-a-u-turn-by-reducing-uk-spend-on">200 charities</a> – not to mention <a href="https://www.thetimes.co.uk/article/five-former-pms-oppose-move-to-cut-foreign-aid-grgblkq2t">five former prime ministers</a> – that cutting foreign aid is an ethical and strategic error. The evidence on the good that the UK’s work has begun to do for the poorest people in the world – particularly disadvantaged girls – highlights the realities of the human cost involved.</p>
<p>In 2019, <a href="https://www.gov.uk/government/news/pm-steps-up-uk-effort-to-get-every-girl-in-the-world-into-school">the government stressed</a> the need for action and leadership on girls’ education. Wherever it chooses to swing its axe on the foreign aid budget, it is now difficult to see how that standard will be maintained.</p><img src="https://counter.theconversation.com/content/150983/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pauline Rose receives funding from FCDO as part of a team on the Girls' Education Challenge Independent Evaluation; for the Research for Improving Systems of Education programme; and for producing evidence reports on girls' education. She has previously worked for a day a week as Senior Research Fellow at DFID (from 2015-2018).</span></em></p>Cutting aid will have real implications for the life chances of millions of young women.Pauline Rose, Professor, International Education and Director, Research for Equitable Access and Learning (REAL) Centre, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1508992020-11-25T17:51:25Z2020-11-25T17:51:25ZCuts to UK foreign aid budget are shortsighted and could damage British interests<p>As part of his <a href="https://theconversation.com/spending-review-2020-the-experts-react-150875">spending review</a>, chancellor Rishi Sunak has announced a cut to the UK’s foreign aid budget, which will be reduced from 2021 from 0.7% of gross national income to 0.5%. </p>
<p>The saving of approximately £4 billion will surely be welcome in some quarters. The impact of dealing with COVID-19 has caused the British economy to contract and Britain is facing an economic crisis which is likely to dwarf the impact of the 2008/9 banking crisis. </p>
<p>Despite the Conservative party manifesto promising to maintain aid spending at the 0.7% level, there has been huge pressure on the spending promise. It is not a popular policy, particular among Conservative voters, and the merging of the Department for International Development (DfID) with the Foreign and Commonwealth Office (FCO) had made a reduction likely even before the impact of COVID was entirely apparent. </p>
<p>However, critics of the cut argue that it is shortsighted and that the UK’s overseas development aid (ODA) budget is money which is very well spent. In fact, foreign office minister Baroness Sugg <a href="https://news.sky.com/story/spending-review-baroness-sugg-resigns-as-government-minister-after-rishi-sunak-cuts-foreign-aid-12142065">has announced</a> she intends to resign in protest at the move. So what benefits does Britain’s ODA budget provide – not simply for developing nations, but for Britain as the donor nation, and how might this cut impact on those?</p>
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<p>The 0.7% spending target for overseas development aid was established by the United Nations in the <a href="https://www.oecd.org/dac/stats/the07odagnitarget-ahistory.htm">Pearson Commission report</a>, published in 1969. For critics of that spending target, the 0.7% figure is outdated and arbitrary and only a very small number of nations actually achieve it year on year. The largest aid donor in the world, the United States, donates approximately 0.2%-0.3% of its gross national income each year, but the size of its economy dwarfs all other donors. </p>
<p>For the UK, this commitment was made <a href="https://www.parliament.uk/business/publications/research/key-issues-for-the-new-parliament/britain-in-the-world/07-of-national-income-as-international-aid/">by Tony Blair’s government</a> and was then enshrined in law in 2015, with a Liberal Democrat private member’s bill being given parliamentary time by the coalition government. For the Blair government, and those that followed it – up to and including Theresa May’s administration – the foreign aid budget was a way of buying influence and friends. </p>
<p>By investing in developing nations, the UK could help to develop emerging markets, and that investment allowed them to reap the financial rewards of close trading links with developing nations. In addition to developing and accessing new markets, the ODA spend allowed Britain to encourage developing nations to engage with the international community in ways the UK thought was beneficial, whether that was encouraging free trade or democratic practices.</p>
<p>Money talks a language universally understood. Supporters of Britain’s ODA budget <a href="https://www.politicshome.com/members/article/for-the-sake-of-british-business-we-must-maintain-our-aid-budget-this-is-why">have suggested</a> that it has been a wise investment by UK PLC. They point to the fact that the majority of the money “invested” in developing nations has led to subsequent <a href="https://www.econstor.eu/obitstream/10419/39976/1/297_martinez-zarzoso.pdf">gains for the UK treasury</a> although the diffuse nature of that relationship make empirical evidence difficult to come by. The select committee which <a href="https://publications.parliament.uk/pa/cm5801/cmselect/cmintdev/596/59607.htm">oversees ODA spending</a> is a formidable organisation because of its cross-party structure and while corruption can occur with ODA spending, the oversight of that spending <a href="https://committees.parliament.uk/committee/347/international-development-subcommittee-on-the-work-of-the-independent-commission-for-aid-impact/">is extensive</a>.</p>
<p>For their part, many of those developing nations were former British colonies – much of the UK ODA budget is spent in former British colonies and Commonwealth member states – and the aid budget allowed the British to create new, friendly relationships with nations which didn’t have the most positive view of dealings with the UK. Any discussion of colonial reparations, as <a href="https://www.theguardian.com/politics/2015/oct/13/jamaica-denies-signing-uk-deal-repatriate-hundreds-prisoners-transfer">happened in 2015</a> when David Cameron visited Jamaica, can be ignored with such an extensive ODA budget. </p>
<p>Additionally, as Britain struggles to maintain a position of international power (particularly post-Brexit when it is no longer part of the EU), a leading role as defender of the developing world gives the UK an influential role and a voice once again in global governance. If you wish to punch above your weight you need to have something to help you land the punch – and in the 21st century, Britain’s role as a <a href="https://www.visualcapitalist.com/mapping-the-global-flow-of-foreign-aid/">leading foreign aid donor</a> has been a key factor.</p>
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<a href="https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Chart showing UK has fifth largest overseas aid budget as a percentage of gross national income in the OECD." src="https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=425&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=425&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=425&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=534&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=534&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371347/original/file-20201125-13-1hhta4w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=534&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">How does the UK’s overseas aid budget compare?</span>
<span class="attribution"><span class="source">Visual Capitalist</span></span>
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<p>The savings that Sunak is expected to make from this cut are approx £4 billion, but the impact could be immense. As many charities will tell you, the key to donation is sustainability. A one-off donation can only do so much, but repeated donations can achieve so much more. </p>
<p>The reduction of Britain’s gross national income because of the impact of the pandemic meant that aid spending was already expected to fall sharply in the next financial year. By cutting the ODA budget further, the government will cut off important development projects. Fewer children in developing countries will go to school, more women will die in childbirth, more people will go hungry. </p>
<p>The impact of that won’t simply be felt in those developing nations which ODA has done so much to help. It will be felt in the UK when those new markets contract, when the deals with developing nations reduce in frequency, when the Treasury receives less in taxation payments. </p>
<p>If Rishi Sunak needs to cut spending – and everyone agrees that money needs to be saved – there are many other places he could sensibly begin. Cutting the ODA budget is shortsighted and potentially damaging – not just to the UK’s collective conscience but our bank balance.</p>
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Read more:
<a href="https://theconversation.com/spending-review-2020-the-experts-react-150875">Spending Review 2020: the experts react</a>
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<img src="https://counter.theconversation.com/content/150899/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Victoria Honeyman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Overseas aid doesn’t just help developing countries, Britain also benefits hugely.Victoria Honeyman, Associate Professor of British Politics, University of LeedsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1508752020-11-25T14:59:29Z2020-11-25T14:59:29ZSpending Review 2020: the experts react<p>“The health emergency is not yet over, and the economic emergency has only just begun.” With a global pandemic for a backdrop, Chancellor Rishi Sunak has announced a short-term spending review for the year 2021. With a freeze on public sector pay, an economy declining more than it has in 300 years and no mention of Brexit, experts from across the country share their reactions. </p>
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<h2>Economy</h2>
<p><strong>Drew Woodhouse, Senior Lecturer in Economics, Sheffield Hallam University</strong></p>
<p>Rishi Sunak <a href="https://www.gov.uk/government/news/spending-review-to-fight-virus-deliver-promises-and-invest-in-uks-recovery">announced</a> £280 billion in his spending review to be spread across several sectors, with little mention of Brexit or the climate crisis. This included £18 billion for COVID-19, £250 million for rough sleepers, £2 billion for transport and £3 billion to local councils.</p>
<p>This came in the context of the <a href="http://cdn.obr.uk/CCS1020397650-001_OBR-November2020-EFO-v2-Web-accessible.pdf">highest levels</a> of borrowing “in peacetime”. What was most stark was that the government cut more channels to growth than it did create them. This spending review focused on short-term government spending policy “plasters”, with considerations of longer-term sustainability measures. </p>
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<p>The most important question in the review was how bad economic forecasts are looking. Economic output is expected to contract by 11.3% this year - the worst result for <a href="http://cdn.obr.uk/CCS1020397650-001_OBR-November2020-EFO-v2-Web-accessible.pdf">300 years</a>. With no expectations to match our pre-crisis trend level until late 2022 and the “<a href="https://obr.uk/box/the-equilibrium-unemployment-rate/">natural level of unemployment</a>” not being met until 2024, this is indeed dire. </p>
<p>There was an undertone in the chancellor’s comments that, to improve the economy’s health, his response should target real growth through indirectly supporting the productive “supply” <a href="https://www.bakermckenzie.com/en/newsroom/2020/10/outlook-for-trade-after-brexit">capacity</a> of the economy – the amount businesses and workers can produce. There was also a formal acceptance that deeply ingrained structural issues, that have gripped the UK for years, should also be at the forefront of a “reform” effort. </p>
<p>At the heart of the crisis is the <a href="https://www.icaew.com/technical/economy/economic-insight/coronavirus-uk-economic-outlook-differences-across-regions">uneven</a> effect it has on regions and communities. So introducing a levelling up fund and <a href="https://www.nationalhealthexecutive.com/articles/spending-review-infrastructure-bank-nhs">an infrastructural bank</a> based in the north of England is a welcome approach.</p>
