Article by Richard Layard: “…What is its value for money — that is, how much wellbeing does it deliver per (net) pound it costs the government? This benefit/cost ratio (or BCR) should be central to every discussion.
The science exists to produce these numbers and, if the British government were to require them of the spending departments, it would be setting an example of rational government to the whole world.
Such a move would, of course, lead to major changes in priorities. At the London School of Economics we have been calculating the benefits and costs of policies across a whole range of government departments.
In our latest report on value for money, the best policies are those that save the government more money than they cost — for example by getting people back to work. Classic examples of this are treatments for mental health. The NHS Talking Therapies programme now treats 750,000 people a year for anxiety disorders and depression. Half of them recover and the service demonstrably pays for itself. It needs to expand.
But we also need a parallel service for those addicted to alcohol, drugs and gambling. These individuals are more difficult to treat — but the savings if they recover are greater. Again, it will pay for itself. And so will the improved therapy service for children and young people that Labour has promised.
However, most spending policies do cost more than they save. For these it is crucial to measure the benefit/cost ratio, converting the wellbeing benefit into its monetary equivalent. For example, we can evaluate the wellbeing gain to a community of having more police and subsequently less crime. Once this is converted into money, we calculate that the benefit/cost ratio is 12:1 — very high…(More)”.