Wednesday 5 November 2008

The price of everything, the value of nothing

One of the people on my Venice trip mentioned an EU defence minister’s summit he had assisted in the 1980s – it had been in Venice and co-incidentally HMS Britannia had been there as well, with the Queen Mother in residence. She had invited the various ministers for a drink with consequential positive effects on the UK’s negotiating position. Putting aside how much more tasteful Brittania was compared to Russian mega yachts, it reminded me just how stupid we had been to decommission her. The cost – was it £10m a year? And what an ambassador for the country. There won’t be a world leader who wouldn’t appreciate a State Dinner on board.

Our Government does not seem able to look at social costs and benefits, to look at the wider value of what it does. Given that it uses other people’s money it should. Another much more important example is the inability to value the wider social benefit of post offices to their community – urban as well as rural – when considering how much of the network to keep. In one way or another, that lost benefit will have to be provided in other ways, probably by a combination of Local Councils and the NHS, at an extra cost. A Minister recently commented that the decision on the future of the Post Office Card Account, used for receiving benefits and pensions, would solely be determined by commercial factors. Yet if it is taken away from post Offices up to another 3,000 may have to close.

And yet another example which has prompted this post: Citizen’s Advice Bureaux across the country perform a valuable service for people needing help. (I write as a trustee of a local CAB). Part of their funding comes from legal aid as they help people particularly with debt and welfare issues. The cost of criminal legal aid has gone up so much recently that other legal aid has had to be cut back. This has partly been achieved by a complex formula which saves up to 9 months cash flow and therefore hurts the providers of legal advice by that much.

In addition the Government plans to have contracts with groups covering large geographical areas which can cover at least three areas of law, and appear to accept lowest cost bids. Two examples show the problems with this: in Gateshead, the contract was awarded to a group that has got into financial problems; in Hull, the contract was awarded to a for profit organisation and the loss of revenue for the local CAB means it may have to close, seriously disadvantaging local users.

It is probably too late for policy to be changed, although the effect of withdrawing funds and increasing administration for the CAB does not comply with the Government’s announced policy on helping not hindering the Third Sector. But the bidding process needs to take account of any previous record of successful service provision and the importance of stability of service as well as absolute cost. The key is “value” rather than “lowest cost”.


Troy said...

I think you mean HMY rather than HMS but I totally agree with your thoughts on its decommissioning. It was a typically petty and mean New Labour gesture made at the same time as they decided to spend a fortune on the Millenium Dome.

Hopefully DC will commission a new one in 2010.

Ladybird World Mother said...

Maddens me how there are cuts and decisions to close this, that and the other, when it is so obvious that these things provide such an important SERVICE. Post offices. Not just the fact that you can get your stamps and pension, but that you can talk and chat in the middle of your village about 'stuff'.
Your last sentence says it all.
Thanks for your post.

Troy said...

No thoughts on the Pre-Budget Report? We look to the brainy guys with the Upper Seconds to guide our thinking!