<p>Then there was contradiction on wages. He announced measures to protect wages of those who earn lower incomes, citing that this could fuel some “marginal” growth, whilst also accepting that this recession has been far worse for low-paid workers than anyone else. Yet by freezing public sector wages (except for NHS nurses and doctors), Sunak restricted a source of economic stimulus at the time we need it most. </p>
<p>Private sector wages <a href="https://www.niesr.ac.uk/publications/dynamics-public-and-private-sector-wages-pay-settlements-and-employment">decline quicker</a> and do not pick up the demand slack, while public sector wages can act as an “automatic stabiliser” in a downturn because they typically <a href="https://www.niesr.ac.uk/publications/dynamics-public-and-private-sector-wages-pay-settlements-and-employment">grow more quickly during recessions</a>. The freeze will also have a worse affect on regions with a <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/publicsectorpersonnel/bulletins/publicsectoremployment/march2019">higher proportion</a> of public sector jobs, which are the same regions already <a href="https://www.ifs.org.uk/inequality/the-geography-of-the-covid-19-crisis-in-england/">worst affected</a> by the crisis.</p>
<p>While effective economic support is vital, it must be part of a wider plan to get the economy going again, restarting growth and supporting job creation. </p>
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<h2>Jobs</h2>
<p><strong>Ernestine Gheyoh Ndzi, Senior Lecturer, York Business School, York St John University</strong></p>
<p>Early on in his speech, the chancellor stated that, despite the pandemic, the UK still has one of the lowest unemployment rates in Europe. But this statement is highly misleading as, in the UK, people in precarious and insecure work – such as those on zero-hours contracts – are considered employed. Indeed, these types of <a href="https://theconversation.com/zero-hours-contracts-have-a-devastating-impact-on-career-progression-labour-is-right-to-ban-them-123066">contracts can have</a> a hugely devastating impact on people’s lives – yet a ban on them has been ignored by the government.</p>
<p>But the headline statement of the day was the pay freeze for all public sector workers – apart from nurses and doctors in the NHS. The chancellor talked of restraining public sector pay levels to retain consistency with the private sector. Yet compared to the private sector, public sector pay has <a href="https://www.ifs.org.uk/uploads/BN263-public-sector-pay-and-employment1.pdf">fallen drastically in the past decades</a>. </p>
<p>Employees in the public sector, especially frontline services, have worked incredibly hard throughout this pandemic. And a pay freeze would likely affect <a href="https://www.iaeme.com/MasterAdmin/uploadfolder/IJMHRM_08_04_005/IJMHRM_08_04_005.pdf">worker morale and performance</a>. </p>
<p>The pay freeze will be interpreted as a lack of recognition and appreciation for the work public sector employees are doing. There is also the risk that this will affect <a href="https://theconversation.com/emergency-service-workers-are-already-at-high-risk-of-burnout-coronavirus-will-make-this-worse-136006">frontline staff’s mental health</a> – which has already been impacted during the pandemic. </p>
<p>The government needs well motivated workers to rebuild the economy that has been hit hard by COVID-19. But this will not be achieved by damaging the morale of workers. </p>
<p>There’s also the fact that the public sector has, for some years, been struggling to recruit and retain staff in areas like the NHS and teaching, and this pay freeze will most likely exacerbate difficulties with <a href="http://www.smith-institute.org.uk/wp-content/uploads/2016/02/From-pay-squeeze-to-a-staffing-crisis.pdf">recruitment and retention of workers</a>. </p>
<p>In this sense, it seems the government still hasn’t learnt its lesson from the impact of the <a href="https://www.epsu.org/sites/default/files/article/files/Impact_of_cuts_final_report.pdf">two-year pay freeze</a> imposed across the public sectors in 2010, that resulted in increased gender inequality and widened the gender pay gap. With the UK economy in its steepest decline for centuries, while a pay freeze may seem like a good solution, it’s likely to create more problems in the long run.</p>
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<h2>Personal finance and pensions</h2>
<p><strong>Jonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open University</strong></p>
<p>Income is the key driver of personal finances. The chancellor has announced an income freeze for all public sector workers apart from NHS doctors and nurses and a small flat-rate increase of £250 for those earning less than £24,000 a year. </p>
<p>The lowest earners who are on the national living wage or minimum wage will also see an increase in their hourly rate from April of 19p to £8.91 an hour. But this still trails behind the <a href="https://www.livingwage.org.uk/what-real-living-wage">“real” living wage</a> that people are estimated to need to meet their living costs of £9.50 an hour (£10.85 in London).</p>
<p>The income tax personal allowance and national insurance thresholds and bands are being increased from April in line with inflation (0.5%). This will give most benefit to people on modest earnings.</p>
<p>The government has also confirmed that changes to the <a href="https://www.ons.gov.uk/search?q=retail%20price%20index">retail prices index</a> (RPI), a commonly used measure of inflation, will go ahead – though not until 2030. This will see the formula for calculating RPI brought into line with the more commonly used <a href="https://www.ons.gov.uk/economy/inflationandpriceindices">consumer price index</a> (CPI) that typically records inflation rates around 1% a year lower than RPI. The retired, in particular, will be affected, if they have private pensions and annuities that are “increased” each year in line with the RPI. </p>
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<img alt="Row of terraced brick houses." src="https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371353/original/file-20201125-23-y9e4y4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Consumers will be enouraged to decarbonise their homes.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/english-row-terraced-house-spring-season-601569743">Pompaem_Gogh/Shutterstock</a></span>
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<p>On the spending side of household budgets, the spending review confirmed funding for the government’s <a href="https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution">ten point plan</a> for green recovery <a href="https://theconversation.com/the-uk-has-bold-plans-to-reach-net-zero-emissions-but-it-must-go-beyond-just-turning-off-the-co-taps-150399">recently announced</a> by the prime minister. In addition to the big push towards electric vehicles, this includes encouraging homes – whose heating and cooking account for around a <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875485/2019_UK_greenhouse_gas_emissions_provisional_figures_statistical_release.pdf">fifth of the UK’s carbon dioxide emissions</a> – to give up their gas boilers in favour of ground and air-heat pumps. But it seems likely that, even with the current <a href="https://www.gov.uk/guidance/apply-for-the-green-homes-grant-scheme">Green Homes Grant</a>, most households will eventually find they need to invest heavily in “greening” their home heating system – though running costs thereafter may be lower.</p>
<p>Overall, personal finances are likely to come under pressure over the next few years as the government starts to bring its finances back to more sustainable levels. But at last it seems this government is taking the need to tackle climate change seriously, which is important as the green industrial revolution holds the promise of jobs and incomes to replace those lost in the pandemic.</p>
<hr>
<h2>Infrastructure and levelling up</h2>
<p><strong>Anupam Nanda, professor of urban economics and real estate, University of Manchester</strong></p>
<p>Infrastructure is key for unlocking economic opportunities and supporting prosperity. Infrastructure investments tend to have very long-term implications for the economy and society. Today’s announcements have put emphasis on using infrastructure spending to support and accelerate economic recovery from the pandemic. </p>
<p>Sunak has tried to address concerns of funding inequality across and within regions with the creation of a £4 billion “Levelling Up Fund”. Local areas can bid directly for support for projects from this fund. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1331585229522415623"}"></div></p>
<p>Using national and regional infrastructure investments to close the regional inequality gap is welcome, as areas such as the north of England continue to suffer heavily from the ongoing pandemic. However, whether this is enough remains to be seen and will depend on how the fund is administered. </p>
<p>The creation of a new infrastructure bank – to be headquartered in the north of England – is good news. This will replace the UK’s involvement with the European Investment Bank and, by encouraging private sector involvement in infrastructure projects, will lead to more streamlined investment. </p>
<p>The spending review also placed emphasis on green and digital infrastructure and renewable energy use. This is very much needed.</p>
<p>Much will depend on the choices and types of specific infrastructure projects, as well as the mixture of national, regional and local investment. The success of these projects will rely on skill development and cooperation across the government departments and agencies involved. It will also demand collaboration across all government levels, down to local authorities.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-local-governments-will-feel-aggrieved-by-this-spending-review-150695">Why local governments will feel aggrieved by this spending review</a>
</strong>
</em>
</p>
<hr>
<h2>COVID-19</h2>
<p><strong>Alex de Ruyter, Professor of Economics and Director of the Centre for Brexit Studies, Birmingham City University</strong></p>
<p>For this fiscal year, the government is still very obviously in “whatever it takes” mode. That remains partially true in certain areas for 2021-22, although in other respects the government is very much looking to scale back support.</p>
<p>Total support due to COVID-19 is estimated to be around £280 billion this financial year. The largest portion is job support – an estimated £53.7 billion on the furlough scheme and a further £19.6 billion on support for the self-employed. A total of £113 billion has been allocated to government departments, of which almost half is for health. A further substantial amount goes directly to the devolved administrations, who have the power to decide how it is spent.</p>
<p>However, this is misleading, since the vast majority is being spent on COVID-related procurement rather than frontline services. Test and trace, operated by the private sector, has been allocated £22 billion (a very large increase from the initial £12 billion). A further £15 billion is for personal protective equipment (PPE), which is eye-catching given the government’s poor record in getting value for money on this. Likewise £2.7 billion is being spent on developing and procuring vaccines. </p>
<p>Next year sees COVID-related support scaled back to a “mere” £55 billion, with nearly half set aside as contingency. The additional recovery money for the NHS seems miserly – that only £1 billion is being spent on addressing the backlog for elective treatments is particularly concerning.</p>
<p>Funding for councils – £5.4 billion in 2020-21 and £3 billion in 2021-22 – likewise seems tiny relative to increases in demand.</p>
<p>All of the money will be borrowed, although the spending review suggests this won’t be a problem, with government spending on debt interest actually expected to fall very substantially over the next few years.</p>
<hr>
<h2>Armed forces and foreign aid</h2>
<p><strong>Simon J. Smith, Associate Professor of Security and International Relations, Staffordshire University</strong></p>
<p>The chancellor claimed the spending review “strengthens the United Kingdom’s place in the world”, and that the UK will remain “open and outward looking”. However, the financial resources required to make a convincing case for a global Britain were lacking.</p>
<p>Rishi Sunak said the foreign aid budget would be cut to 0.5% of national income (down from 0.7%) in 2021, as retaining the current budget would be “difficult to justify to the British people”. Some of these savings, however, will be allocated to defence. It was announced soon after that there would be £24 billion investment in defence over the next four years, “allowing us to provide security not just for our country but around the world”. </p>
