Next UK government must link money to social outcomes and early action

Whatever shade of government is painted on May 7th, it will face two huge challenges – tackling both the deficit and a set of persistently poor social outcomes, such as widespread health inequalities or the poor educational attainment of some deprived children and young people.

These twin challenges are daunting enough, but they are also seemingly in tension with each other. Put simply, tackling the deficit requires spending a lot less public money; tackling thorny social issues means spending a lot more. 

Or does it? If government can act early to tackle social problems, can’t it improve outcomes for individuals and families, as well as save taxpayers’ money to boot?

For example, a well-judged package of domiciliary care (£320 per week, according to the Personal Social Services Research Unit) or even a cheap home adaption such as a stair rail can prevent an older person falling. In turn that prevents a broken hip (a hip replacement costs the NHS an average of £5,400) or even permanently reduced mobility (an ongoing package of residential care is as much as £1,000 per week).

Early intervention can make even more sense when applied to earlier points in life. For example in education, in tackling youth unemployment and to improve lifestyle decisions around exercise, eating and drinking.

Why is there not a lot more early action if outcomes are better and it’s cheaper? I am reminded of the fable of frogs jumping straight out of boiling water, but happy to boil to death if water is slowly heated-up.

Public and social services are already many years into a slow, inexorable increase in demand. Meanwhile, the basic tenants of these services have remained basically unchanged for decades if not a century or so. Now the UK is trapped running expensive acute, reactive services, and we have nothing left to spend on prevention just as we need it most.

So what can the next government do to promote more early action, improve outcomes and lower costs? As part of a new book on Early Action, I propose two things. A spot-purchase outcomes revolution and an outcomes-based spending review. 

The spot purchase outcomes revolution requires a ruthless trawl to find every public service that is currently bought on a “spot” market – a public financial market in which financial instruments or commodities are traded for immediate delivery, as opposed to a market in which delivery of the service is carried out at a later date – mainly from private providers, and paid for on the basis of inputs or services. A body such as the National Audit Office would be well-placed to conduct this trawl.

Then, such contracts could be immediately recalibrated onto more of an outcomes basis. Markets don’t need to be reshaped, and contracts don’t need to be cancelled, re-commissioned or re-tendered – that is after all what spot contracts mean.

This is the logic behind the Essex Social Impact Bond tackling children at risk of going into care, or the It’s All About Me Adoption Bond. It is exactly what is proposed by the excellent report by Resonance into the “Winterbourne View” cohort of adults with learning disabilities housed in inappropriate inpatient settings.

The spot purchase outcomes revolution would be quick, relatively simple to enact, provide some short-term incentive to the provider market to innovate around outcomes not inputs, and give commissioners more confidence in embarking on their own more tricky reforms. But it would be limited in its scope.

So in tandem, the next Government should conduct a social outcomes-based spending review in 2015 for the whole of the next Parliament. This would put social outcomes at the heart of public finances, and would provide a much more systemic and longer-lasting approach to embedding early action in public services. It would need to:

• Identify some social outcomes to focus on. I would focus on social outcomes that are both persistently poor, and hopelessly lost between departmental silos: for example NEETs, troubled families, homelessness, and mental health and wellbeing. 
• Make settlements on the basis of these outcomes. This would necessitate re-imagining the concept of Departmental Expenditure Limits (DEL) in managing public finances – as departments would no longer be the only unit of settlement. 
• Learn and build from precedents. Luckily there are some, such as the Better Care Fund, the DfID, FCO and MoD conflict pool and the Social Outcomes Fund.  
• Prevent the Treasury from running the spending review process by itself. The Treasury is driven by the primacy of short-term expenditure control and will not like the concept of explicitly linking long-term social goals to public finances. Don’t just take my word for this, read Nesta’s report on the future of the Treasury. 
• Find a pool of money to allocate to social outcomes not departments. This I admit is the hard bit. The obvious approach is simply to salami-slice departmental budgets harder. Perhaps a more promising way is to treat the social outcomes settlements as capital expenditure not recurrent expenditure. 

More early action and prevention is not a question of why. It is a question of how. I hope that my ideas give some sense of how all the talk around this can be turned into, well, early action.

Photo credit: Chris Jones