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Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

In times of debates on budgets, dizzying large figures are passed around. What does it really mean to curb back government by £6.25 billion? The numbers can be made a bit more concrete by thinking what you get for the money. Some estimates say the first round of cuts equals losing about 100,000 jobs in the public sector. It also seems that the cuts are just about enough to finance a potential coming round of expanding prisons.

In the run-up to the elections, only the Liberal Democrats were rejecting expanding the UK’s prison capacity. The Conservatives were committed to matching Labour’s plans of expanding prisons by 14,500 beds. In the outlined coalition agreement, any mention of policy on prisons is strikingly missing. This may mean that commitment is being scaled down. Given the Conservatives’ tough stance on law and order, an era of penal moderation seems unrealistic.

The Ministry of Justice recently estimated that the building and running costs of five Mini-Titan prisons could be up to £4.5 billion pounds. These would deliver about half of the planned increase. England and Wales already have the proportionally highest prison population of all Western European countries. After the planned expansions, it would offer Zimbabwe and Tajikistan tough competition in the statistics.

In the current state of public finances, decisions around public spending warrants stronger scrutiny than ever. Are the billions we are disbursing for locking people up really creating a safer society?

A new report by nef studies in depth the consequences of imprisonment of young people and children. The evidence reviewed for Punishing Costs shows that going through prison makes it more likely for released young people to face unemployed, to have unstable accommodation, and to live on a lower income.

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Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

Image by Antti Knuutila

With the glimmering colourful lights and the smell of popcorn, the Empire at Leicester square seems an unlikely place for serious discussion on public policy. Yet it may be the starting point for an important movement to change public perceptions and the politics of youth justice.

Yesterday about 400 people were gathered at the Empire for the first screening of the documentary The Fear Factory. The film powerfully described how the fear of crime is maintained by sensationalist media coverage and the cynical tactics of political parties. This has lead to harsher and more punitive responses to youth crime, which in many cases do little more than entrench the criminal behaviour. The documentary, produced by Spirit Level Films, is connected with a campaign for a criminal justice policy that is more humane and long-term in its perspective – and ultimately better at delivering safety for our neighbourhoods. nef’s latest report Punishing Costs was launched in connection with the screening.

With interviews from key experts and practitioners, the documentary shows how the public’s beliefs about the risk of becoming a victim and the general trends in the amount of crime were far from reality and all evidence. Britain has become a safer place in the past two decades – yet the fear of crime remains stubbornly high.

Unfortunately, it is perceptions that drive politics. One of the safest political strategies in the recent past has been to promise to crack down misbehaving youth and to hit them where it hurts. The Fear Factory documents how any deviation from this pattern is quickly struck down, as happened to Cameron when he suggested understanding the social causes of crime. The film also points an accusing finger at the media that gives disproportionate attention to violent cases and misrepresents sentencing as more lenient than it is in truth.

This reaction may actually create the monster that it so much fears. In the climate of alarm about youth crime, the imprisonment of children and young people has remained on very high levels. Prison as an intervention is incapable of dealing with the real causes of crime, and does little more than temporarily isolates an individual from contact with society. About three in four young people released from prison return to crime within a single year.

At the same time custody uses up massive amounts of resources that could have truly improved the safety on our streets. Our report Punishing Costs shows how the full cost of a year-long sentence in prison is £140,000. It is worth pausing to think about what could be achieved if these resources would be put to a positive use.

The screening was followed by an excellent panel that included some prominent criminologists and politicians – and an ex-editor of a tabloid who astonishingly displayed no sense of regret for his past role. Most of the panellist agreed that current policy was too much determined by knee-jerk reactions to high-visibility criminal cases in the media and an arms race between the parties to appear to be the true guardians of law and order.

One of the solutions they proposed by the speakers was to create a cross-party committee for a longer-term vision of developing criminal justice policy that all parties would sign up to. This would curtail the harmful competition between parties, which has led to the current punitive arrangements that hardly anyone believes to be productive or humane. Such a committee, together with a better debate and engagement with the public, is part of the recommendations of Punishing Costs.

