Welcome back, Help to Save — what took you so long? (And what should we learn from this saga?)
Today’s news bulletins gave us the pre-Budget story that the government plans to create a matched saving scheme to help boost low and modest income households — ‘Help to Save’. Various policy people have been quick to point out that this sounds remarkably like a policy created by the last Labour government (the ‘Saving Gateway’) which had the same objective and a similar system of matched-payments to reward savers. It was announced in 2001 and summarily abolished in June 2010 in the Coalition’s emergency budget.
All this rings bells for me as I developed the original version of the policy around the millennium at the ippr and then in Whitehall. Rather than rehearse the finer details of the new and old policies (on this see this blog) it is more interesting to ask two other questions: where did the initial impulse for the policy come from? And what should we make of the wearying Whitehall policy-cycle of announcement, pilot, evaluation, abolition and then…….re-announcement?
The thinking behind the original Saving Gateway had a number of influences: the US, history and distributional. The UK policy community has had a long fascination with US debates and perhaps never more so than in the Blair-Clinton late 1990s. The work of the academic Michael Sherraden, whose pioneering book Assets and the Poor set out the many ways in which the broadening of asset-ownership could promote a range of beneficial social and economic outcomes, caught attention both in Washington DC and over here. (Based on it we undertook longitudinal research in the UK seeking to identify an ‘asset-effect’ on life trajectories.) There was also interest in the Clinton government’s idea of Universal Savings Accounts — tax-efficient life-time savings vehicles aimed at low and middle income workers. Some of this agenda caught the attention of David Blunkett — then at Department for Education and Skills and always eager to range widely — who became a tireless champion of the whole agenda.
A second influence on the Saving Gateway (along with its sister policy the Child Trust Fund) was less direct but important nonetheless. There was a longstanding strand of political and historical thinking that emphasised the importance of asset-ownership in the creation of a more egalitarian market economy. Tom Paine was perhaps its best known champion but this current of thought found new and radical expression in the mid-20th century via the likes of James Meade and then again through the ‘market socialist’ debates of the 1980s. There were also centre-right versions of these arguments — articulated via the popular capitalism of Sam Brittan and David Willetts. (Indeed, at the launch of the Saving Gateway and Child Trust Fund proposals Gordon Brown channelled the spirit of Harold MacMillan as much as anyone on the left). Admittedly, these may sound like a rather grandiose set of influences for what was a relatively modest saving policy — but believe it or not they all loomed large.
A third, and more relevant consideration, not least from the vantage point of Budget 2016, was a rising concern in the early 2000s over the regressivity of existing tax incentives for savings and pensions. Inside government we looked at projections for the growing cost of these reliefs, as well as distributional analysis showing how pro-rich they were. These distributional concerns helped cement interest in trying out a new approach to saving that was intentionally pro-poor.
Back then, as now, there were all sorts of debates and concerns about how the policy would work: for instance, ‘deadweight’ (‘won’t this just be a windfall for those who’d save anyway?’), the ‘hierarchy of saving’ needs (‘isn’t the real priority boosting pension savings?’), and whether it was appropriate to encourage those on low incomes to save at all (‘you want people to save not eat? Shouldn’t the focus be income-support?’). These sorts of issues were part of the reason for the extensive piloting. And, of course, the context back then was very different and more benign: in the early 2000s there was fast wage growth, rapidly rising tax-credit support and more confidence about tax-revenues.
If this is the genesis of the measure what should we make of its rise, fall and belated resurrection? It is certainly hard not to feel dis-enchanted by the manner in which newly elected governments often act first and think later — ditching carefully crafted and trialled policies for the sake of the appearance of ‘change’. The 2010 coalition was culpable of this: the sense of ‘not invented here’ was palpable. But before Labour-types get too partisan, they should recall that all modern governments are guilty of the desire for perpetual reinvention. Whilst working on health policy in the late 1990s I recall the frustration of GPs involved in the Major government’s ‘total purchase pilots’ in the NHS who the saw this innovation summarily abolished when Tony Blair came to office, only to be revived in the form of ‘practice-based commissioning’ in the early 2000s.
As well as being a sure indicator that the policy process isn’t working as we might want it to, this pattern of axing and reinvention generates fierce cynicism among those working in affected sectors who feel like bit-part players in a bad Whitehall farce. And that is before we even consider the loss to citizens who pay for this policy zig-zagging both directly (through taxes) and indirectly (via the loss to society created by ditching the learning that what would have led to better informed policy).
There is, of course, no clever way of ensuring this doesn’t happen. New governments will continue to strive to demonstrate their novelty only to learn hard lessons on the job leading them to reverse prior decisions taken in haste. But there are features of our political culture and system that make these episodes more likely. One of these is the time-lag involved with evidence-based policy. Piloting and careful evaluation take time. The Saving Gateway went through two different rounds of piloting over six years before it was judged that it was ready to go to scale at a national level. These sorts of time-horizon often fall foul of the electoral cycle — if evidence based policy is seen to be too slow then politicians are likely to avoid proper testing in the first-place. Politicians certainly need to learn to be more patient; but the world of policy trialling and evaluation needs to be expeditious too.
Another issue concerns institutional memory in key Whitehall departments: my recollection of entering the Treasury was being taken aback at how astonishingly young everyone seemed — not least compared to other departments. The Institute for Government published research last year showing that the proportion of civil servants in the Treasury aged under 30 is at 38 per cent — more than four times the civil service average. Levels of churn are high. Greater civil service continuity would at least help ensure that Ministers are made more aware of past approaches. Indeed, this problem has led one former advisor to make the interesting proposal that each department should have an official ‘historian’.
Nor is it just Whitehall that appears to lack a memory. The media reporting of these policy-reinventions is often poor: you would have looked in vein this morning on the BBC’s website for any reference to the fact this ‘new’ policy was actually a rather old one (this has since been rectified). If the policy process is to improve then those involved, as well as those who report it, need to have a keen sense of what has come before.