<p>Although it is not stated as such, it would seem there has been a reduction to the foreign aid budget in order to provide savings to boost defence investment. Neither of these announcements came as a surprise, as the prime minister signalled “the biggest defence investment since the end of the cold war” <a href="https://www.ft.com/content/684a9881-c964-478b-b87b-84aa697810f2">on November 19</a>, saying that “the defence of the realm must come first”.</p>
<p>There is no doubt that this is a serious escalation of investment and a demonstration that defence secretary Ben Wallace and chief of the defence staff General Sir Nick Carter have <a href="https://rusi.org/commentary/britain-defences-biggest-spending-boost-cold-war">convinced the Prime Minister to confirm four-year funding for the military</a>.</p>
<p>What will be prioritised for investment? Current suggestions are that the money is for a national cyber force, a space command and an artificial intelligence agency. An even larger question is for what grand strategic purpose these capabilities will be used.</p>
<p>In any case, tough decisions will need to be made in terms of pursuing savings elsewhere in the force. As Michael Clarke, former director general of the Royal United Services Institute thinktank <a href="https://www.ft.com/content/684a9881-c964-478b-b87b-84aa697810f2">put it</a>, which older areas of the armed forces are going to “have to be cut to be able to afford the new bells and whistles”? Moreover, will the British people think these eye-watering costs are justified in the age of COVID and when the government <a href="https://www.bbc.co.uk/news/live/uk-politics-55062425">is set to borrow £394 billion this year alone</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cuts-to-uk-foreign-aid-budget-are-shortsighted-and-could-damage-british-interests-150899">Cuts to UK foreign aid budget are shortsighted and could damage British interests</a>
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<img alt="" src="https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=150&fit=crop&dpr=1 600w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=150&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=150&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=189&fit=crop&dpr=1 754w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=189&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/339451/original/file-20200603-130917-1phwlgk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=189&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em>Listen to Recovery, a series from <a href="https://theconversation.com/uk/topics/the-anthill-podcast-27460">The Anthill Podcast</a>, to hear more about how the world recovered from crises including the Lisbon earthquake, world wars, the collapse of the Soviet Union and the 2008 financial crisis. Start here with <a href="https://theconversation.com/how-europe-recovered-from-the-black-death-recovery-podcast-series-part-one-139896">episode one on the recovery after the Black Death</a>.</em></p>
<hr><img src="https://counter.theconversation.com/content/150875/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anupam Nanda's research has been sponsored by UK and international public and private funding bodies and companies, including UKRI/Innovate UK, the Real Estate Research Institute in the US, UK Foreign and Commonwealth Office, UK Department of Energy and Climate Change, the Investment Property Forum and the Royal Institution of Chartered Surveyors. He is a board member of the European Real Estate Society.</span></em></p><p class="fine-print"><em><span>Simon J Smith received funding from the Economic and Social Research Council for research on the Drivers of Military Strategic Reform.</span></em></p><p class="fine-print"><em><span>Alex de Ruyter, Drew Woodhouse, Ernestine Gheyoh Ndzi, and Jonquil Lowe do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The chancellor’s spending review and what it means for you.Alex de Ruyter, Professor of Economics and Director of the Centre for Brexit Studies, Birmingham City UniversityAnupam Nanda, Professor of Urban Economics & Real Estate, University of ManchesterDrew Woodhouse, Senior Lecturer in Economics, Sheffield Hallam UniversityErnestine Gheyoh Ndzi, Senior Lecturer at York Business School, York St John UniversityJonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open UniversitySimon J Smith, Associate Professor of Security and International Relations, Staffordshire UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/642962016-08-23T04:38:17Z2016-08-23T04:38:17ZHow to get a better bang for the taxpayers’ buck in all sectors, not only Indigenous programs<p>A <a href="https://www.cis.org.au/publications/research-reports/mapping-the-indigenous-program-and-funding-maze">report</a> released today by the Centre for Independent Studies (CIS) has drawn attention to the lack of quality evaluations being conducted on Indigenous programs. </p>
<p>The report identified 1082 Indigenous-specific programs delivered by government agencies, Indigenous organisations, not-for-profit NGOs and for-profit contractors. It found 92% have never been evaluated to see if they are achieving their objectives.</p>
<p>While it oversteps in some regards, this report raises a very important point: we don’t really know what works if we don’t check. That’s a lesson that applies to all areas of public policy spending, not just Indigenous affairs.</p>
<h2>A bit of perspective</h2>
<p>The <a href="https://www.cis.org.au/app/uploads/2016/08/rr18.pdf">report</a> asserts:</p>
<blockquote>
<p>Indigenous-specific funding is being wasted on programs that do not achieve results because they are not subject to rigorous evaluation.</p>
</blockquote>
<p>This is a contradiction. With no rigorous evaluation, how could we know if it’s a waste or not? The point should be that we mostly don’t really know if those programs are improving outcomes. But a lack of evaluation is indeed a major problem, and we can do better.</p>
<p>The report only addresses Indigenous programs but it’s important to note the issues raised are not confined to Indigenous programs. I was not entirely surprised by these findings because I have seen similar patterns in other sectors, such as education spending. </p>
<p>A recent <a href="http://www.nber.org/papers/w22130.pdf">paper</a> published by the US’ <a href="http://www.nber.org/">National Bureau of Economic Research</a> reviewed the evidence from randomised evaluations on the impact of education programs (not confined to Indigenous programs) in developed countries. Of the 196 experiments it identified, only two were conducted in Australia.</p>
<p>If we were to withdraw funding from all programs conducted by Australian governments whose impact has not been verified through rigorous evaluation, then I don’t think we’d have many programs left.</p>
<p>That said, it may be that rigorous evaluation for Indigenous programs in Australia is of extra importance. In other areas (take education or design of the income support system), it is perhaps easier to piggy-back on the rigorous evaluations conducted in other countries; taking evidence “off-the-shelf” from overseas.</p>
<p>The CIS’ report is correct to draw attention to the paucity of rigorous evaluations. It feels good to spend money on Indigenous programs, just as it feels good to spend money on all worthy causes. But greater investment on evaluating those programs would almost certainly be money well spent, as long as the evaluations are of high quality.</p>
<h2>Not all evaluations are created equal</h2>
<p>We need to be very aware that not all evaluations are equally compelling. There can be a temptation for government departments to conduct tokenistic, low-quality evaluations that tick-the-box for a program being evaluated. </p>
<p>Many evaluations rely only on asking program participants or workers if they believe that a program has had a favourable impact. While such work has merit, it doesn’t actually measure impact. We don’t rely only on such evidence in medicine. Nor should we for social policy. </p>
<p>Such evaluations are usually inconclusive, which has the added benefit of not risking embarrassment to the minister championing the program. </p>
<p>We have made tentative steps toward fixing this problem. The Productivity Commission convened a roundtable of experts in 2009 on the topic of <a href="http://www.pc.gov.au/research/supporting/strengthening-evidence">Strengthening Evidence-Based Policy in the Australian Federation</a>.</p>
<p>In his <a href="http://www.pc.gov.au/research/supporting/strengthening-evidence/13-chapter10.pdf">submission</a> to the roundtable, Andrew Leigh – then a professor of economics at the Australian National University, now the shadow assistant treasurer – outlined what he called a “hierarchy of evidence” that would help policymakers better understand what social programs were actually worth the money and effort:</p>
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<a href="https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=423&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=423&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135085/original/image-20160823-18734-1d5s430.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=423&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="http://www.pc.gov.au/research/supporting/strengthening-evidence/13-chapter10.pdf">Evidence-based policy: summon the randomistas? Andrew Leigh, 2009</a></span>
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<p>Leigh’s proposed hierarchy itself may need more scrutiny, debate and refinement. My view is that studies relying only on <a href="https://en.wikipedia.org/wiki/Matching_(statistics)">matching</a> or <a href="http://www.statsoft.com/Textbook/Multiple-Regression">multiple regression</a> are a lower grade of evidence than genuine <a href="https://theconversation.com/reimagining-nsw-tackling-education-inequality-with-early-intervention-and-better-research-57483">quasi-experimental work</a>.</p>
<p>The CIS report recommends:</p>
<blockquote>
<p>All programs receiving taxpayer funding should be subject to independent evaluations. At the same time, governments and organisations should cease collecting data that does not make a valuable contribution towards improving the level of knowledge about the effectiveness of programs.</p>
</blockquote>
<p>I think we need to go further and ensure that we conduct the best possible evaluations. This includes conducting randomised trials as part of the mix. </p>
<p><a href="https://thenumbercruncherdotorg.wordpress.com/2013/02/03/poor-indigenous-economics-part-i/">Nicholas Biddle</a>, a quantitative social scientist at the Australian National University, has asked whether the challenges facing programs targeting Indigenous people in remote Australia may have similarities to those targeting poverty in developing countries.</p>
<p>If so, then we should consider drawing on the considerable experience of the leaders in such evaluations, such as the <a href="https://www.povertyactionlab.org/">Abdul Latif Jameel Poverty Action Lab</a>, a network of professors who argue for policy informed by scientific evidence. Importantly, the Indigenous community must be involved in every step.</p>
<p>The CIS plans to follow up their report with a detailed review of the evaluations that have been conducted of Indigenous programs. </p>
<p>Whatever it finds, it is clear that more prominence should be given to understanding the variation in the quality of evidence.</p><img src="https://counter.theconversation.com/content/64296/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Siminski has previously received funding from the NSW Department of Education. </span></em></p>A new report highlights how little we know about what works and what doesn’t when it comes to publicly-funded Indigenous programs. It’s a similar story in other policy areas – but we can do better.Peter Siminski, Associate Professor of Economics, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/583332016-04-28T11:10:44Z2016-04-28T11:10:44ZIf you think the NHS is going to receive an extra £8.4 billion, think again<p>It was clearly stated in the Conservative election <a href="https://www.conservatives.com/manifesto">manifesto</a>: “We will spend at least an additional £8 billion by 2020 over and above inflation to fund and support the NHS’s own action plan for the next five years.” But close scrutiny of November’s <a href="https://www.gov.uk/government/topical-events/autumn-statement-and-spending-review-2015">spending review and autumn statement</a> reveals the government has chosen its words very carefully – and that it’s not obvious how much truly “additional” money is being provided. </p>
<h2>How much has been promised?</h2>
