(12 years, 10 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Mr Graham Allen (Nottingham North) (Lab)
Early intervention not only requires no new net public expenditure, it is also the biggest deficit reduction programme that we have. If we implement it properly, it will produce results beyond the Chancellor’s wildest dreams. We need to change our default public expenditure culture, which is one of late intervention, to one of early intervention. Late intervention is expensive and not very effective. Early intervention, by contrast, is inexpensive and highly effective.
I shall give the House an example. Delivering the intensive health visiting service of the family nurse partnership to 115 teen mums and their babies in my constituency costs about the same as putting three 16-year-olds in a secure unit for a year—an average of two of whom, incidentally, will reoffend. Family nurse partnership services delivered in the first years of life can reduce the number of arrests at the age of 15 by 80%. So dealing with several hundred individuals and doing so effectively costs roughly the same amount as failing to deal effectively with three young people, 16-year-olds, later on in life.
Andrea Leadsom (South Northamptonshire) (Con)
The hon. Gentleman and I are in huge agreement on this subject. Does he agree that more than 80% of long-term prison inmates suffer from problems that stem back to early infant attachment?
Mr Allen
Indeed, and the costs are absolutely enormous and continuing. They continue through the generations, whereas one effective early intervention costs only for the one occasion, does not need to be repeated and proves to be very effective.
I make many recommendations in my recent report for Her Majesty’s Government, “Early intervention: Smart Investment, Massive Savings”. The ones I would particularly like to talk about tonight involve the Treasury. I ask the Minister for her first thoughts on these recommendations. I am very grateful for the assistance I received from the Chancellor, the whole Treasury team and, indeed, Treasury officials—and, above all, from the Minister herself. She helped me in various ways—although the faults in the report are entirely my own—to make the second report a practical and pragmatic programme of work rather than a flight of fancy.
There are no magic bullets. This is all about a practical, long-running and consistent effort to try to bring social and emotional capability to our babies, children and young people, which will repay us over and over again throughout the life cycle, as we avoid the costs associated with drink and drug abuse, teenage pregnancy, a lifetime on welfare benefits, educational underachievement, and so on and so forth. That benefit can come from just a little bit of early investment.
The key relevant recommendations to the Treasury concern the comprehensive spending review; rebalancing central Government spending from late to early intervention; a Whitehall task and finish group, which I shall talk about; a serious proposal for departmental payments, introducing a payment-by-results system effectively across Whitehall; liberating our local authorities so that they can be our partners in pursuing early intervention policies; and using the 2012 Budget to incentivise early intervention investment. I propose to look at each of those in turn.
First, I have suggested that the Treasury consider theming the next CSR around early intervention. The usual cross-departmental effort that goes in ahead of every CSR should be directed at early intervention across all Departments. That includes the research programme and the evaluation, which should be used to assess what is being spent on early intervention by Departments, thus providing a baseline from which we can judge the costs, benefits and potential savings to taxpayers from early intervention policies and programmes.
This CSR preparation should also include commissioning long-range surveys, studies and longitudinal programmes so that we can add daily to the evidence base for early intervention and its role in saving massive amounts of taxpayers’ money from being captured by the long-term costs of failure. Above all, doing this in the CSR will symbolise the Government’s approach and the switch in philosophy to give strong signals to Departments throughout Whitehall and indeed in local areas. We will thus be demonstrating that we are moving from talking the talk to walking the walk.
I want to put on the record that it is evident from the discussions I have had with all parties and with all party leaders, including the Prime Minister, that there is a very strong desire to move—incrementally, admittedly—across this divide between our typical, traditional late intervention policies and early intervention. This is not just to save money; it will also help to make good many of the social failures that arise because we do not tackle problems early enough and let them get rooted before we start to invest money in them—often too little, too late.
The second issue is the rebalancing of funding in Departments. It is easy to demand big switches of financing from one place to another, but that is a pipe dream that we did not entertain in the report. What we did consider was the fact that we have spent billions of pounds, decade after decade, often with only marginal impacts on, in particular, the social and emotional capabilities of babies, children and young people, especially those in poorer areas and constituencies such as mine. We discussed how we might push back the spending and personnel juggernaut of late intervention, and start to invest, gently and incrementally, in early intervention.
