Category Archives: Public spending

Show us the money

In the early episodes of David Simon’s hit TV series, The Wire, Lester Freamon, a methodical and paternal veteran of Baltimore’s Major Crimes Unit, explains to his team the rationale behind his way of working: “You follow drugs, you get drug addicts and drug dealers. But you start to follow the money, and you don’t know where the f*** it’s gonna take you.”

At a time when the Coalition Government is aiming both to become the most transparent administration in the world and to inflict the deepest cuts to public spending since World War Two, trying to trace the money for new initiatives proves no easy task. Just last week the Government made two announcements: a U-turn on plans to cut a benefit that helps disabled people in residential care get out in their communities (a cut so callous some – this author included – thought it was probably only suggested in the first place to distract campaigners’ attention from other regressive reforms); and the establishment of a £1 billion ‘Youth Contract’ scheme to help deal with the highest youth unemployment levels since 1986.

The similarity between these two announcements is that nobody yet knows where the money has come from to fund them (or, in the case of the U-turn, to make up for the £135 million that would have been ‘saved’ had the Government persisted with its plan). Such ambiguity makes it hard to commend what would otherwise be welcome announcements, while also trying to figure out what cuts were made elsewhere to fund such decisions.

The Youth Contract is a particular case in point, for it is very similar to a scheme that was already in place, and proving successful, when the Coalition was formed. That scheme was the Future Jobs Fund – introduced in 2009 to create subsidised jobs for unemployed 18-24 year-olds. The Government’s own study shows that, overall, the FJF succeeded in preparing young people for work and that many of those who participated in the scheme reported “a significant improvement in self confidence” and “a positive change in aspirations and motivation to pursue their job goals”. Among those now employed many are convinced the FJF played a vital role in enabling them to find work.

Shortly after its formation in 2010, the Coalition Government decided to cut the FJF and then, barely more than a year after its Spending Review, to recreate it again – only this time offering wage subsidies to private sector employers (under the FJF any organisation from public, private or voluntary and community sectors was eligible to bid). The Youth Contract is comprised of 160,000 wage subsidies; 250,000 work experience placements, and 20,000 ‘incentive payments’ aimed at getting employers to take on young apprentices.

The new scheme will cost £1 billion, but it is not clear as to where this money come from. Officials are reported to have said that the funding comes from ‘other areas’ of government spending (assumed by some to translate to an even tighter squeeze on welfare budgets).

The money mystery doesn’t end with the funding of the project; it permeates much of the Government’s wider approach to tackling unemployment – via its welfare-to-work scheme: the Work Programme. Launched this summer, this operates on a payment by results basis: contracted organisations are paid depending on the length of time their client stays in work, and what out-of-work benefit they have moved off. Such is the Government’s faith in the Work Programme that once in office it saw fit to end all existing back-to-work schemes (including the FJF) and replace them with a single scheme. However, how successful it is and how much the providers are paid remains to be seen, as the Government won’t publish the results until Autumn 2012.

If the Government is to achieve its aim of being the most open administration in the world, then it needs to show – especially in an age of austerity – where the money for schemes like the Youth Contract really comes from. If its faith in the Work Programme is such that it can cut all existing – and successful – initiatives like the Future Jobs Fund (and even then still spend more money recreating it) it needs to show what rewards are going to whom, and for what. We need to be able to follow the money.


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