Standards for articulating cost benefit CEC crowdsourcing - RSA

Standards for articulating cost benefit

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  • Picture of Fraser Henderson
    Fraser Henderson
  • Economic democracy

Fraser Henderson writes about his submission to the RSA citizens' economy crowdsourcing challenge 'Engaging the public in decisions about the economy'.

We’re used to the idea of being consulted on changes to public services.  From library closures to the reconfiguration of health services, involving people in tough choices is recognised as a way of improving decisions and, on a more subtle note, making the public more accepting of change.

However, it is often difficult to appraise the choices which are presented to us – particularly when the costs and benefits of each are missing, distorted or poorly articulated.  The situation is made worse when the public are only presented with a single option or when obvious ideas are excluded from a set of proposals.

There is also a deficit in terms of citizen engagement on high value public-sector spending.  For example, I can’t remember being asked to give my views on the renewal of Trident or the award of the East Coast main line to Virgin and Stagecoach.  As a regular train user, my past experience of these rail operators on other routes would have triggered some pretty loud alarm bells!

On top of this, there is a lack of public accountability in companies which hold a public interest.  I’m talking about critical infrastructure companies such as BT, indispensable businesses such as the Post Office and companies which have received our tax pounds such as RBS - or indeed any company which delivers goods and services which have a critical impact on citizens, such as Carillion.  

The fallout is increasingly apparent.  For example, banks failed to consult on the recent closure of branches which have disproportionately affected isolated communities and the most vulnerable in our society and public pay phones have been removed from places where people would most benefit.

So what are the opportunities?  

Foremost it seems to be to seize the moment. The consequence of reckless sub-prime lending have exposed how fragile and dependant we are on good economic policy and the actions of so-called ‘experts’.  This, coupled with the onset of Brexit, has amplified uncertainties for all of us – not just the bankers.

In terms of the puzzles above, I wanted to open up some small ideas for further debate.  My view is that good decision making is the essence of good democracy.  Consequently these ideas are based on the concept of strengthening the voice of the citizen where it has previously been ignored.

Firstly, we could standardise the way that cost benefits are presented when choices are made open to the public.  We could even democratise the way that the benefits are evaluated.  This might be realised in a number of different guises but, at a basic level, I’m thinking about some sort of graphical representation about ‘cost per unit benefit’ or public involvement in the creation and appraisal of options.

Secondly, we could insist on public consultation for public sector organisations who make big spending decisions.  For example, this could be any spending decision over £10 per citizen at the local level and £50 per citizen at the national level.

Thirdly, we could mandate that companies of public interest have the same modern instruments of democracy that the public sector has.  For example, a petitioning process and standards of scrutiny which match those defined by law in the public sector.

We are no longer living in an era of a gold backed currency. Pension fund deficits are out of control and billion pound companies are folding in the blink of an eye.  When there seems only to be reward, not repercussions for those who are in control – isn’t it about time we challenged the balance of power?   

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  • I very much support the 3rd suggestion to democratise companies, particularly those serving a recognised public interest e.g. maybe utilities, care home providers etc.  I suppose they might have to be a certain size to make that viable though. For me this means ensuring their legal form provides voice to key stakeholders in some way rather than just having non-exec directors who could be just part of the crony circuit.  

    I am not so sure about the standardisation of cost benefit. The problem here is that the very nature of the valuation process is that it take the normal multidimensional nature of values and quashes them into a single metric often using techniques that are far from transparent or objective.  I think valuation is actually inimical to democratic input as it technicalises value.  I think the direction should be more a broader set of indicators of value and in line with your 3rd point better democratic processes.

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