<p>In fact, in January 2016, the government promised a total of <a href="http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/health-committee/impact-of-the-comprehensive-spending-review-on-health-and-social-care/written/27323.html">£10 billion</a> over the course of the parliament, with <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382327/44695_Accessible.pdf">£1.5 billion</a> provided in 2015-16, and £8.4 billion thereafter. In announcing the settlement, the Department of Health reported the “<a href="https://www.gov.uk/government/news/department-of-healths-settlement-at-the-spending-review-2015">cumulative delivery</a>” of the commitment. The £8.4 billion is to be front-loaded, with £3.8 billion given in 2016-17 most of which will be used to deal with <a href="https://theconversation.com/hospital-deficits-are-skewing-nhs-priorities-55459">hospital deficits</a>. This will be followed by £1.5 billion in 2017-18, £0.5 billion in 2018-19, £0.9 billion in 2019-20 and £1.7 billion in 2020-21. </p>
<h2>What’s the NHS getting?</h2>
<p>There are two sets of carefully chosen phrases in the government’s manifesto promise. The first is “over and above inflation”. The second is “to fund and support the NHS’s own action plan”. Let’s take these in turn. </p>
<p>Inflation adjustments allow spending every year to be reported in “real” terms. It is usual practice to use the first year as the baseline and deflate future spending back to this starting point. It would seem safe to assume that’s been done here, particularly as it is stated in the government’s tables that 2015-16 is <a href="https://www.gov.uk/government/news/department-of-healths-settlement-at-the-spending-review-2015">the baseline</a>. But, in fact, the “additional” £8.4 billion is reported in terms of 2020-21 prices. This is not mentioned, but it matters. If we use 2015-16 prices, the “additional” commitment amounts to just <a href="http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/health-committee/impact-of-the-comprehensive-spending-review-on-health-and-social-care/written/28159.html">£7.6 billion</a>. </p>
<p>As to the second set of words, most people seem to believe that “additional” money is going to the NHS and that the Department of Health’s budget will be £7.6 billion (or £8.4 billion) higher in 2020-21 than it is now. But, actually, the government is talking about the budget for <a href="https://www.england.nhs.uk/">NHS England</a>, which is the organisation that will hold the money “to fund and support the NHS’s own action plan”, the so-called <a href="https://www.england.nhs.uk/wp-content/uploads/2014/10/5yfv-web.pdf">Five Year Forward View</a>. </p>
<p>NHS England currently controls around 85% of the Department’s budget and is the national body responsible for commissioning health services. So NHS England is to get a bigger budget. But much of the increase will come from cuts to other NHS organisations and arm’s-length bodies funded from the Department’s budget. This is simply robbing Peter to pay Paul.</p>
<h2>Where are the cuts being made?</h2>
<p>The £5 billion annual budget for <a href="https://hee.nhs.uk/">Health Education England</a>, used to train the current and future workforce, is to be reduced by £1.2 billion, meaning that <a href="http://www.nursingtimes.net/roles/nurse-educators/treasury-looking-at-replacing-student-nurse-bursaries-with-loans/5090805.fullarticle">bursaries</a> will no longer be available to student nurses. The public health grants paid by the Department to local authorities are set to fall from <a href="http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/health-committee/impact-of-the-comprehensive-spending-review-on-health-and-social-care/written/29950.html">£3.5 billion to just £3.1 billion</a> in real terms over the next five years. This puts at risk plans for a radical upgrade in <a href="https://www.england.nhs.uk/wp-content/uploads/2014/10/5yfv-web.pdf">prevention and public health</a>, unless local authorities somehow make up the difference. </p>
<p>And the Department’s capital budget will fall in real terms from £4.8 billion in 2015-16 to £4.4 billion in 2020-21. This will hinder the uptake of new technology and reduce the <a href="http://www.oxfordreference.com/view/10.1093/oi/authority.20110803095547686">capital-to-labour ratio</a>, the <a href="http://cep.lse.ac.uk/pubs/download/special/cepsp31.pdf">likelihood</a> being that this will reduce NHS productivity. </p>
<p>Of course, the increase to NHS England’s budget isn’t solely to be funded from cuts elsewhere. The government is providing some truly additional funding over and above inflation. But rather than “at least an additional £8 billion by 2020”, the real terms increase compared to 2015-16 amounts to just <a href="http://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget">£4.5 billion</a>. </p>
<h2>Lowest funding increase in NHS history</h2>
<p>The language used by the Department continues to imply that more money is being provided to the NHS than is truly the case. The announcement of an extra £2.4 billion a year for <a href="http://www.bbc.co.uk/news/health-36087286">GP services</a> is the latest example. “Extra” means additional to existing spending on GP services – not that the Treasury is providing extra money for this initiative. Rather, once again, it is to be funded by diverting funds from elsewhere, but where the cuts will be made has <a href="https://www.england.nhs.uk/ourwork/gpfv/">not yet been specified</a>.</p>
<p>To reiterate, the government’s spending commitments mean that the Department of Health’s budget will be only £4.5 billion higher in 2020-21 than in 2015-16. The annual funding increases are the <a href="http://www.kingsfund.org.uk/blog/2015/10/nhs-spending-squeezed-never">lowest</a> in NHS history and leave a substantial <a href="https://theconversation.com/does-the-nhs-really-face-a-30-billion-funding-gap-57251">funding gap</a> between what the NHS needs and what it is set to receive.</p><img src="https://counter.theconversation.com/content/58333/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>Andrew Street receives funding from the National Institute of Health Research and the Department of Health's Policy Research Programme but the views expressed are his own.</span></em></p>The government used careful wording to pull the wool over our eyes about NHS spending.Andrew Street, Professor, Centre for Health Economics, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/510572015-11-20T14:22:30Z2015-11-20T14:22:30ZResearch funding: big changes on the horizon leave scientists nervous<figure><img src="https://images.theconversation.com/files/102632/original/image-20151120-404-13s57cf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will we see a repeat of this 2010 protest against planned cuts to science?</span> <span class="attribution"><a class="source" href="https://creativecommons.org/licenses/by/2.0/"> Shane/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Scientists are facing great uncertainty ahead of the UK government’s comprehensive spending review on November 25. Not only is funding for research <a href="http://www.bbc.co.uk/news/uk-politics-34790102">under threat</a>, the government is believed to be <a href="http://www.researchresearch.com/index.php?option=com_news&template=rr_2col&view=article&articleId=1355255">planning on culling</a> many of the agencies that fund research in an effort to make savings.</p>
<p>Now a <a href="https://www.gov.uk/government/publications/nurse-review-of-research-councils-recommendations">long-awaited review</a>, led by the <a href="https://royalsociety.org/">Royal Society’s</a> president Paul Nurse, has recommended that a single body is set up to oversee research funding in the country. While such an arrangement could work well, it is crucial that investment in science is protected. Having one body in charge of many funding streams could make it extremely vulnerable. </p>
<p>The question is whether the government will listen. Just as successive governments have been unable to not meddle with the organisation of the NHS, it is clear from a large number of recent reviews that the government is keen on making significant changes to research. </p>
<h2>Unusual funding structure</h2>
<p>By many international measures, the UK is world-beating in scientific research, and comfortably attracts <a href="https://erc.europa.eu/projects-and-results/statistics">the highest volume</a> of funding from the European Research Council among all EU countries. This is in spite of a fixed research budget which has been <a href="https://theconversation.com/five-years-of-the-tories-creates-uncertainty-for-british-science-41622">eroded by inflation</a> since 2010.</p>
<p>From the outside, arrangements for allocating research funds to universities in the UK may seem overly complex. Individual researchers bid to one of seven research councils, covering disciplines ranging from arts to engineering and medicine, for funding of specific projects. In parallel, the <a href="http://www.hefce.ac.uk">Higher Education Funding Council for England</a> (HEFCE) – and its counterparts in the rest of the UK – provide institutions with block grants based on the quality of research undertaken, informed by an assessment known as the <a href="http://www.ref.ac.uk">Research Excellence Framework</a>.</p>
<p>This “dual support” provides universities with a baseline award covering a fraction of academic staff costs. It also allows researchers to recruit graduate students and post-docs for the highest-priority research projects. In most regards this system works exceptionally well, and the respective agencies have a good understanding of what the researchers they fund need.</p>
<p>But civil servants at the Department for Business, Innovation and Skills – responsible for universities and science – are <a href="http://www.ft.com/cms/s/8b1f3f70-8c64-11e5-a549-b89a1dfede9b,Authorised=false.html?siteedition=uk&_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8b1f3f70-8c64-11e5-a549-b89a1dfede9b.html%3Fsiteedition%3Duk&_i_referer=http%3A%2F%2Fwww.bbc.co.uk%2F906ab90f461ed49c953a3b92e96d6c3b&classification=conditional_standard&iab=barrier-app#axzz3s1ZpZPwk">querying</a> whether seven research councils are really necessary. After all, other developed counties seem to operate effectively with just one. Every so often, reforms to the makeup of UK research councils have been made. Still, there has been much-needed continuity, and five research councils were already in existence 50 years ago.</p>
<p>To date, there have been modest attempts to make the research councils work more closely together. In 2002 an umbrella structure, <a href="http://www.rcuk.ac.uk/">Research Councils UK</a>, was introduced to develop a common strategy for capital infrastructure projects. However, in 2014 a “<a href="http://www.rcuk.ac.uk/media/news/140416/">triennial review</a>” of the research councils came to the conclusion that there was no compelling case to reduce the number of councils. Could it be that the government has chosen to keep reviewing until it gets the answer it wants to hear? </p>
<h2>Single body</h2>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=770&fit=crop&dpr=1 600w, https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=770&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=770&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=967&fit=crop&dpr=1 754w, https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=967&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/102630/original/image-20151120-404-1etqhk6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=967&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Will the government listen to Nurse’s words?</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Paul_Nurse_2007.jpg">University of Exeter/wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>The new single organisation proposed in the review, Research UK, would have overall responsibility for allocating funds and reporting to BIS. However, Nurse also stresses that the existing research councils should retain their autonomy within this new structure. The business secretary, Sajid Javid, however, was most likely hoping the review would recommend a bigger shake-up. </p>
<p>Hopefully, having the current research councils within a single organisation, akin to seven faculties in a university, would give them greater influence. There are worries that recent capital investments in science by the government <a href="https://theconversation.com/state-of-the-nation-government-protection-of-the-science-budget-has-come-at-a-cost-39751">have been directed</a> towards its own “pet projects” rather than long-term strategic investments in infrastructure needed to keep current facilities running.</p>
<p>But there are some thorny issues which remain unanswered. In parallel with the new review, BIS recently published its <a href="https://theconversation.com/explainer-new-look-regulation-on-cards-for-higher-education-50433">Higher Education green paper</a> in which the body responsible for awarding teaching grants to English universities would be switched from HEFCE to a new Office for Students. HEFCE will likely be culled, so which organisation would be responsible for the allocation of block research grants to English universities? </p>
