Policy Exchange: Past, present and future

The group once called "Cameron's favourite think-tank" celebrates its tenth anniversary today, and i

Policy Exchange was founded ten years ago. We believed -  and still do - that there is a role for the state, albeit a much smaller and more efficient one, to help improve peoples’ lives. We also felt that people should have more of a direct say on the decisions that affect themselves and their families.

Decentralisation was one of our key themes and some of our better known policy recommendations such as directly elected police commissioners and Free Schools stem from this initial premise. The first elections for police and crime commissioners will take place this November. We believe that a police chief who is directly accountable to the people he or she serves will improve not only the standard of policing at a local level but also re-establish trust in the police, something that has diminished recently with the recent phone hacking scandal.

We first put forward policy recommendations for the setting up of Free Schools because we believe that every parent should have access to a good, local school which offers their child the best possible education. Teaching is one of the most important jobs in the country. We want schools, especially in the most deprived areas of the UK, to have the means to attract the best possible teachers. That means challenging dated concepts such as national pay bargaining, which defines how much a teacher should earn based on time spent in the job, rather than ability. Head teachers know how good a teacher is and should be allowed to pay that person accordingly. Likewise if someone is not cut out to be a teacher, then he or she should not simply be moved from one school to the next as is currently the case. We need to reform the education system to attract the brightest and the best to help our children achieve their potential.

The pupil premium – an additional cash payment for the most disadvantaged children – is one idea that some people forget was first floated by Policy Exchange. The Liberal Democrats took the idea forward in their 2010 election manifesto and the policy came into being this year.

Our work on re-establishing the contributory principle in the welfare system has been taken forward by both Labour and Conservative politicians. The universal credit, set to be introduced in 2014, is a stepping stone to making it more worthwhile to work rather than remain on benefits. However, there is a huge amount more to be done to create a fairer welfare system. Recently we have proposed tougher sanctions and conditions on jobseekers who are not doing all they can to find work. At the same time, the government has a responsibility to help jobcentre advisers identify those people who are the least likely to be able to hold down a job due to alcohol or drug problems or a history of mental health problems. These people need the most help and we need to create a system where on day one of someone signing on, a Jobcentre adviser has the information to tailor specific help towards people with particular needs.

While a number of our policy recommendations have found their way into coalition thinking, we are still looking to the future. There is a huge challenge facing all political parties – how do you improve public services with no money. We will be publishing a number of reports over the coming months which specifically look to provide answers to this question.

How can you improve the effectiveness of the police when they are faced with 20 per cent budget cuts over the next three years? We think the police could deploy existing, fully trained officers more effectively rather than simply hire more staff – deployment is more important than employment. Private companies and civilian staff can play a role in delivering back office functions, such as manning call centres, freeing up time for officers to carry out more visible policing roles which is what the public is crying out for.

Energy bills are the biggest concern to most people around the country if you look at any of the opinion polls. We think the government could help energy companies reduce electricity bills by revising current climate change policy. We believe that global warming is happening and we believe that the UK has a responsibility to reduce its carbon emissions. But, current energy policy throws billions of pounds of taxpayer’s money on the deployment of specific, expensive technologies such as offshore wind. Government should spend more of its budget on financing innovation directly, rather than subsidising the mass roll out of expensive technologies.

Opening up public data is something that this government is committed to doing and we fully support this aim. Only this week we published a report calling on a right to open data. All non personal information held by government departments (maps and postcodes for example) should be made available for free. We think that entrepreneurs and civic activists could use this information to create new ‘Apple-like’ services and products. Free, open data could create billions of pounds for the economy.

As you can probably tell, there is plenty of work to do. We need to make sure that the modern day Policy Exchange rises to the challenge.

Neil O'Brien is the director of Policy Exchange.

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.