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Justify your spending

First published in The MJ on 2 April 2013

As the cuts continue, public services are having to explain to the public that their money is being well spent. George Osborne’s 2013 Budget told us several things.

First, that something about the medicine being administered to our economy is just not working. New forecasts show that estimates for the coming year have been halved relative to forecasts made as recently as December 2012. Five years after the crash and we’re only looking at 0.6% growth in 2013, which means the tough times will keep on going.

Second, that the experiment of trying to cut overall borrowing by squeezing the economy isn’t helping; the debt, far from coming down as promised is still heading up towards 85%, and is not due to peak until 2016/17. Keynesians—those  who said that the priority for getting borrowing under control was to secure growth, which would be best achieved by boosting rather than cutting demand—can afford more than a wry smile.

Third, the Budget told us that the environment for those interested in the welfare of our fellow citizens will continue to be very difficult. Osborne’s figures show that he intends to bring in further austerity measures as we head towards 2015/16 and beyond. Indeed, the very sober and sensible IFS found the projections on spending reductions pencilled in for the future so unlikely that it more or less assumes that whoever wins the next election will, in fact, place more of the burden on tax.

Faced with all this, what do those concerned with the things that public services deliver do, since it is clear that the cuts – especially for local government – will go on and on? Doing things more efficiently will not be enough; decisions will now need to be made about what simply cannot be afforded any more. It will be interesting to see where the breaking point for the public is; politicians would love to know.

Given the strains in this area, it will be important to harness whatever can be accessed in terms of charitable giving to help fill in some of the emerging gaps. It cannot make up for that much of it, but anything is surely worth having.

However, in that context, a recent report by NPC gives cause for concern. Surveying those who already donate around a pound a week to charity, Money for Good UK found that even among these folk who represent around 40% of the population, only a minority thought that you should give to charity—even if you can afford it. This surprisingly weak culture of giving may be a legacy of the post-war years when the boundaries between state, private sector and civil society were drawn in such a way that there were certain things we came to believe were not for charity, but only for the state to provide and worry about. Those days are gone—at least for a long while—but public attitudes have not yet caught up.

Money for Good also dug a little into the reasons why people do not want to give. It seemed to be partly a lack of understanding about how their donation is spent, and whether it achieves anything. If donors felt more confident that their money would lead to results, then the research suggests that some £665m more might be given, and indeed, £1.7bn would be given differently.

With honourable exceptions, charities are generally terrible at explaining what they do and proving it works—and they need to improve. But, is this not also true of public services and local government? In times when people are feeling the squeeze on their incomes and seeing all sorts of cuts in services that many value—from libraries to road maintenance to adult social care—the public sector has got to show clearly and effectively to its ‘donors’ that it is spending its money well. This needs to go beyond simplistic Pickles-like metrics (nobody is paid more than the PM; that there are no fancy chairs in the office), and get into the area of showing that expenditure does actually deliver the sort of outcomes that are claimed.

The fiscal situation is difficult for everybody and people in genuine need are already suffering as a consequence. But, if one result of tougher times is more analysis of what spending achieves and better communication about it, then at least some good will have come of it.