<p>Nurse suggests Research UK could do so, provided the dual-support system remains in place and the current expertise of HEFCE is retained. Still, there are concerns that if all university research funds were administered by a single body, a squeeze on its budget would have a dramatic impact on financial planning in English universities.</p>
<p>Perhaps the most challenging aspect of Nurse’s report involves how to improve the interaction between scientists and government departments beyond BIS. He proposes introducing a ministerial committee, chaired by a senior minister with cross-cutting cabinet responsibilities. This committee would also include other ministers with major science budgets, and would be advised by Research UK and the government’s chief scientific adviser. </p>
<p>Regardless of how research funding is administered, next week we’ll find out whether chancellor George Osborne has been persuaded to maintain – or even increase – the science budget ring fence over the next four years. Osborne has spoken of his desire for Britain to become the best place to do science, so let’s hope that he is true to his word on November 25.</p><img src="https://counter.theconversation.com/content/51057/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Crowther receives funding from the Science and Technology Facilities Council.</span></em></p>A review by Paul Nurse, president of the Royal Society, has said the UK’s research councils should continue to be exist as part of a new quango.Paul Crowther, Professor of Astrophysics, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/402152015-04-16T13:44:46Z2015-04-16T13:44:46ZManifesto Check: Tory defence policy talks tough but cuts deep<p><em>Welcome to The Conversation’s Manifesto Check, where academics from across the UK subject each party’s manifesto to unbiased, expert scrutiny.</em></p>
<p>While the hallmark of <a href="http://b.3cdn.net/labouruk/e1d45da42456423b8c_vwm6brbvb.pdf">Labour’s defence manifesto</a> was <a href="https://theconversation.com/manifesto-check-labour-leaves-the-door-open-to-downscale-trident-40110">brevity</a>, the same cannot be said of the <a href="https://s3-eu-west-1.amazonaws.com/manifesto2015/ConservativeManifesto2015.pdf">Conservative manifesto</a>’s line on defence. Although it contains its fair share of rhetoric as well, the manifesto devotes considerably more space to these issues than its Labour equivalent. </p>
<p>This may not be that surprising given the primacy the Conservatives have traditionally given to these matters, and their disdain for Labour’s record. The party never misses an opportunity to remind the voting public that Labour’s Great Recession (often emphasised with capital letters) weakened Britain on the world stage – and the 2015 manifesto is a case in point. </p>
<h2>Fighting talk</h2>
<p>The section on defence veers between rhetoric and actual policy, and reads more like a mini-National Security Strategy or Spending Review than a template for five years of government. It notes the “£38 billion black hole in the defence budget” left by the Brown government, and that Labour left a gap of “12 years without conducting a Strategic Defence Review”. </p>
<p>This is somewhat uncharitable. The £38 billion figure (more an overspend or deficit than a “black hole”) is <a href="https://fullfact.org/factchecks/defence_spending_38_billion_black_hole-2572">debatable</a>, and while the “12 year gap” is not, long periods between major reviews are historically <a href="http://www.parliament.uk/briefing-papers/SN05714.pdf">not uncommon</a>. </p>
<p>And while it’s hard to quantify claims such as “we have strengthened Britain’s place in the world”, many commentators have recently questioned this one in particular. </p>
<p>The Financial Times, hardly a citadel of the left, has <a href="http://www.ft.com/cms/s/0/0947ebf8-c7f4-11e4-8210-00144feab7de.html#axzz3XN82NnR2">noted</a> that “the principal markers of Mr Cameron’s foreign and defence policies have been drift and retreat.” The Economist <a href="http://www.economist.com/news/special-report/21647789-no-party-promising-renewed-engagement-world-keeping-up-appearances">decried</a> the Foreign Office as “underfunded and demoralised”. When it comes to defence spending in particular, even the other partner in the so-called Special Relationship has signalled that it is “<a href="http://www.bbc.co.uk/news/uk-31688929">very concerned</a>” with the impact of recent cuts. </p>
<p>The government’s claim to have “balanced the defence budget” is <a href="http://www.bbc.co.uk/news/uk-politics-18054731">not new</a>, but as RUSI reported in an <a href="https://www.rusi.org/downloads/assets/201502-BP-MoD-Emerging-Budgetary-Challenge.pdf">analysis</a> of defence spending, it also “relies on the assumption that the equipment budget will grow at 1% above inflation every year, and that the rest of the budget is maintained at real 2015/16 levels.”</p>
<p>This has <a href="http://www.independent.co.uk/news/uk/politics/government-reveals-it-has-balanced-the-defence-budget--but-at-what-cost-to-britain-7746790.html">come at a cost to the British Armed Forces</a>. RUSI <a href="https://www.rusi.org/downloads/assets/201502-BP-MoD-Emerging-Budgetary-Challenge.pdf">found</a> that the bulk of real-terms cuts in spending has been “felt in the personnel budget”. </p>
<h2>Skeleton crew?</h2>
<p>There has been some worry about the size of the British Army after the next spending review. To pay for large capital expenditure equipment costs if you are not willing to increase the defence budget, you have to shrink the force. </p>
<p>That the army will be cut from 100,000 soldiers to 82,000 by 2020 <a href="http://www.army.mod.uk/documents/general/Army2020_Report_v2.pdf">has been known for some time</a>, but there have been recent warnings that it could be reduced to <a href="http://www.telegraph.co.uk/news/uknews/defence/11449136/British-Army-could-be-cut-to-just-50000-over-next-four-years-report-warns.html">as few as 50,000 soldiers</a>. So it is striking that the Tory manifesto commits not to reduce the army to below 82,000 soldiers.</p>
<p>Although the manifesto claims that a Conservative government will “maintain our world class Armed Forces”, there is no specific pledge to ring-fence defence spending; the MoD will most likely not be <a href="http://www.ft.com/cms/s/0/534b4a2c-6ba0-11e2-a700-00144feab49a.html#axzz3XN82NnR2">spared the axe</a>. </p>
<p>This is further exacerbated by the fact that the <a href="http://www.bbc.co.uk/news/uk-10812825">cost of Trident</a> and a large portion of the operational budget <a href="http://www.publications.parliament.uk/pa/cm201415/cmselect/cmdfence/469/46904.htm">comes out of the regular defence budget</a>.</p>
<h2>Spend, spend, spend (or don’t)</h2>
<p>The manifesto recognises that currently “we are meeting NATO’s two targets” of spending <a href="http://www.nato.int/cps/ic/natohq/official_texts_112964.htm">2% of GDP on defence, and 20% of that on major equipment costs</a>. Never mind the fact that this marker is only achieved by <a href="http://www.ft.com/cms/s/0/08e9e07a-c746-11e4-8e1f-00144feab7de.html?siteedition=uk#axzz3XN82NnR2">folding some intelligence costs into the MoD budget</a> – there is also no commitment in the manifesto to maintaining the 2% commitment in the future. </p>
<p>When it comes to procurement costs, the manifesto is quite specific, committing to “invest at least £160 billion … over the next decade” on six Type 45 Destroyers, seven Astute submarines, and an undisclosed number of Joint Strike Fighters, Scouts, Type 26 frigates and Apache helicopters. It also commits to put both the new Aircraft Carriers into service so that “we have one available for use at all times”. </p>
<p>But it is not clear how the defence budget will make sure these behemoths are value for money once they’re in service. Budget shortfalls could severely limit both the number of aircraft deployed to the carriers and the duration of their deployments.</p>
<p>It is no surprise that the Conservatives have pledged to “retain the Trident continuous at sea nuclear deterrent” and “four Successor Ballistic Missile Submarines”, both <a href="http://www.defensenews.com/story/defense/2015/04/09/conservatives-say-4-boats-planned-for-nuclear-deterrent-fleet/25514811/">announced</a> prior to the release of the manifesto. But as the RUSI report above <a href="https://www.rusi.org/downloads/assets/201502-BP-MoD-Emerging-Budgetary-Challenge.pdf">notes</a>, this would require serious trade-offs: replacing the Trident submarines is “due to take the largest share of the forward procurement programme” and “if economies have to be made, air, maritime and land systems could all be vulnerable”.</p>
<p>It is difficult to see how a Conservative government could stick to all of these major equipment expenditures, maintain manpower levels and keep the possibility of military operations open without a defence spend of 2% GDP over the next parliament. And given the party’s dogged pledge to eliminate the deficit, it’s hard to imagine it spending that much.</p>
<p>If the Conservatives get the chance to put this defence plan into policy, something will have to give. Ultimately, it looks like there would be be a tremendous gap between the ambition of the National Security Strategy and a Conservative government’s ability to fulfil it.</p><img src="https://counter.theconversation.com/content/40215/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon J Smith receives funding from the Economic and Social Research Council (ESRC), but this article does not reflect the views of the research councils. </span></em></p>The Conservatives can’t quite figure out how to both cut defence spending and procure new kit the UK can actually use.Simon J Smith, Research Associate, Department of Politics, Languages & International Studies, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/157892013-07-04T13:59:22Z2013-07-04T13:59:22ZOsborne won’t usher in a renewable renaissance<figure><img src="https://images.theconversation.com/files/26919/original/wh96crws-1372945437.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Do they have any idea what they're doing? Or is it all an act?</span> <span class="attribution"><span class="source">Stefan Rousseau/PA</span></span></figcaption></figure><p>In a dramatic flourish of energy policy announcements over the past two weeks, the government’s spending review was merely the first act. </p>
<p>Soon after, a British Geological Survey <a href="http://www.bgs.ac.uk/shalegas/#ad-image-0">report</a> revealed our huge shale gas reserves, the government committed to <a href="http://www.building.co.uk/news/breaking-news/hinkley-nuclear-plant-gets-government-guarantee/5056952.article">underwrite</a> the construction of Hinkley Point C nuclear power station to the tune of £10 billion, and detailed <a href="https://www.gov.uk/government/policies/maintaining-uk-energy-security--2/supporting-pages/electricity-market-reform">proposals</a> emerged for electricity market reforms designed to ensure sufficient electricity capacity to meet peak demand.</p>
<p>These are all significant developments in the policy landscape, but are all geared towards encouraging investment in “traditional” energy generation such as gas and nuclear. They are designed to deliver large amounts of power to plug a potential gap in our electricity capacity from 2015. This is a gap caused by a combination of the closure of some coal-fired and nuclear power stations, and a decade of under-investment. What remains to be seen is whether the government can encourage investment in renewable power.</p>
<p>The key announcement aimed at encouraging investment in renewable power generation is the level of subsidy available from 2014. These subsides will be in the form of <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/65635/7077-electricity-market-reform-annex-a.pdf">Contracts for Difference</a> (CfD) - a contract that guarantees a set price, known as the <a href="http://www.businessgreen.com/bg/news/2277939/breaking-renewable-energy-strike-prices-unveiled">strike price</a>, per kilowatt of electrical output. When actual prices in the market are below the strike price, generators’ revenue is topped up. If market prices rise above the strike price, then generators refund the difference.</p>
<p>Huge capital projects such as nuclear power stations are relatively unattractive to investors because of the amount of money required up-front, with no guarantee of a return. Some forms of renewables, such as offshore windfarms, are also expensive as the technology is new and commercial aspects have yet to mature. The system of CfDs is designed to provide that missing revenue certainty.</p>