A great deal of evidence was given to my inquiry. One of our proposals is a gentle shift—within departmental budgets, and involving no extra money—from late to early intervention. Following discussions with Departments, I propose—modestly, I hope—not a top-slicing of budgets to a pooled early intervention fund run by one Department or another, but a slow, incremental migration of funding, within existing budgets, from late to early intervention. I proposed that it should amount to just 1% a year, which is incredibly modest. It would be possible to move such spending slowly and relatively easily, and no additional spending by Departments would be required.
In education, for instance, an obvious way of using an existing function, organisation or budget head would be through the early intervention grant itself, which currently amounts to £2.2 billion. That would be a good home for the start of a transition from late to early intervention. Similarly, £55 billion is spent on children and children’s services in the United Kingdom. A minor adjustment, in percentage terms, made incrementally on an annual basis could begin to shift us from the costs of failure to investment in the success of our babies, children and young people.
The Department of Health, the Home Department and the Ministry of Justice already have machinery for such an incremental change. They run prevention programmes of various sorts, all of which could be steadily and progressively geared up. Such a reorientation of internal spending could also provide some of the resources needed to pay investors for the outcome-based contracts to which I referred in my report, and about which I shall say more later. It could be described as payment by results.
I also propose the establishment of a task and finish group. This may sound an internal, dry subject, but in preparing my report I discovered that although tremendous work is going on throughout Whitehall in different Departments, it is not always joined up; it does not always connect. People do not always know what the next Department is doing, for one reason or another. That is not a criticism of anyone working in those Departments or on those programmes—on the contrary, I was very impressed by the way in which all Departments set about their work—but it is a criticism of the fact that no Governments have co-ordinated such action to the level that I would like to see, a level that would add value if people all worked together.
I have suggested that the existing Cabinet Social Justice Committee should be given more teeth, and that it should have a task and finish group—perhaps with an independent chair, but that is a matter for Government to decide—which could offer an independent eye, and promote Government change via the Committee. Through consistency, long-termism and progress-chasing, it could achieve, through Whitehall, some of the important objectives and milestones that the Government may choose to set in the early intervention strategy that I proposed in my report.
Such a group should, as a matter of course, report to all party leaders to maintain what I hope is the helpful benchmark that has been set of establishing this as a non-party issue. I am delighted to pay tribute to those Members of all parties who have taken this issue so seriously, and the fact that the three main party leaders have kindly said good things about both the first and second reports underlines my belief that this is a non-party issue. Indeed, they have supplied quotes, expressing embarrassingly kind sentiments about the philosophy of early intervention, for the back page of each of the reports. What we now need to do is make a practical proposition, and I hope we can put into effect my recommendation of establishing an effective task and finish group.
Another Treasury-oriented recommendation is our proposal about the Treasury, Departments and local areas introducing a proper payments-by-results system, so that benefits can accrue to central and local government for investing in the right package of policies and getting external investors interested in this field. Central Government need to play a role in co-commissioning, or co-paying for, the outcomes set by local areas. Her Majesty’s Treasury and other Departments would therefore need to work at putting in place methods of accounting to ensure that future payments based on successful local outcomes are honoured. It is obviously a matter of great concern that local authorities feel, rightly or wrongly, that if they are successful they will be penalised by the withdrawal of other grants or financial assistance. When drawing up the contracts and talking to local authorities about this issue, we need to make it clear that their payments will be honoured when they reach the endgame of the payment-by-results exercise.
In my report I have outlined a number of areas where local authorities have an important role to play. I do not have time to go into them now, but one that would bear examination is the possibility of looking again at issuing a capitalisation directive to councils that will perhaps allow up to £500 million of early intervention spending to be capitalised, provided that it is funded through the local bond market. If one accepts, as the Government and the main political parties now seem to, that early intervention represents an essential investment in human capital for future generations, there is a strong case for allowing local authorities to finance that by using money in the same way as they would to finance a bridge or a building.
The final recommendation that the Treasury may want to think about now that my report is in the public domain is to do with the 2012 Budget and whether the Treasury can assess properly the possibilities of incentivising early intervention investment. It was clear from my review that tax incentives would be a popular and effective way of incentivising early intervention and social investment more generally. The possibility of creating a market in social investment and social finance is a prize indeed, and if we manage to create a social finance market within, perhaps, 10 years, that will be a measure of our success.
