Back in November I wrote on our website about the Trades Unions Council conference I attended for LWM at which, to the frustration of the audience and speakers, the Labour minister and MP present seemed entirely unable to address the relevance of intelligent public spending (debt as investment) to alleviate recession and generate economic prosperity. As we progress towards the election, it is increasingly and depressingly clear that rather than any serious investigation of how public investment can be channelled to rebuild and future-proof our economy (a la Green New Deal, for example), the major parties are falling over themselves to promise cuts in public spending, regardless of the economic impacts.

So this arrival in my inbox today is refreshing. My one quibble with Impact Measurement relates to the language of efficiency. To us, efficiency in public spending is a good thing, IF it’s truly efficient in the long term and in the whole system. As Impact Measurement rightly suggest, the public sector’s efficiency drives are modelled on those of the private sector and are rarely more than a short term financial saving, leading to a longer term loss. But we should reclaim the word ‘efficiency’ to mean what it really means….

Karen

The real impact on jobs and the economy of ‘efficiency’ savings

We have all heard politicians telling us that “This investment will regenerate the community and create x number of jobs for the local economy.” Strangely when ‘efficiency’ is on the agenda the reverse seems not to be true.

However we can show you the real impact of both reducing costs and spending outside the economy on jobs, and wealth in a region. In a groundbreaking piece of work we combined two economic impact models to generate a more meaningful way to measure the impact of public spending on the economy of the North East of England. What’s more you can go and try it for yourself as well.

The scenario below reduced public sector spending by 5% in 2010 and then 10% in 2011 and 2012. The model suggests that in addition to any direct job losses in the public sector this would result in the loss of an additional 11,800 jobs in the North East.

[Click on image to see larger version]. However if at the same time we change the pattern of our spending so that we spend 3% in 2010, 5% 2011, and 10% 2012 within the region, then the possible job losses are more than halved to just under 5000. We argue that this is only by using objective measurement of the impacts of political decision making that we can assess whether politicians are doing a good or bad job.

If you want to try it for yourself or to download the full report then go to www.impactmeasurement.net

Adam Wilkinson