Documentaries are powerful tools in transmitting knowledge and awareness of issues. At a time when the media is transmitting a largely false picture and political parties are failing to take the leadership to change perceptions, a film may be exactly the tool that is needed. I hope the Fear Factory, and the coalition forming to campaign around it, receive the attention they deserve.

Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

In difficult times for state finances, prison is the only public service enjoying growing investment. The plans to expand prison capacity faced strong criticism from a major report by a cross-party committee, released yesterday. The Common’s Justice Committee latest report demands that the government should reallocate resources to more effective ways to reduce crime.

The Government in the future faces a tough choice: to continue with the expenditure trajectory the current administration is embarking upon with its prison-building plan, or to reinvest the public’s money in attempts to reduce the need for new prisons in the first place.

The Committee is right in recommending shifting resources spent on inefficient punishment towards rehabilitation and the prevention of crime. All the evidence suggests that this approach is not only more humane, but will be more effective for potential victims of crime as well as state finances. To be truly tough on crime is to stop it at its roots.

The Valuing What Matters team at nef will publish research in the end of February that will show how the policies advocated by the Justice Committee can be put into practice in the sphere of youth justice. It will demonstrate the full social consequences to society of imprisoning children, which go beyond the high bill to the state. The report will also outline policies that will empower local authorities to comprehensively prevent young people from getting into trouble with the law.

Such shifts in state activity sometimes seem so obvious that they beg the question: Why is it not happening? One of the reasons is the tabloid media that are constantly placing pressure on government for harsher, symbolical reactions on crime. The Daily Mail, for instance, responds to the Committee report in the following way:

The prison population should be slashed by a third – putting 28,000 offenders back on the streets, according to a group of MPs.

The justice select committee says Britain will have 96,000 prisoners by 2014 – the highest incarceration rate in western Europe – but spending £4.2billion on building the extra 12,000 prison places needed is a ‘mistake’.

The committee wants the prison population to be stabilised at its current level of 84,000 – then slashed by a third.

It would leave 56,000 inmates in jail and put 28,000 criminals on the streets.

An observant reader will immediately note that the Committee did not want to release inmates out of custody. They recommended creating conditions that will lead to fewer offences being committed, reducing the need for prison beds in the first place. The Mail’s text is hence slightly ambiguous: Did they misunderstand the report? Or are they claiming that that the 28,000 that averted prison should be considered criminals regardless of whether they break the law?

Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

If you are behind in your Christmas shopping, this is the perfect intellectual excuse for your shortcomings. In his new book Scroogenomics, Joel Waldfogel claims that Christmas is an economic calamity of the order of the worst natural disasters. The professor from the University of Pennsylvania blames the winter celebrations for the destruction of a full $12 billion of wealth.

What is so seriously wrong with Christmas? Waldfogel believes that it is festival of inefficiency, where people give each other things of little use. The reason is simply that people don’t understand one another and are poor judges of other people’s preferences. Your close ones may display delight from your gifts, but this is only polite deceit; in truth they would have found something better with the money you used.

Waldfogel’s claims are based on a survey he has done with potential victims of Christmas. He asked a range of people how much they would be willing to pay for the things they had been given. It showed that, as a rule, gifts were worth one fifth less to their recipients than their actual price. That new jumper that your aunt bought you for £50? You may find that it is not worth a pence over £40. This means that economic value of £10 has disappeared into thin air.

Waldfogel is right to question how much just producing precious commodities adds to social welfare. In trying to adjust measures of exchange value to better reflect the worth of things he comes close to much of the work that nef has been pioneering.

At the same time, Waldfogel suffers from a bias that is not untypical to people of his profession. In his view the only good that can result from gifts is the utility that the recipient gets from the commodities exchanging hands. If the object does not match the wishes of its receiver, the whole ordeal has been a waste. Does this view not miss many important sides of our habits of giving? Some examples can show what Waldfogel forgets to take into account.