Of course everyone would like to have an incentive. I did not see it as my role to provide a set of demands to which Government had to say yes or no. However, I would like there to be a serious exercise before the Budget, so that the Government examine all possible ways of sucking into early intervention investment philanthropic, ethical business and retail investors and wholesale investors. That would be extremely helpful. I will say no more than let us learn from the creativity in other countries, such as tax credits in the Netherlands and Australia, and money to contribute to social impact bond payments in the USA. The US President has introduced rule changes so that money can be committed over longer periods than is commonplace in public contracts.
In conclusion, the Treasury often says, rightly, that having less money can drive us all to be more creative and to challenge the old ways and the old rules. One of the threads in the report is that this should apply equally to Government thinking, and to Treasury thinking in particular. Money is scarce, so ideas on how better to spend existing public funds should be encouraged and new sources of funding should be incentivised. Due diligence, which is commonplace in the private sector, should now be used at all levels of government to question the comparative costs of wasteful, late intervention versus early intervention alternatives. Levels of savings to be achieved should be an integral part of all public investment calculations. Short-term cuts that jeopardise massive long-term returns should, of course, be avoided. Rules and methods of working established in a different era, in a different public expenditure environment, need to be reviewed.
If we can do that, and if our friends in the Treasury can take some of these proposals seriously—as I know they would, as they made a strong contribution to my review—we will be on the verge of changing the spending culture in our country, moving from wasteful, expensive spending when problems are deep-seated to pre-emptive and preventive spending to help babies, children and young people develop the social and emotional capability that will see them realising their potential in the same way as we want to see our children realising theirs. This is an important field. In many ways, it is a slow burner, not one that heralds dramatic change. This is a field in which there must be a serious commitment to change public policy on behalf of all parties. If we do that, not only will the benefits to those children be immense, but the repayments to the taxpayer will be massive.
The Economic Secretary to the Treasury (Justine Greening)
There are a number of Adjournment debates that I might have a chance to respond to as a Treasury Minister, but of all of them, this is probably the one in which I would be most keen to participate. The hon. Member for Nottingham North (Mr Allen) has done a great deal of work in an area that for many years was debated on moral grounds—“What’s the right thing to do?” That was absolutely right, but his contribution has been to say why it is in everybody’s interest to address these issues and, in particular, to focus on early intervention. That work will have longevity in this place and beyond. Indeed, I think that I speak for Members across the House when I pay tribute to the work that he has done, not just in contributing to this Government’s policy, but in the years prior to that.
The hon. Gentleman talked about some of the recommendations in the recent, second—and final—report on his review of early intervention. As he knows, we are still looking at those recommendations. I shall not pre-empt the conclusion, but I want to emphasise one thing. He said that he hoped that Ministers would take those recommendations seriously, and I can absolutely assure him that we do. In the time left, I shall try to respond to as many of his points as possible, but I have no doubt that in the weeks, months and perhaps even years to come, we will continue to debate these issues both inside this Chamber and outside it.
I agree that the case for investment in preventive services is clear. As the hon. Gentleman set out in his speech and in his review of early intervention, there is a clear argument. That argument shows that the more that we can do in government and the more that those working with children can do to intervene earlier, the more likely children are both to reach their full potential, as he said, and to develop well both socially and emotionally. Not only are the costs of not doing so significant for them as developing people, but there are financial costs for the rest of society, as he pointed out, including in local communities. So the costs of not tackling these issues are significant and they do contribute to an ongoing negative cycle.
The hon. Gentleman discussed just some of the examples in this area. Let us consider that of children on the edge of care. A three-year study of multi-systemic therapy at the Brandon centre in Camden, which he is probably aware of, has shown that cost savings ranged between £1,200 and £8,900 per family intervention, in addition to there being a reduced risk of offending and family conflict. Data from 10 of those multi-systemic therapy pilots for children on the edge of care or custody indicate that, by the end of the intervention, custody or care was avoided for 90% of children who had been at risk of those outcomes. Of course, children who avoid care are more likely to succeed academically, and are therefore more likely to earn more and lead more fulfilling lives. That is just one example of how powerful early intervention approaches can be.
