The Economy

Lord Mawson Excerpts

Thursday 28th April 2016 Lords Chamber

[Lord Mawson (CB)]

My Lords, I thank the Minister for this debate. Building a stronger economy depends on many hundreds of thousands of local economies up and down the country and the small and large businesses and communities within which they are set. The success of our economy does not sit in isolation from everything else. The younger generation know this, as they live out their lives on the internet and are increasingly suspicious of large businesses and their motives. But what does this mean in practice, and what are the disconnects as the systems and processes within and outside government control prevent us joining the dots in an increasingly integrated world in which people are demanding joined-up thinking?

HMG have to recognise the increasingly detrimental effect on our economy of continued silo thinking and practice in government systems in a world increasingly lived on the internet—an online environment that is the defining principle of our age. Over the years I have engaged with a number of different Governments, who have tried and failed to move the siloed processes of government on. Yet I suggest that one reason the young are increasingly disenchanted with representative democracy is precisely because they can see that Governments of differing complexions—no matter what US Presidents say—seem incapable of delivering the integrated and joined-up world they want to live in.

Prime Ministers have dabbled in notions of the third way and the big society but they have failed to create any coherent sense of what this all means in practice and, more importantly, what it means for entrepreneurs and businesses which are capable of delivering this joined-up innovation if only the Government and the Civil Service would stop preventing them. This inertia is now having a profound effect on our economy. At a local level, people are attempting to innovate and do joined-up thinking despite—certainly not because of—government and its labyrinthine systems. Would it not be great if we could get behind these innovators and support the people who live out their lives on computers, which are joined-up environments?

Let us look at one government silo: the health service, which spends many millions of pounds of taxpayers’ money on procurement services. We all know that the Chancellor is seeking savings in the NHS but there does not seem to be any correlation between the actions of the health service and, for example, the rise in the consumption of alcohol across the country and the cost this is placing on the public purse.

I heard last week that in one of our great cities a tension has appeared between health and well-being, and the growth of the local economy. In one room in a council building the health and well-being board was looking at the impact of alcohol consumption on its expenditure, as the increase in admissions to the local hospital for alcohol-related conditions had rocketed. This part of the public sector is spending £68 million on new in-patient facilities to deal with this problem. The irony was that while the health and well-being board sat in one room, discussing this state of affairs, the economic growth board sat literally next door, with the connecting door firmly shut—you could not make this up—looking at how it could use alcohol to stimulate the night-time economy and regenerate a rundown area in this famous city. Do not tell me that health has nothing to do with the economy: they are fundamentally connected.

The increase in alcohol expenditure has profound implications for how much we spend on health services. The economy is about more than simply money: healthy communities are essential. If people do not have jobs or personal and social connections, they lose purpose and hope. They become isolated and often turn to drink to self-medicate, numbing the pain of the hopelessness of their situation. Cramped housing conditions, poor aspirations and dependency cultures in our inner cities have major impacts on our economy. They force us to lose and waste the very talent our business community needs.

The possible closure of traditional industries such as Tata Steel will have major social and economic impacts if it happens. What will replace it? In these situations people turn to alcohol, which becomes the way to connect with other human beings—a way to being a community with each other. Go to the Wetherspoon’s in our cities up and down this land at 9 am and see what many customers are drinking: cheap alcohol. There is even a business to be made out of this disconnected state of affairs. Health is an economic issue, and economics is about not just numbers but human life.

The history of our economy is that of the connections between trade, people, healthy local communities and aspiration. How do you bring the different pieces of the jigsaw together so that we create a healthy community and a thriving economy? I am working in a town on the outskirts of one of our major cities in the north of England, where a local developer is building a new town centre in what was formerly a steelworks, and in a community that has all the vestiges of a bygone age and the attendant memory of unemployment and loss of jobs. Here, I must declare an interest as the chairman of Well North, a programme attempting to create 10 public health innovations in challenging communities in the north of England. In this community Tata Steel, with its special processes steel works, is hanging on in there—on the edge of that new town centre site—by the skin of its teeth.

A dynamic, local, successful family business is about to create 750 new jobs there. Because it is an intelligent business and understands that a healthy community is all part and parcel of building a successful economy, it is very keen to put a new health centre hub in the middle of the town centre site and connect it to the wider determinants of health in the surrounding community. When my colleagues and I visited this local community last week, we found that one former employee of John Lewis and her friends had bravely taken control of the local swimming pool, which the council had wanted to close because it said it was uneconomic. Stepping up to that challenge, this group of local people have now set up a charity, taken responsibility for this very large building, created a growing customer base and are running the facility at less than half of what it cost the council, with all its middle-management expense. This group of local people recognise that a swimming pool is a health project, as well as a social and economic asset.

A group down the road, led by a local businessman, have taken responsibility for a suite of community buildings. They now run a nursery and a range of community facilities and activities that bring people together and generate an entrepreneurial culture and a sustainable income. However, the group of GPs across the road, who know that consideration of the public’s health demands that they join in with this local entrepreneurial activity, feel unable to do so for the most part because they are ground down by the NHS and its endless systems and processes, which sap the will to live. The GPs can see that the health of their patients is about more than biology; it is about those 750 new jobs and the aspirations of a local community, whose former lives were defined by the steelworks. But with the red tape, siloed thinking and lack of imagination in NHS systems, who can blame them for being cynical and giving up hope of being able to change anything? If I were them, I, like many other GPs, would retire as soon as possible and get out of all that unhealthy treacle which is the modern health service. When I walked into the waiting room last week, a sign on a very large board read: “Friends and Family Test—Please fill out a form for NHS England”. That says it all.

Here, we have a local business entrepreneur who wants to work with public health services and the community to create a new thriving town centre, with jobs and healthy lifestyles. He wants to connect the new health hub to the new cycle shop, because cycling locally is a health project for overweight and lonely people. He wants to explore the relationship between health and diet in the new Italian family restaurant, with its quality foods and strong family and community traditions. There are potential win-wins for everyone here, as together they build a new and thriving economy. But how hard those NHS government-siloed systems are to navigate, how hard they are to work with in relation to community benefit and how costly they are to an emerging new local economy. This is one community and one government department. Imagine what all this siloed behaviour is doing to local economies and communities across this country, let alone to the lives of thousands of employees in the health service ground down by these outdated public sector cultures. Let us ask the Chancellor to put some numbers on all of this.

The siloed thinking in Whitehall still dominates and is keeping local communities poor and reducing their economic performance. The metaphor of the two rooms demands that we open things up, that government changes its role of being a blocker to an unblocker, that it gets real about the connecting door, that it brings the conversations together and that it encourages joined-up entrepreneurial behaviour and innovation in real and tangible ways. Health is about the whole of life, not some biomedical silo. It is not about more legislation: it is about helping join the dots at a local level and knocking heads together in our public sector systems.

In east London, JP Morgan has now joined with us at the Bromley by Bow Centre, where we have built a model of integrated healthcare precisely because we discovered many years ago that 50% of the patients we were seeing did not have a biomedical problem. As a large business, it has recognised that business is not just about large-scale transactions, important as those are. In east London, it is recognising that small-scale investments in businesses and enterprises are significant in a city as large and complex as London, precisely because the wider economic and social value delivered by such enterprises goes beyond pure economics into building civil society and coherent communities. If the Government encouraged this joined-up behaviour in systems they control, we might truly build our economy, use our resources more effectively and have a rather more interesting conversation with a new generation who are living out their lives on the internet and long to see social purpose in all that we do.

What is the real cost to our changing economy of the siloed systems of government that still so resist the logic of the modern, integrated world? Can the Minister help us put a number on that?