<p>All low carbon technologies – nuclear, carbon capture and storage (CCS), and renewables – will be eligible for subsidy, though the strike prices for nuclear and CCS have yet to be published. But it’s already clear that in the world of low carbon power, some technologies are more equal than others, and the level of support offered differs significantly.</p>
<p>Renewables are likely to have contracts for 15 years, CCS for ten years, and nuclear power for up to 40 years. This reflects the time it takes to pay off the enormous capital costs of building nuclear power stations with the profits from generating and selling power. But the implication for which technologies are more attractive to investors is clear: a 40-year subsidy is a much more attractive proposition for investors than a shorter one. And a shorter contract of the length offered to renewable and CCS offered implies a higher strike price in order to ensure an attractive rate of return for investors.</p>
<p>However, support for renewables is limited by the <a href="http://www.greenpeace.org.uk/newsdesk/energy/analysis/everything-you-could-ever-want-know-about-levy-control-framework">Levy Control Framework</a> (LCF), a limit designed to protect consumers from unconstrained price rises, capped at £7.6 billion in 2020. The higher the strike prices, the less capacity can be supported before the cap is reached. So while the market reforms are intended to deliver low carbon electricity, the conditions that come attached may actually scare off investment rather than encourage it. This could threaten the UK’s binding target of generating 15% of its energy from renewable sources by 2020.</p>
<p>Another announcement sneaked out after the spending review was the decision to allow <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210404/130627_Response_to_Call_for_Evidence_on_Renewable_Energy_Trading_Final.pdf">electricity trading with other countries</a>, to count towards its 2020 renewables target. This is despite the UK’s abundant renewable resources of wind and waves, and the conviction of the renewable power industry that it would be able to meet its targets - if conditions are right.</p>
<p>Many have <a href="http://www.publications.parliament.uk/pa/cm201012/cmselect/cmenergy/742/742.pdf">suggested</a> that the new market arrangements are really aimed at encouraging investment in nuclear power, rather than across the board investment in all low carbon technologies. This suspicion has been fuelled by the many other steps the government has taken to ease through new nuclear power stations - changing planning rules, streamlining reactor licensing decisions, and trying (<a href="http://www.guardian.co.uk/environment/2013/jan/30/cumbria-rejects-underground-nuclear-storage">and failing</a>) to find a politically viable solution to nuclear waste.</p>
<p>Everything announced since the spending review seems to confirm this. The concrete measures are directed at conventional generation – nuclear power and gas - and reflect the government’s new excitement about shale gas and fracking. In contrast, new renewable technologies are very much in the second division, undermined by relatively unattractive contracts and a back-door that allows bought-in renewable electricity to meet 2020 targets.</p>
<p>Sadly then, it seems that the UK is preparing to tread the same boards, merely reciting its learned lines in the role of supporting renewable energy, instead of working on developing a new, more sustainable, and innovative approach.</p><img src="https://counter.theconversation.com/content/15789/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bridget Woodman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In a dramatic flourish of energy policy announcements over the past two weeks, the government’s spending review was merely the first act. Soon after, a British Geological Survey report revealed our huge…Bridget Woodman, Course Director, MSc Energy Policy, University of ExeterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/156052013-07-04T06:18:49Z2013-07-04T06:18:49ZWhere next for local growth policy?<figure><img src="https://images.theconversation.com/files/26813/original/c97t3f8g-1372869346.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Michael Heseltine asked for £12 billion, but got just £2 billion.</span> <span class="attribution"><span class="source">bisgovuk</span></span></figcaption></figure><p>Now the dust has settled on the <a href="https://theconversation.com/spending-review-2013-a-triumph-of-politics-over-reason-15577">government’s spending review</a> and the publication of long-term <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209279/PU1524_IUK_new_template.pdf">infrastructure investment plans</a>, where exactly are we with local growth policy?</p>
<p>The coalition’s approach to local growth has been based on three principles: shifting power to local communities and businesses, increasing confidence to invest, and focused investment on “places of potential growth”. The government has also, to a large degree, simply stopped doing strategic planning while centralising innovation, skills, science, trade and investment.</p>
<p>The abolition of well-funded Regional Development Agencies (RDAs) last year formed part of a concerted move away from regional governance towards “<a href="http://www.researchonline.org.uk/sds/search/download.do;jsessionid=514F03845537642612545F5165380E9C?ref=B15156">functional economic areas</a>” as the primary targets of local growth policies.</p>
<p>To replace regional agencies, the government created 39 Local Enterprise Partnerships (LEPs). These are voluntary partnerships between local authorities and the private sector, designed to promote economic growth and job creation within their local areas. </p>
<p>Numerous other initiatives have been launched to go along with LEPs: the Regional Growth Fund and Growing Places Fund, eight City Deals and 24 Enterprise Zones. The local partnerships have also received small amounts of funding directly from Whitehall to cover executive and administrative costs. Local authorities – as key partners of LEPs – are critical to creating the conditions to support local businesses and job creation, but faced with a 43% cut in funding some councils are understandably finding it difficult to help drive sustainable growth.</p>
<h2>Happy partnerships?</h2>
<p>So how is the government expecting these LEPs to promote local growth in practice?</p>
<p>There are 39 LEPs in England, and although each is different, there are similarities between certain partnerships which will shape their success or failure. In particular, some LEPs to date have had minimal resources and capacity at their disposal to boost local growth. Findings from a recent survey of all 39 local partnerships, conducted by Newcastle’ Centre for Urban and Regional Development Studies and University College London, suggested two main challenges:</p>
<p>As the primary vehicles for delivering local growth, LEPs are facing growing expectations. This may crowd out and distort their organic growth as private sector-led, locally-owned, locally-valued and sustainable institutions. </p>
<p>Second, the variability of and competitiveness between local partnerships, stoked in part by the government, could be their “Achilles heel”. With some failing to deliver local growth within a flat-lining national economy, the whole LEP family risks either becomes discredited, or the collectively moving at the pace of the slowest.</p>
<h2>The Heseltine pot</h2>
<p>The spending review saw the announcement of the new Single Local Growth Fund. In his report on local growth released last year, <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34648/12-1213-no-stone-unturned-in-pursuit-of-growth.pdf">No Stone Unturned</a>, Michael Heseltine called for a “major rebalancing of responsibilities for economic development between central and local government”, and proposed a growth fund of £12 billion per annum over four years. George Osborne’s creation of a £2 billion annual “single pot” (equivalent to total regional agency budgets in 2009/10 or 4% of the High Speed Rail 2 budget) has left many disappointed.</p>
<p>The local growth fund is clearly not a panacea, but it could make some difference. Its impact will multiply when aligned with EU structural funding - money designated to improve Europe’s poorer regions - and if it levers in additional private investment. </p>
<p>The sense of frustration with the fund lies in the fact that on devolution and decentralisation, the reality has <a href="https://theconversation.com/regional-cities-lose-out-in-westminster-power-grab-15574">failed to match</a> the government’s rhetoric. The spending review provides more evidence of local areas having to “earn autonomy” to gain the trust of Whitehall.</p>
<p>There is also unease at the hoops local actors have had to jump through to “demonstrate” their ability to manage government resources. The competitive bidding framework used to allocate funding is cumbersome, with the 39 LEPs having to prepare local growth strategies, EU Structural and Investment Fund Strategies and bids to the “Heseltine pot”. The gap between Heseltine’s vision and George Osborne’s reality could halt momentum in certain local areas.</p>
<h2>Cluttered landscape</h2>
<p>With LEPs, City Deals, Combined Authorities, City Regions, Core Cities, Key Cities, Enterprise Zones and more all part of the growing lexicon of local growth, the landscape is increasingly cluttered.</p>
<p>There is likely to be rationalisation amongst some local partnerships, and a streamlining of the relationships between different players. Reaching consensus among the main political parties would help to cement a more permanent place (post 2015) for LEPs and other sub-regional arrangements. </p>
<p>The initial signs are positive. A period of relative stability, genuine devolution and a mature relationship between central and local government would go some way to improving the next phase of the local growth agenda.</p><img src="https://counter.theconversation.com/content/15605/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter O'Brien is a Visiting Fellow at the Centre for Urban and Regional Development Studies (CURDS), and he has acted as a paid consultant for both CURDS and UCL. He used to work for the North East LEP.</span></em></p>Now the dust has settled on the government’s spending review and the publication of long-term infrastructure investment plans, where exactly are we with local growth policy? The coalition’s approach to…Peter O'Brien, Visiting Fellow, Centre for Urban and Regional Development Studies (CURDS), Newcastle UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/155742013-06-28T05:38:38Z2013-06-28T05:38:38ZRegional cities lose out in Westminster power grab<figure><img src="https://images.theconversation.com/files/26340/original/bsv32m9p-1372343986.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Massive budget cuts leave Liverpool in a precarious position.</span> <span class="attribution"><span class="source">nataliejohnson</span></span></figcaption></figure><p>The coalition came to power in 2010 <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/78977/coalition_programme_for_government.pdf">full of talk</a> about ending the era of top down government and shifting power away from Westminster. The intervening years have given us one broken promise after another: the centre keeps grasping for more power, and local governments are feeling the squeeze.</p>
<p>In his spending review statement, chancellor George Osborne held up the Department for Communities and Local Government (DCLG) as the model of “lean government”. Among other massive cuts, the department has seen its local government resources budget reduced by 10%. </p>
<p>It is the more peripheral cities that will suffer the most, with the leaders of Liverpool, Newcastle and Sheffield <a href="http://www.guardian.co.uk/theobserver/2012/dec/29/letters-coalition-cuts-threaten-cities">co-authoring an open letter</a> to the government in late 2012 warning that the existing cuts already threatened their ability to function. </p>
<p>Indeed the leader of Newcastle City Council estimates that some <a href="http://tyneandwear.sky.com/news/article/71961/local-government-spending-cut-again-more-cuts-to-come">£100m of cuts</a> will have to be made to his city’s budget over three years. Liverpool City Council estimates that the cumulative nature of cuts will see their budget reduced by some 52% from 2010 levels, with cuts this year alone <a href="http://www.bbc.co.uk/news/uk-england-merseyside-21692255">totalling £32m</a>. </p>
<p>Council tax has been frozen, saving the average citizen £100. It’s a nice idea, but not everyone will benefit. The most severe economic and social deprivation is consistently found in major cities and, while these places raise the most total revenue from tax, the per-capita totals are often much lower. Thus a council tax freeze will hit these cities significantly harder, while those cities that have higher per-capita totals face fewer cuts to services. </p>