I want to discuss public spending, because the hon. Gentleman talked about the next spending review being based on the theme of early intervention and said that, in preparation for this, the balance of central Government spending should be shifted by 1% per year from late to early intervention. One of the things that I want to say to him is that in the year and a bit that I have spent as a Treasury Minister I have found that the key to this is something that may seem boring but actually becomes incredibly important. He talked about the need for an evidence base, and I think that he has created that with the work that he has done, as has some of the work carried out in other countries. One of the challenges for the Government is to ensure that we have a good internal evidence base on where our money is being spent.
The hon. Gentleman will be aware of the children and families taskforce that was set up by the Prime Minister, which informed some of our spending review. One of the exercises involved looking at where the portfolio mix of spend currently is, for example, on early years provision. That was not perhaps as easy a task for us as it ought to have been. One of the key things that the Treasury is now doing is progressing what seemed like mundane “accountantesque” projects, such as putting in place a chart of accounts and upgrading the Combined Online Information System—COINS—database so that it is actually one that we can use to analyse data. The “themes” that the hon. Gentleman describes are part of a broader challenge the Government face in understanding where the money is going; we need to understand our normal items of spend and the aim of them. That will give us a chance better to join up the oversight across spending as it happens in different Departments.
I talked about the Prime Minister’s children and families taskforce and in the 2010 spending review we did allocate significant resources to support early intervention. The hon. Gentleman talked about the value of the family nurse partnership programme. We are recruiting 4,200 health visitors and expanding that programme. Of course we have also established the early intervention grant. In doing so, we intend to signal the importance of this agenda that we all care about so much. We have committed to maintain a network of Sure Start children’s centres and, as he knows, to expand the free early education entitlement to disadvantaged two-year-olds. We are also putting in place other measures such as the fairness premium. I hope that we will be able, perhaps in a more sophisticated way, to understand where Government spending is going in relation to early intervention and some of the complex aspects of early intervention. I hope that the projects that we now have running across government should give us a much better chance of doing that as we approach the next spending review. As the hon. Gentleman proposes, we will continue to push on that within the Treasury and across government to make sure that we do understand the costs and benefits of different policies and programmes, both individually and collectively.
One thing that he referred to less in his speech, but which is important, is coming out of the work on early years and that is the need to continue investment. Once initial investments are made, they should be followed up with the individual.
I know that I am going to run out of time, but I want to mention community budgeting and the need to consider budgets from the perspective of the individual who receives the services rather than constantly considering them in silos. We want to address that.
The hon. Gentleman talked briefly about tax measures and he is right to flag up that we should not lose sight of the fact that much of the early intervention agenda has involved money transfers. For us, one challenge is considering how that money is invested, whether we have alternatives and how some of the services and programmes he talks about stack up in terms of value for money for the public and those who receive them when set against some of the more traditional methods we have used, such as income transfers between families, the Government and individuals.
The agenda is very exciting and I know that the Government will have the chance to respond to the hon. Gentleman’s second report. I look forward to taking forward some of his suggestions and developing them.
Justine Greening
I did not realise that. I am delighted because it means I will be able to get through a few more of the comments I wanted to make.
As I mentioned briefly, the agenda is not just about money but about the quality of public services delivered on the ground. The hon. Gentleman talked about joined-up government and we must focus more on that. Community budgeting will help as will stopping ring-fencing at local authority level, but there are broader challenges in how we knit together national and local government policy at that local level. The work he is doing could feed into some of those thoughts.
Just the other week, on 11 July, we published our “Open Public Services” White Paper, which set out the Government’s vision for excellent services. The principles that we have set out of choice, decentralisation, diversity, fair access and accountability will start to open up local authorities’ ability to deliver services more innovatively. The contribution to this agenda made by the charities and organisations we all come across—perhaps the hon. Gentleman more than other Members—will be better able to be made with a more open approach to public service delivery than we have perhaps had in the past.
I also want to talk briefly about a couple of other aspects. The hon. Gentleman talked about the independent foundation he wants to set up and we very much welcome that as it can play an important role in this whole process. He also mentioned the use of innovative financing mechanisms and he was absolutely right. Again, that is one of those boring but important aspects of the agenda. We need to unlock Government financing so that it does not hinder the right projects. He also mentioned payment by results, which is one thing on which we are keen to push ahead across government.
I can see that I have now run out of time—