Budget 2020 - a different government?

Raj Patel

A new focus on measuring outcomes and ‘levelling up’ could make more use of data from longitudinal studies

The media headlines following the budget were clear. An end to austerity and a real growth in public spending. There were effectively two budgets – a short-term response to Covid-19 and a long-term drive to invest in infrastructure, research and development, and broadband. Investment spending is expected to average 2.9% of GDP over the next 5 years, the highest in modern times, with a real-term increase of 2.8% in current spending between 2020-21 to 2023-24. With some of this substituting previous European Union spending, a more realistic growth in current spending is estimated at 2.1%.

Experts don’t think the spending plans are as generous as they sound, and some have questioned whether the balance between capital and current public spending is right. Once the increase in health, education, defence spending, and settlement for Scotland, Wales and Northern Ireland are accounted for, current spending for everyone else will remain extremely tight. The combined capital and current spending stimulus is, however, welcome as we enter choppy waters, with an extremely uncertain economic outlook, poor productivity in key parts of the UK and the nature of EU trade deal to be decided – all while facing a climate emergency and the Covid-19 virus outbreak.

Looking beyond the financial analysis, the Treasury’s Red Book shows that it will prioritise four policy areas in the forthcoming comprehensive spending review (CSR):

  • levelling up economic opportunity across the country by investing in infrastructure, innovation and people
  • improving outcomes in public services
  • strengthening the UK’s place in the world
  • reducing carbon emissions and improving the natural environment.

There are also two operational changes which present a new opportunity for using UK’s longitudinal and cohort studies. These partly depend on using data as a strategic asset to improve evidence-based policymaking and the government’s long-term impact.

A focus on outcomes

Firstly, the government is developing medium- to long-term priority outcomes against which spending decisions can be made and metrics introduced to measure performance. These priority outcomes and metrics will be published as part of the CSR.

More specifically, it wants to “put the UK at the forefront of international approaches to driving public value”. This means getting better outcomes from public spending and assessing the real impact of government activity on people’s lives. Of course, this is not necessarily a new challenge but the government is introducing a new public value framework. This will require departments to link their spending proposals to the outcomes they intend to achieve. The framework, first proposed by former No.10 Delivery Unit chief Sir Michael Barber in November 2017, has been revised by the Treasury.

Departments will also be required to produce plans to improve evaluation of their own performance, with the Treasury hoping that “this will lead to more evidence-based allocation of public funding and better outcomes in the long term”. However, social issues don’t come knocking on the door of individual departments, and mobilising resources and effort across departments, has always been challenging.

Indeed, Scotland and Wales were already off the starting line much earlier. The Scottish Government’s National Performance Framework “aims to get everyone in Scotland to work together”. In Wales, the government has set out well-being goals in the Well-being of Future Generations (Wales) Act and established a Future Generations Commissioner for Wales who can take a longer-term perspective, driving integration and report on progress.

Levelling-up places or people?

The second dimension of the government’s approach relates to its “levelling up” agenda, which will be accompanied a National Infrastructure Strategy and an English Devolution White Paper. Whether one is talking about ‘left-behind places’, spatial inequalities, regional variations in productivity or highly differential spending in transport between London and the rest of the country, how can the government redistribute public spending in favour of regions outside London and the South East?

The significant increase in investment spending clearly provide an opportunity to target new spending to tackle structural challenges – but the vast majority of public spending will still be tied up in delivering mainstream services across the country.

The Treasury’s ‘Green Book’ guides and directs government policy and investment decisions. Unsurprisingly, often areas with stronger economies come out more favourably when assessing the business case for projects. The key criticism has been that funding has been overly concentrated on economic returns, without adequately weighting social benefits – whether this is improving the health and wellbeing of people living in poorer areas, or reducing productivity gaps. In fairness, the Green Book does allow for other kinds of benefits to be taken into account.

Of course, levelling up places, itself tremendously challenging, will not necessarily result in ‘levelling up’ people who live in those places. For example, attracting graduates can help level up places and may even have some spillover effects for the rest of the population. But as our policy briefing The Industrial Strategy: Building a more productive society (PDF) shows, while local growth can provide new opportunities for workers to switch firms and earn more, such growth is proportionately more likely to benefit those in higher skilled occupations.

So in the long-term could revising the Green Book lead to a ‘Barnett formula’ for the regions? Probably not – unless there is a more radical shift away from centralised decision-making. Increased capital investment will not be enough without ‘bending’ mainstream spending to less prosperous area, particularly in areas such as education and skills.

Making practical use of research

Of course, this government may ultimately be defined by the coronavirus crisis but, in the context of the 2019 General Election results, the Red Book does reveal a desire for change.

In the last year, we’ve seen research use our data to address a range of issues:

2020, therefore, is an opportunity for researchers to start knocking on departmental doors.
 

Author

Raj Patel

Raj Patel is Associate Director of Policy at Understanding Society, focusing on how data can be used to address the challenges society faces.