One area where Labour can do more with less money

Good morning. I wrote yesterday about one of the growing upward pressures on public spending: the return of Donald Trump to the White House and the need for the UK to spend more on its own defence.

Ultimately, these pressures will involve a degree of further tax rises in Britain. But today, I want to touch on some increasing demands on public spending where the government could and should cut spending and achieve better results.

A big opportunity

One benefit of devolution is that it can produce useful natural experiments in policy. One such experiment is the 2014 Children and Families Act, which reformed special needs provision in schools in England, but not in Scotland or Wales, as education is devolved.

The number of children with a statement of special educational needs (SEN) actually fell in England from 2010 to 2014. This was partly a result of the new Conservative government’s decision to implement some recommendations from a 2010 Ofsted report into the effectiveness of (or lack thereof) SEN support in England.

Since the passage of the act, spending on what are now education, health and care plans (EHCPs replaced SEN statements) has increased significantly across the board, including in costly “alternative provision” outside of mainstream state schools.

Remember how I said that devolution provided a good natural experiment? Well, Scotland and Wales did not introduce anything like the 2014 act, and have not seen such significant increases in costs as England has. More important, these higher costs have not led to happier parents, or to better educated children with special educational needs. If anything, quite the reverse: the British government now spends more money on special needs education in England than it ever has before, but the results are no better, and in some cases worse, since the big changes to how SEN was assessed and treated.

EHCPs essentially have no mechanism for cost control, and unsurprisingly, that has led to a situation where spending is greater, but neither parents nor children are better served. There is a big opportunity for Labour here to achieve more than the Conservatives and with less money. But there are two pitfalls that they will have to do well to avoid. The first is that 84 per cent of teaching assistants in secondary schools are there supporting pupils with EHCPs. This is not leading to better results for children than in Scotland and Wales and it costs a lot, but shifting away from it is going to upset a lot of people.

The second, is that although there is an opportunity for Labour to fix the system so that they are helping more pupils than the current one, and for less money overall, we are still talking about a comparatively small outlay. To be wildly ambitious, we are talking about £2bn or £3bn in savings. These are not small, but they are also not going to ease the policy challenges Rachel Reeves faces in a significant way.

This is an important policy issue because Labour has an opportunity to improve outcomes, and as such I anticipate I will return to this topic frequently over the course of the parliament. But the savings are secondary.

Changes to welfare spending, however, are a big deal: this is one of the UK government’s biggest outlays, and there is a similar story to EHCPs. Welfare spending in the UK has increased significantly since 2010; however, no one could say it was more generous with a straight face. There is a real opportunity here for Labour to get better outcomes for a small price tag, but the challenge always in reforming a public service is that it often increases your upfront costs (because you are having to run both the new and the old system alongside each other).

Nonetheless, if there is an area of public spending both where Labour can do more with less and that “doing more with less” can unlock large amounts of funding, it is here.

Now try this

I’m off to see the new Captain America film this weekend and to try and bribe my way into the hearts of my friends’ kids. However you spend it, have a wonderful weekend!

Top stories today

• ‘This isn’t about meaningless platitudes’ | Business secretary Jonathan Reynolds suggested the UK has too many regulators, as he called on the country’s under-fire competition watchdog to be “more agile”.

• Just a minute | The UK government has refused to disclose details of a meeting between American billionaire Peter Thiel and a former minister on the grounds that doing so could harm “diplomatic relations” between Britain and the US. The government released heavily redacted meeting notes and an agenda in response to the FT’s disclosure request.

• Spotlight on Reeves | The chancellor was the subject of an expenses probe during her earlier career as a bank executive, a BBC investigation by Billy Kenber and Phil Kemp found. Their reporting also revealed that Reeves’ LinkedIn profile exaggerated the time she worked as an economist at the Bank of England, further undermining her claim to have spent the “best part of a decade” there.