There are times when the usefulness of the goods being given is completely secondary. One extreme example of this is the tradition of potlach, observed by some natives of North America. In its most extravagant form, potlach involved chiefs giving away valuable pots, blankets and food, which were promptly destroyed and burned after being received. Potlach is a case where gifts are used to maintain certain types of social relations: The group that gives more lavishly is able to express and reassert their superior power. In less competitive settings, giving gifts can also support equal and communal relationships.

Modern societies have some practices more bizarre than potlach. One recent innovation are so-called charity gifts. By donating the right amount you can purchase, for instance, a goat for someone in a developing country, then give your donation as a present to someone else. It is unlike regular gifts because when the present exchanges hands, the owner of the goat stays the same. The point of the present is not to allow its receiver to get something new, but to let them assume the role of a benefactor. It is, to use an obscure term, a meta-gift: a gift of giving. What better proof could there be of the fact that people place value on giving things in itself?

Even when a gift is meant to be useful, it is not always given with the preferences of the other in mind. Some presents are aim to have an educative function. Here the point is not to match the recipient’s preferences. On the contrary, it is to actively shape them. For instance, I have been at times pretentious enough to give complicated books or fringe films with the hope of kindly nudging someone’s cultural tastes. To the credit Waldfogel and his approach to gifts, such attempts have never been met with much enthusiasm.

All the same, I would not recommend buying Scroogenomics as a gift. It seems like a guaranteed failure. If the premonition of the book is correct and you did not predict your friend’s preferences, they will be unhappy with the present. In case they enjoy your book and accept its message, they may berate you for so lavishly investing in a present.

Bookmark and ShareWritten by Aleksi Knuutila and Eilis Lawlor from the Valuing What Matters team

It does exist after all. Apparently it has been broken for a while and now requires enlargement. Delivering the 2009 Hugo Young lecture at the Guardian, David Cameron stated that he wanted a “big society”, in place of Labour’s “big state”. He believes that the “growth of the state has promoted not social solidarity, but selfishness and individualism”. The alternative is to “help families, individuals, charities and communities come together to solve problems”.

Cameron’s calls for cuts in the scale of government are obviously pandering towards the fiscal conservative wing of his party. To some extent he continues the tradition of earlier conservatism, defined by Thatcher, in which the state was blamed for the moral degradation of society. The state fosters a dependency culture, discharges people from their responsibilities, and displaces families as the proper purveyor of moral values.

Cameron’s true volte face is in coming up with new victims for the state’s malice. Cameron blames government for worsening many of the themes that have traditionally been the concern of the left: the gap between the rich and the poor and material deprivation. The large size of the state, he claims, is “inhibiting, not advancing, the progressive aims of reducing poverty, fighting inequality, and increasing general wellbeing”.

This appears to be a canny political move. Issues such as poverty and particularly inequality would traditionally be far from the conservative agenda. Cameron believes that by naming big government the culprit, he can mobilise conservative support even for traditionally lefty topics. He can move into Labour’s territory without losing his party’s base, as long as a smaller state is presented as the solution. So far his political gambit seems successful.

In Cameron’s view, society consists of individuals, families and communities. Government is external to society and engaged in a zero-sum game with it: The expansion of the state can only be to the detriment of society.

Third sector organizations and social enterprise are put forward as the vehicle for delivering on social goals. Cameron believes these institutions to be almost like an extension of communities, accountable to their will and able to engage them in “self-improvement, mutuality and responsibility”.

The premise that third sector organizations would be representative of community is often false. Many charities that have been tasked with delivering public services have grown so large they are as unresponsive to the needs of their clients as state departments but devoid of any formal accountability. With a large size they also acquire monopoly-like power over the services that they deliver, and can begin to work for an interest of their own. In that sense they have more in common with large corporations. The opening up of competitive markets in public services to third sector organisations has explicitly encouraged this development.

