Posted by: Brian Clarke | March 5, 2012

Spend to save

Politics is no part of this blog. What follows applies to good governance generally.

People like me look on with despair when governments try to save money without first doing their homework. What is the point of saving (ie cutting) £1 in one area, if it means having to spend £2 in another area? The Spectator, for example, has pointed out that cutting legal aid can be a false economy.

Of course, as an accountant I have a potential vested interest; people like me are needed if The Powers That Be want to find where the real savings can be made, or what the real costs are of a particular course of action.

Another example: a lot of elderly patients are blocking hospital beds because there is nowhere suitable to discharge them to. In other words, the NHS is bearing social costs which should be really be taken out of the Social Services budget. But the Social Services budget is stretched … (you can fill in the rest).

Even more to the point, the cost of an NHS bed must be greater than the cost of a Social Services bed, so keeping someone in an NHS bed, when they could be discharged, costs the government as a whole more. But then governments are very bad at thinking globally.

I can’t help thinking the solution here is a lot simpler. If the NHS could charge Social Services for each day one of their beds is blocked, Social Services would soon change. But then this would be the market in action, and the government doesn’t like that sort of thing … wait a minute, it says it likes that sort of thing. Well, does it or doesn’t it?

As they say in Freakonomics, incentives are everything.



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