By Tobias Phibbs
10th May 2019
Defra is adopting a public money for public goods approach to supporting farming and the natural environment after Brexit.
While this approach is still in its infancy it has produced promising initiatives as well as difficult points of contention. The Food, Farming and Countryside Commission suggests a public value framework would enhance those initiatives while resolving points of contention.
There is much that is welcome in Defra’s public goods approach. So long as at is sufficiently resourced, shifting subsidies away from the area of land that is farmed to the delivery of public goods paves the way for incentivising better management of soils and water, reducing greenhouse gas emissions and other externalities, as well as leading to public benefits such as improved animal welfare and healthier diets.
Yet it has its limitations and frailties too. Public good is a technical term with an established meaning. As a consequence, debate is liable to get bogged down in technical disputes about what constitutes a non-excludable and non-rival public good. Farming and land management produce many valuable outcomes that would fail to meet these criteria. It is also vulnerable to political interference. A new minister with a different agenda could whittle down the definition of public goods.
It also, and more importantly, focuses debate narrowly on the replacement of the Common Agricultural Policy. The future of agriculture depends on a great deal more than just direct subsidies, which constitute a fraction of the overall resource flowing through our food and farming systems and the wider countryside.
We have proposed instead using a public value framework to bring together all the resources flowing through food, farming and the countryside to deliver things like soil fertility, as well as sustainable farming, healthy diets and a flourishing countryside. It avoids unnecessary debate about the definition of public goods and would be embedded across government to give it expanded capability and greater political robustness. It also provides a framework within which we can understand the role of private and third sector money and social capital and consider how to align these substantial resources to deliver public value.
The concept of public value dates back over two decades to Harvard economist Mark Moore’s case for a change in the role of public bodies. He argued that they should move away from being vehicles for the bureaucratic enacting of a legislative mandate, and instead take on a wider social role. Rather than treating policy and funding streams in silos, a public value framework considers the whole resource flowing through a system and how best to coordinate it to deliver public value.
The Barber Review, published last year, extends the idea of public value from the public body to public spending. It introduces a public value framework for the Treasury to assess the public value of spending programmes through judging four ‘pillars’: the clarity and ambitiousness of a given goal, as well as the progress that has been made towards it; how effective the programme is at managing inputs (forecasting, benchmarking, etc.); the level of citizen engagement (how legitimate it is seen to be as a use of taxpayer money, the level of user participation, and engagement from key stakeholders); and the extent to which it develops system capacity as a whole (increasing levels of innovation, workforce capacity, work across organisational boundaries, etc.).
From the perspective of the FFCC, this review is a useful starting point but it too has its limitations. It is confined to assessing government decision-making and its overwhelming focus is on improving productivity, at the expense of wider social goals.
One way of viewing public value is that it consists of an expanded definition of public goods plus a public engagement element – what the public values is a crucial part of defining public value. The public value framework, then, is the means to coordinate all the resources flowing through a given system to deliver these objectives. This can apply to both government resources and non-government resources.
Recent initiatives launched by Defra and BEIS show the need for a systems-wide approach that breaks down government silos. Defra has launched the pioneering Facilitation Fund as an early means of encouraging farmers and land managers to cooperate to deliver public benefits such as soil restoration and improved water quality. Dozens of groups of farmers from Cornwall to Northumberland have grouped together to benefit from the Fund and deliver public benefits.
BEIS, on the other hand, has launched a Transforming Food Production Fund which emphasises competition in place of cooperation and has no notion of public goods or public value at all. Instead funds are given to those who “speed up commercialisation.” These stated aims are likely to mean BEIS incentivising externalities, such as farming practises which deteriorate soil quality, which we pay for further down the line. Indeed, the very projects funded by Defra’s Facilitation Fund may be clearing up the mess produced in part by BEIS’ fund.
Subsidising both the production and the mitigation of externalities is hardly an efficient use of stretched resources. And despite BEIS’ fund sitting within the industrial strategy, it also shows a lack of cross-departmental strategy. These conflicting incentive structures speak to the most fundamental problem with the public money for public goods approach, namely the narrowness with which public money has been interpreted.
Similarly, at present much debate has focused on the how the successor to the common agricultural policy will distribute funds. But other food, farming and countryside-related public (as well as private) money impacts on public goods. The government spends over £2.4bn on procuring food and catering services. The Forestry Commission plants trees, and the Environment Agency funds programmes with impacts on flooding, coastal risk, water pollution and many more. The National Trust is the UK’s largest farmer, with more than 618,000 acres of land and about 2,000 tenants. Private businesses involved in water supply, mining, energy extraction (including fracking which has now started in Lancashire), on and off shore wind, and so on, also impact on public goods.
Meanwhile the government has pledged to create a UK Shared Prosperity Fund to help reduce inequalities between communities and replace the money local areas currently receive through European Structural and Investment Funds (ESIF), but its focus seems to follow the Industrial Strategy in its narrow focus on productivity and growth.
A public value framework, by contrast, will consider all these aspects of the whole resource and how they can be aligned to deliver public value. Despite the formal Treasury commitment to adopt the public value framework little work has yet been done on implementation. A recent National Audit Office report found: “HM Treasury has not yet decided how best to implement the findings of the [Barber] review… Without such a framework, there is a real risk that the system is vulnerable to short-term thinking, which often leads to poor outcomes for those relying on public services and jeopardises value for money.” Just 33 per cent of civil servants involved in business planning and spending agreed that HM Treasury spending teams provided mechanisms to support and encourage departments to work together.
This lack of cooperation and strategic oversight is precisely what a public value framework would overcome, instead effecting genuine system change rather than just a better distribution of an ever-diminishing subsidy pot.
Note: this briefing was originally published on the RSA website (Royal Society for the encouragement of Arts, Manufactures and Commerce), which hosted the Food, Farming and Countryside Commission between November 2017-April 2020.