Conversely, the government providing things need not be opposed to citizens taking responsibility. Ideas of design such co-production can make sure that the clients have an active role in the delivery of services. The interface between government and civil society is what matters. Cameron forgets that the state is a part of society too, and that a good society requires strong public investment to maintain public goods and collective solutions. This philosophy makes no provision for preventative services, or long-term solutions of the kind that we now need. In spite of the rhetoric about outcomes, he has reverted with the Conservative obsession with the mode of delivery.

Cameron’s emphasis on decentralization and active citizenship is commendable. Who would not want people holding power and being actively engaged in shaping their lives? As means for delivering the changes in society the “progressive conservatives” are after – social mobility and reductions in poverty – they are blatantly insufficient.

To reduce inequality we must make a political topic of another forgotten part of society – the economy. All major parties today regard the economy as a sphere with its own natural laws and best left to its own devices. The role of government is merely to correct market failures and fix some of the resulting unjustness after the free reign of economic forces. The question all of the parties fail to ask is whether the economic system itself, with its gross inequalities and individualistic bent could be the root of the problem.

Labour’s measures such as the minimum wage and tax credits have obviously mitigated some of the growing disparities in the economy. The Tory promises to lift the threshold of the inheritance tax and cut unemployment benefits can only aggravate them and don’t fit well for Cameron’s newly found interest in the poor.

What is needed is a society of many parts: a fair economy, an effective state and a committed community – all of appropriate size.

Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

Some commentators believe that the worst of the current recession is behind us. Whether this is true or not, we can be sure that its full social consequences have not yet been felt. People are still losing their work, and unemployment may well rise to 3 million next year. Drastic cuts in spending may make this harmful trend worse.

As previous nef research expected, the recession increases the gap between wealthy and poor areas. Recent research by the Joseph Rowntree Foundation the communities that already had highest unemployment have suffered the largest losses of jobs. These areas don’t suffer only from a lack of employment. The downturn has also forced over half of local authorities to reduce their staff and cuts services. The poorest neighbourhoods suffer from both job losses and a cut in the services that support them.

In the form of benefit payments, billions of pounds are spent on these areas. These resources succeed in keeping their recipients out of the gutter. At the same time, benefit payments constrain claimants’ possibilities to improve their lives. Our social security functions more like a trap than a ladder, and is fuelling the deprivation of poor communities.

Welfare reform has for long focused on making work pay. nef’s new report, Benefits That Work, shows that purely financial calculations don’t capture what matters to the unemployed. Benefit claimants are above all concerned that accepting work will make their life more insecure. Benefits systems are function like an on-off switch; either you are on it or not. This makes it insensitive to the fickle and uncertain nature of today’s labour market. Taking up a job with irregular hours and no employment protection risks leaving people penniless.

The benefits spend could be channelled so that it allows people to improve their own communities while helping them to move towards employment. Benefits That Work presents an Social Return on Investment (SROI) analysis of an innovative scheme to make the happen. With the Community Allowance, community organizations would be able to hire unemployed people to work with them for the good of their area. The participants would have their benefits secured for a year, and would be able to earn a small, capped income on top of them. Protecting the current level of benefits would allow the claimants, with the support from the community organization, to focus their efforts on moving towards the labour market.

What makes the Community Allowance effective is that it plays up the strengths of the claimants. Many employment schemes offer subsidized work placements for the unemployed. They often leave the participants feeling stigmatized, as if they would not be good enough for the work without government footing the bill. In contrast, Community Allowance engages the unemployed in work that they are best placed to perform, due to their close connections with the neighbourhood or their capacity to act as positive role models.

Our SROI analysis of the Community Allowance shows that for each £1 invested into it, £10 of social value is created. This extra value is received by the participants, their communities and families. The state is likely to recuperate more than the resources necessary to run the scheme. Channelling the benefits spend so that it works for the good of deprived will take the edge off the ruin of the downturn.


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nef employees blog in their personal capacity. The opinions expressed here do not necessarily reflect those of the new economics foundation.