Posted tagged ‘observer’

Squeezing the Balloon

July 4, 2011

Squeeze too hard and it will burst

This weekend the Observer carried a major Tory split headline:

Eric Pickles warns David Cameron of rise in homeless families risk

The claim from Mr Pickles (well, actually one of his staff) was that the Overall Benefits Cap being proposed by the Prime Minister might have some wider effects and not lead to the savings claimed of it.

In the words of Nico Heslop, the Private Secretary to Eric Pickles:

(The) Overall Benefits Cap could cause some very serious practical issues for DCLG priorities.

Firstly we are concerned that the savings from this measure, currently estimated ay £270m savings p.a from 2014-2015 does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost. In addition Local Authorities will have to calculate and administer reduced Housing Benefit to keep within the cap and this will mean both demands on resource and difficult handling locally.

This might be a big story for the Observer but I find it surprising that anyone else is, well, surprised.

Public services are full of these sort of trade-offs. If you reduce spending in one area then it may lead to increased costs in another area.

This is especially relevant at the moment due to the scale of the cuts being requested of local authorities. The temptation is to ensure that the cuts are made so that short term budgets are balanced, regardless of the other effects. However, the good local authorities (most of them) and now, thankfully the Government, spend our time working out how best to manage the cuts so they don’t lead to worse outcomes.

Housing is a classic example. A local authority could reduce the size of its homelessness team (designed to prevent people from being homeless) but if there are less staff it is more likely that the homeless people in the local authority area will end up in temporary accommodation which can cost an awful lot more.

You could also reduce the size of some of your preventative teams or not provide support for low level adult social care needs arguing that the State, in times of austerity, should not be providing for these needs. But, some evidence shows that not addressing needs at an early stage can lead to more expensive care later down the line.

Even closing a library can lead to greater pressure on schools and other facilities.

Some saving ideas have to be judged like a balloon. If you squeeze in one area the rest of the balloon simply pushes out.

The challenge we are all facing now is to come up with new ideas for how to make the savings without simply shifting the pressure to other areas of your, or someone elses, budget.

So, was I surprised about this weekend’s expose? No; in fact I was sort of glad to hear that the Government are recognising these sorts of knock on effects. I just hope that the same can be said for all the rest of the coalitions policies.

Oh yeah, and I don’t say this very often but well done Mr Pickles; you got this one right!

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