Guest post: The Triple Dividend

Early action – building a fence at the top of the cliff rather than running an ambulance at the bottom – seems like common sense but, across our public services, it isn’t common practise. Why not?

This is one of the questions that the Early Action Task Force set out to address and part of the answer was contained in the Prime Minister’s response to questioning at the parliamentary Liaison Committee last week.

“If you go to the Treasury” he said “and say ‘it’s a spend to save scheme’ they will say ‘thank you very much but we’ve got a budget deficit’. That is where the social finance comes in.  I know that it is complicated and slightly wonky but the principle is simple. If you take an area of policy that is failing badly such as prison spilling on to the streets people who are committing loads of crimes and you say create a bond, put in some private capital and if you can find the solution … we will pay you by results. If you get the result government save money and we pay you for stopping re-offending. . If you don’t…it didn’t cost us anything.”

Social finance, in other words, unlocks the change. Government can’t afford to pay for the fence and the ambulance and it can’t abandon the most desperate to invest in prevention so the “last resort service” – the prison, the children’s residential unit, the mental health ward – gets funded and the prompt interventions that have might have forestalled the crisis condition do not. The creative use of independent investment can break the deadlock, leading system wide transition from acute services to earlier action.

Such transition, the Task Force suggests – in its first report published this week – was never needed more  The nation can no longer afford to wait for trouble, paying, for instance, for the unemployed school leaver who can’t read and write. We need, more than ever, best value for public money and that means investing in reading recovery programmes several years earlier. We recommend “transition planning” for the steady shift of resources from acute services to earlier action and we suggest some of the mechanisms, including the use of social finance, needed to achieve this incremental transformation.

To those in Whitehall who say “it can’t be done” we say look north. The Finance Committee of the Scottish Parliament acknowledged this year that “the current reactive approach to public spending is unsustainable. There must be a shift away from reacting to crises to a greater focus on prevention and early intervention.” They voted for a September budget that included a £500m increase in preventative spending.  “Apart from independence”  Education Minister Angela Constance said:  “preventative spend is the most radical and exciting agenda that this government is pursuing.”

And to those who say that £500m isn’t a lot and that “steady, incremental targets” won’t achieve anything we say look back at the numerous government reports over the last two decades all making the case for earlier action in specific fields. Look at Tony Blair’s first speech as PM in which he warned of the “double jeopardy – worsening social problems and escalating tax bills.” “Government” he said, “must not fall into the trap of short termism.”  We know earlier action makes sense, socially and economically, but bizarrely we don’t do anything because we fear that we can’t do enough. If Blair had gone one step further and committed to transition targets of just 2% a year in ’97 the UK would look very different today.

Earlier action isn’t only cheaper than later action and important for social well being; it helps to reduce the deficit and to increase growth. A population that is well supported and “ready for anything” contributes more, public spending goes down and growth goes up.  This is the “triple dividend“ – thriving lives, costing less, contributing more. And, at the risk of falling out with the PM, it really isn’t all that complicated or even “slightly wonky.”

By David Robinson, Social Finance Board Member and Co-Founder of Community Links

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