<p>Without the ability to increase council tax, many cities have been forced to raise funds through business levies. They must strike a delicate balance: charge too little and the coffers run dry, charge too much and business goes elsewhere. </p>
<p>All this must be achieved while trying to keeping meaningful council services going, against a backdrop of cuts. Without decent services, an area becomes even more unattractive to live in and less economically viable to potential investors. A nasty spiral. </p>
<p>Local governments can promote growth themselves through various schemes and funds designed to foster enterprise. One <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34648/12-1213-no-stone-unturned-in-pursuit-of-growth.pdf">government-backed proposal</a> by Lord Heseltine recommended a national fund worth £12 billion per year to encourage economic growth through innovation and competitiveness. The amount George Osborne announced in the spending review? Just £2 billion. A large number, to be sure, but this is no panacea.</p>
<p>Perhaps anticipating disappointment, we have seen some local governments turning to alternative means of revenue generation. In early June, Liverpool City Council embarked on such a move, snapping up Everton Football Club’s training ground <a href="http://www.guardian.co.uk/football/2013/jun/11/everton-training-ground-liverpool-council">in a deal worth £12.9m</a>. In return Everton will become tenants of the city council, paying rent each year to use the facility. </p>
<p>Critics have questioned how the city can afford such an outlay while making drastic cuts elsewhere. Mayor Joe Anderson responded by saying that the city had merely used a loan to secure the money – effectively taking out a mortgage on the site. In one year, £13m is a lot of money, especially when thought of in terms of new schools, roads or care homes. The longer term question is <a href="http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2013/06/13/everton-training-ground-could-have-been-taken-over-by-government-had-liverpool-council-not-bought-it-for-13m-99623-33465280/">whether this represents a smart investment</a>, or one the city has simply been forced to make to ensure its survival. </p>
<p>Some <a href="http://www.guardian.co.uk/politics/blog/2013/jun/26/osborne-spending-review-2013-live#block-51cabf60e4b023faee6c7c08">local government leaders</a> have even argued that giving councils the ability to borrow against their assets is the only way to ensure that public service delivery as a whole can be increased. However, this is clearly dangerous, equivalent to remortgaging the house in order to stave off a pay-day loan. The temptation to secure short term gains through massive borrowing will always be present. We need safeguards to ensure that we don’t see a spate of city councils going bankrupt, unable to pay their loans, as has happened <a href="http://usatoday30.usatoday.com/money/economy/story/2011-11-09/alabama-county-bankruptcy/51146416/1">in the US</a>.</p>
<p>The UK has one of the most controlling centre-local relationships of any country in the western world. Indeed, while the government wants our local areas to innovate, they still maintain control of the scope and scale of this innovation. This spending round simply continues this trend, highlighting how much control Whitehall has over the fate of our cities. </p>
<p>Cities have become increasingly innovative as they struggle to keep their finances in shape. But cutting services, remortgaging public property, and taking on football clubs as tenants? This does not represent a sustainable business model that will secure their long-term financial independence from Whitehall. </p>
<p>Rather, these moves show our city leaders have been forced to the gambling table, in a game where the odds are increasingly stacked against them.</p><img src="https://counter.theconversation.com/content/15574/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Nurse does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The coalition came to power in 2010 full of talk about ending the era of top down government and shifting power away from Westminster. The intervening years have given us one broken promise after another…Alex Nurse, Research Associate, University of LiverpoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/155752013-06-27T13:15:01Z2013-06-27T13:15:01ZOsborne’s attack on public servants won’t work<figure><img src="https://images.theconversation.com/files/26337/original/p4q8b8k3-1372330157.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Happy with out-of-date outfits, not so happy about out-of-date salaries.</span> <span class="attribution"><span class="source">Julien Behal/PA</span></span></figcaption></figure><p>George Osborne’s populist attack on public sector salaries made for just the headlines he wanted. He <a href="http://www.independent.co.uk/news/uk/politics/public-sector-workers-to-lose-automatic-pay-rises-as-chancellor-george-osborne-unveils-further-115-billion-cuts-8674782.html">promised to end</a> “automatic progression pay” in the civil service by 2015-16, and to work towards ending it in the education system, the NHS, the prison service and police service. </p>
<p>The issue is a good deal more complex than the easy headlines make it out to be, however. Pay reform will be very tough to implement, and its too early to tell if the political will exists to see it through. </p>
<p>The text of the <a href="https://www.gov.uk/government/publications/spending-round-2013-documents">Spending Round 2013 report</a> can help interpret what has been <a href="https://www.gov.uk/government/speeches/spending-round-2013-speech">announced in the House of Commons</a>. It is inevitably more cautious than the headline writers. But in between the nuanced language of the report and the sensational headlines, we can get a sense of what actually lies ahead for public servants.</p>
<p>The government has only committed to make a plan, not to end pay progression immediately. These plans will undoubtedly take some time to complete and are likely to come under review with the election of a new government, of whatever party, in 2015.</p>
<p>Teachers and workers from the health, prison and police services, are likely to see little change in their progression pay any time soon. It’s clear that some reforms will be taken forward, or are already underway, but there is no clear timescale for implementation.</p>
<p>Many of these workers have not received “automatic progression pay” in many years anyway. For some, progression pay may already be linked to performance. For others, it has been frozen for some time. For the minority who do still receive progression pay purely as a result of time in post there is likely to be a move towards linking progression pay to satisfactory performance. But again, something tells me this won’t happen tomorrow.</p>
<p>Even if the government were being more forceful, there are some real implementation issues involved. Progression pay is typically a contractual obligation, and changing the terms and conditions for public service workers would therefore mean renegotiating all these contracts. Given that there are more than 200 separate bargaining units in the civil service, each with their own pay structures and their own terms and conditions of employment, politicians are likely to avoid this task in the run-up to a general election.</p>
<p>It is important to remember that what is at play here is politics. Whatever happens regarding progression pay in the public sector, the chancellor has set out his stall for the upcoming election campaign. There is an apparent political desire to play to the galleries in <a href="http://www.standard.co.uk/news/politics/spending-review-osborne-slaps-lid-on-welfare-state-and-says-foreigners-must-learn-english-to-get-benefits-8674772.html">stating that</a> “some public sector employees see annual pay rises of 7%”, referring to progression pay as “antiquated” (though it is being retained in the armed services) and drawing distinctions between public and private sector pay.</p>
<p>Again, pay realities are very different for many public sector workers. For example, three quarters of council workers currently earn less than £21,000. Almost two thirds of civil servants earn less than £25,000. Yes, average pay in the public sector is higher than in the private sector. But it is also true that a significant number of low-paid jobs in the public sector have been privatised over the last 20 years. Those who are left are <a href="http://www.youtube.com/watch?v=hjicrrRvnjM">disproportionately employed in professional roles</a> such as doctors, nurses and teachers. </p>
<p>These same professional workers face the challenge of continuing to deliver vital public services such as healthcare and policing with fewer staff and less resources. Additional cuts risk affecting stress levels as well as morale, productivity, recruitment and retention. Nurses, teachers and carers are already among the <a href="http://www.hse.gov.uk/statistics/causdis/stress/stress.pdf">most stressed workers</a> according to the Health and Safety Executive.</p>
<p>At a time when public services are facing such significant change and uncertainty, the biggest challenge for employers will be to find new ways to attract, train and retain skilled public service workers in the future. Cutting progressive pay, or even talking about planning to, won’t help.</p><img src="https://counter.theconversation.com/content/15575/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian C Elliott does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>George Osborne’s populist attack on public sector salaries made for just the headlines he wanted. He promised to end “automatic progression pay” in the civil service by 2015-16, and to work towards ending…Ian C Elliott, Lecturer in Public Services Management, Queen Margaret UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/155272013-06-27T05:54:49Z2013-06-27T05:54:49ZCuts to diversity spending are no great loss for universities<figure><img src="https://images.theconversation.com/files/26260/original/2vs89psk-1372266402.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We still don't know what works when it comes to opening up universities</span> </figcaption></figure><p>In his spending review, Chancellor George Osborne announced cuts to the universities budget, targeted mainly at funding used to encourage students from under-represented groups to apply for university.</p>
<p>Despite getting off reasonably lightly compared to the rest of Whitehall, the Department for Business, Innovation and Skills has been told to cut 6% from its budget. Since spending for science and university research is protected by a ringfence, this means money for student support and national scholarships for undergraduates will be hit. </p>
<p>The department and its funding councils will also need to “reprioritise” the university teaching budget and some universities are already <a href="http://www.millionplus.ac.uk/press-releases/latest-press-releases/million-comment-on-spending-review">warning</a> that this could mean further cuts to widening participation spending - funding for universities to encourage enrolments from a more diverse range of students. </p>
<p>This may not be the end of the world for universities, as the benefits of this kind of spending are yet to be proven.</p>
<h2>Bad data</h2>
<p>Academics, commentators and politicians have all expressed <a href="http://www.guardian.co.uk/higher-education-network/blog/2013/jun/20/social-mobility-university-admissions-debate?INTCMP=ILCNETTXT3487">concern</a> that certain sub-groups of the eligible population are under-represented in university admissions. These include individuals with disabilities, from state schools, living in poverty or certain regions, some ethnic minority groups and older students. Widening participation is a process of trying to correct this under-representation by encouraging applications from disadvantaged students, and by discouraging universities from selecting more advantaged students. </p>
<p>But <a href="http://trentham-books.co.uk/acatalog/Trentham_Books_Overcoming_the_Barriers_to_Higher_Education_284.html">research</a> shows we currently have no idea whether these widening participation policies and initiatives are effective, or even whether they are needed.</p>
<p>There is no evidence that widening participation funding has led to changes in the student intake to higher education. In fact, the available figures show little change over time in the proportion of students from each of the relevant sub-groups above. </p>
