5. Economics
Economics is the study of how societies produce goods and services, and how they develop their capacity to produce products that consumers value over time. This is particularly relevant at the moment as the UK economy attempts to recover from recession and begin to grow output and employment sustainably. Growth is the only way that the UK can pay back its debt.
Within this context economics is the study of how limited resources can be most efficiently used to maximise the economic potential in markets. This is also very relevant at a time when government resources are becoming increasingly scarce and asked to do more. Economics can help ensure that:
- government only intervenes in markets with good reason
- regulation does not impose unnecessary costs on business to achieve its objectives
- any government spending achieves value for money.
Economics in government
The Government Economic Service (GES) is the professional body for economists in the UK public sector. With more than 1,600 members it is one of the biggest professional economics networks in the world.
The purpose of the GES is to promote ‘making economists better and the better use of economics’ in the public sector. More generally, our goal is to serve the public through ensuring that economic policy is driven by the best analysis and evidence led by a strong professional community working closely with other analysts.
Economists across government work in a variety of roles from building complex models to forecast economic variables to leading specific policy areas. Underpinning all GES work is a commitment to clear communication of technical ideas in order to proactively influence policy development and implementation.
Economists maintain strong links to other professional economists outside of the GES and are experts in using procurement techniques to bring in external research expertise. They also maintain connections to the academic community in order to bring the latest in innovative economic thinking into advice for decision makers.
Economics in ACME
The ACME economics team works across the whole department to help provide strategic direction, develop policy, and articulate the value of our work.
Economic growth is a key government priority: raising prosperity to get people into employment and pay back the national debt is the number one priority for the coalition. ACME has aligned itself to this objective with a stated goal to “become a more economic department”. ACME economists are helping to deliver this objective by:
- developing a growth narrative that demonstrates the economic value and potential of our sectors and existing policies so that we can stake a claim to be a growth department
- engaging with policy teams to identify policy ideas to enable the department to grow its growth narrative by focusing on thematic areas of growth potential such as exports
- strategic management of cross-government growth policy including Budget and Autumn Statement events, Growth Review, Heseltine Review, and Industrial Strategy
Robust evidence led decision making should be at the heart of all ACME policy development. There are three main areas where ACME economists add value to policy. Regulation is supported by the better regulation impact assessment process. Spending is supported by the investment committee business case process. Implementation and learning is supported by robust policy evaluation. ACME economists are also able to provide ad hoc advice at short notice to help think through proposals.
Proposals to regulate business need to achieve collective agreement. The Economic Affairs Committee and Reducing Regulation Committee are focused on ensuring that regulation is clearly defined, minimises impact on business, and cannot be replaced by any alternatives. Evidence is central to this process, and departments are policed on the robustness of their proposals by the Regulatory Policy Committee. ACME economists play a role in supporting policy teams throughout the policy development process – identifying problems, generating options, and examining impacts. ACME economists also manage departmental engagement with core aspects of the overarching better regulation agenda commitments.
Proposals to spend new money rely on a business case that sets out the strategic, economic, financial, commercial, and management case for the project. The purpose of the business case is to ensure that the spending is justified and will achieve value for money. High cost projects need to be approved by the ACME investment committee, and ACME economists support this process by providing guidance on the production business cases and, separately, providing a quality assurance function before sign off.
Evaluations are crucial to assessing the impact of policy and ensuring it is working appropriately while at the same time showing results to the taxpayer and achieving transparency in the decision making process. ACME economists are regularly involved in policy evaluation, particularly where economic impact is central to the work. The Olympic and Paralympic Games meta-evaluation is one example of an economist-led evaluation where the impact of the Games is assessed across four strands: economic impact, sporting legacy, community engagement and the regeneration of East London.