<p>There has been no rigorous evaluation of any large-scale widening participation programme. Most purported evaluations rely solely on self-reports from students on their likelihood of applying. Some widening participation activities may have led to excellent results, but we have no idea which these are. This is shocking given that so much effort and money has been spent on these programmes, particularly since the introduction of tuition fees of up to £9,000 in 2012.</p>
<p><a href="http://eprints.bham.ac.uk/269/">The patterns of under-representation in higher education</a> are not as clear as most commentators portray. Women, ethnic minorities and disabled students, for example, are actually somewhat over-represented. White males are the most obviously under-represented but they have been largely overlooked by those seeking to widen participation - at least until very recently.</p>
<p>Of course, there are differences between various ethnic groups and disability categories but this leads to the next problem. So much of the relevant data is missing that tracking changes or differences in small sub-groups is nearly impossible. The second largest ethnic origin classification for undergraduates in England is “not known” (including missing, refused and invalid). This group is larger than all ethnic minority groups combined. The largest occupational classification is also “unknown”, and both missing groups are growing in size over time.</p>
<h2>Start with schools</h2>
<p>The imbalance at university level reflects inequalities that exist from the earliest stages of education. </p>
<p>If we continue to select on the basis of prior qualifications then we will also be selecting on the basis of variables that would be illegal if used explicitly – such as age, sex, disability, ethnicity and social class. </p>
<p>Alternatively, if we reject the validity of the prior qualifications because they are already stratified, then the logical alternative is open access for all who want it – and widening participation programmes are not needed. </p>
<p>Given these unresolved (and even unaddressed) concerns, and if cuts have to be made in education spending, taking money from widening participation is one of the least harmful options. More important is the news that the pupil premium, which provides for under-privileged students cash directly to schools, is to be protected. If schools continue to receive this extra funding, we can tackle inequality much earlier, which could have a knock-on effect at the university level.</p>
<p>Meanwhile, some of the money that is left for widening participation would be well spent on evaluating what really works. </p><img src="https://counter.theconversation.com/content/15527/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Gorard has previously received funding from the Higher Education Funding Council for England and the Department for Education.</span></em></p>In his spending review, Chancellor George Osborne announced cuts to the universities budget, targeted mainly at funding used to encourage students from under-represented groups to apply for university…Stephen Gorard, Professor of Education and Public Policy, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/155772013-06-26T16:15:55Z2013-06-26T16:15:55ZSpending review 2013: a triumph of politics over reason<figure><img src="https://images.theconversation.com/files/26258/original/f3f6tbtg-1372262898.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Osborne: coming after an extra £11.5bn from departmental expenditure.</span> <span class="attribution"><span class="source">PA</span></span></figcaption></figure><p>The spending review is a strange beast. Invented by Gordon Brown, it would normally cover 3 to 4 years instead of a single year – but this one is aimed at 2015-16. </p>
<p>Chancellor George Osborne’s 2010 Review covered a four-year period and was supposed to eliminate the deficit in time for the 2015 election. As we know, this has spectacularly failed to happen, with austerity now planned to go on until at least 2018. </p>
<p>The Chancellor is looking for an extra £11.5bn cut from departmental expenditure (DEL), an extra 2.8% on average across the board. But since 60% of spending is “ring-fenced” in health, schools and overseas aid, this means an 8% average cut on the unprotected departments. Remember that this is on top of the big departmental already planned and implemented (e.g. 27% in Justice). </p>
<p>The reasons for the curtailed one-year spending review include:</p>
<p>• The government doesn’t want to highlight the even more draconian cuts pencilled in for the years after 2016. Cuts for the following two years are predicted to be another whopping 7.6% (see chart below); although in reality some of this will undoubtedly be covered by further tax increases. But don’t hold your breath to hear about these tax increases in the election campaign.</p>
<p>• The government wanted to force Labour to detail their own spending plans. Labour has duly signed up to the government’s spending envelope, and predictably leader Ed Miliband is accused simultaneously of being “weak” for agreeing with the cuts and too weak to implement them.</p>
<p>• The Coalition partners of the Liberal Democrats and Conservatives can’t agree a common programme.</p>
<p>Although these motivations ring true, the basic cause of the spending review is that spending has actually not fallen since 2010. Despite the cuts in departmental money, the costs of pensions and welfare have risen inexorably upwards. On a like-for-like basis the deficit has been stuck at around £120 billion for the last two years and this is because UK economic growth has been extraordinarily disappointing: GDP is still about 2.6% smaller than it was before the crisis - the worst “recovery” for over a century. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=323&fit=crop&dpr=1 600w, https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=323&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=323&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=405&fit=crop&dpr=1 754w, https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=405&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/26257/original/vkk69g7k-1372261618.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=405&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Spending down now, but even worse after 2016.</span>
<span class="attribution"><span class="source">Carl Emmerson, IFS</span></span>
</figcaption>
</figure>
<h2>The big, ugly picture</h2>
<p>So why has growth been so poor? All major nations are still struggling with the economic near-death experience of 2008-09. The implosion of the financial system meant that lending dried up as banks rebuilt balance sheets and households pay down debts. The fact that the UK households were more heavily in debt and that the UK financial sector is relatively large meant Britain took an especially hard knock. It’s true that more fiscal surpluses should have been built up in the 2000s, but as <a href="http://www.independent.co.uk/voices/comment/the-myth-excessive-government-borrowing-got-us-into-this-mess-8601390.html">Simon Wren-Lewis has shown</a>, the idea that the major UK problem was reckless fiscal deficits prior to the bust is a myth.</p>
<p>With private sector retrenchment in full swing and central bank interest rates near zero, the usual medicine would be a fiscal stimulus. This happened during the crisis itself and continued to some degree in the United States. But the UK took a different path after 2010 of rapid deficit reduction through tax rises and spending cuts. Unlike the Eurozone countries bound by the single currency, Britain had a choice when embarking on this fiscal experiment. Unfortunately, the lab results are disappointing - no “expansionary contraction” as households became more confident in the soundness of the public finances. </p>
<p>The impact of austerity was much worse than it might have been as our biggest export market – the eurozone – was administering the same medicine. Although the government has retreated from its initial plans to reduce the debt ratio by next year, the accelerated austerity programme has caused more economic harm than necessary. Ironically, low public investment cuts may have actually made it more difficult to bring down the deficit as slow growth begets higher deficits through lower tax revenues and more welfare payments.</p>
<h2>Capital v current spending</h2>
<p>The Chancellor’s centrepiece of the spending review was infrastructure spending. Such spending is sorely needed for three reasons. The UK has a historical weakness (especially energy, transport and housing); these investments have big knock-on effects on growth; and the government can borrow at rock-bottom interest rates. </p>
<p>There is a consensus that the cuts to public investment of more than 40% since 2010 were a huge policy mistake. Net investment looks like it will average less than £30 billion per year over the next five years, hardly making a major dent on these cuts. The efforts so far to boost infrastructure have been shambolic and ineffective. New orders for infrastructure have dropped to a 25 year low despite the Infrastructure Plan – a glorified wish-list - announced to great fanfare two years ago.</p>
<p>As announced in the last Budget, the increases in infrastructure spending have come at the expense of further cuts to current spending. We will have to wait until Thursday to learn how “£100 billion of infrastructure investment will be allocated over the next Parliament” (ie nothing imminent). </p>
<p>It does look like there will be £9.5 billion more in transport in 2015-16. Although better than nothing, a superior policy would have been to simply increase capital spending without further cuts. Public investment is like borrowing for a mortgage, not borrowing to increase consumption. </p>
<p>The problem of further departmental cuts is that huge reductions on top of the current plans do not lead to sensible policy. For example, the Home Office has been called a winner as it only has an additional 6% fall of budget. Apparently, the cuts of the immigration budget will be much larger. Immigration is one of the surest ways to increase growth. It boosts skills and entrepreneurialism without bad effects on public services, wages or jobs. </p>
<p>The government, however, wants to slow net immigration to under 100,000 per year. Since we cannot control immigration from the EU, the government has tightened up on visas particularly on international students, thus damaging a valuable source of export earnings in universities. Cut-backs will mean slower processing of visas and hence dissuade even more talented people from India, China and the US locating to Britain. A superb example of an anti-growth policy.</p>
<h2>What should be done?</h2>
<p>The end to automatic increments for public sector staff, pooling local budgets and some minor restrictions on Winter Fuel Payments are overdue. But in terms of what should have been done three major things stand out.</p>
<p>First, the Chancellor should increase public investment by £10-£20 billion. Second, there must be a series of reforms announced to change the way we make long-term investment decisions in skills, innovation and infrastructure as proposed by the <a href="http://www.lse.ac.uk/researchAndExpertise/units/growthCommission/home.aspx">LSE Growth Commission</a> and <a href="https://theconversation.com/imf-no-longer-bff-for-osborne-14572">endorsed by the IMF</a>. For example, we need to reduce the policy dithering over major infrastructure projects by reducing political meddling and rewarding local people properly when development takes place. Third, there are a wide number of ways to bridge the deficit such as removing VAT loopholes, ending the tax privileges of corporate debt, increasing the retirement age, and switching money away from <a href="https://theconversation.com/without-curbing-corporate-power-the-g8-have-no-chance-of-combating-tax-avoidance-15153">useless schemes such as Patent Box</a> to better ways of financing innovation. </p>
<p>None of this is rocket science. Public services can be delivered more efficiently with better management, but just cutting willy-nilly without regard to evidence is not sensible. There must be a better way of mending our broken economy.</p>
<p><em>This article also appears on <a href="http://blogs.lse.ac.uk/politicsandpolicy/archives/34500#more-34500">LSE’s British Politics and Policy blog</a>.</em></p><img src="https://counter.theconversation.com/content/15577/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Van Reenen receives funding from the ESRC and is affiliated with the CEPR, NBER and IZA.</span></em></p>The spending review is a strange beast. Invented by Gordon Brown, it would normally cover 3 to 4 years instead of a single year – but this one is aimed at 2015-16. Chancellor George Osborne’s 2010 Review…John Van Reenen, Director, Centre for Economic Performance, London School of Economics and Political ScienceLicensed as Creative Commons – attribution, no derivatives.