The next social challenge to public health: the information environment.pptx
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Will Hutton: Facing the future - The Nuffield Conference
1. Facing the future – The Nuffield Conference
24th March 2010
Will Hutton
Executive Vice Chair – The Work Foundation
2. The rise of “ unproductive entrepreneurship”
Size of UK banking sector
Banking sector assets (per cent of GDP)
UK banking sector assets 600
500
400
300
200
100
0
1880 1904 1928 1952 1976 2000
Source: Sheppard, D. K. (1971) and Bank of England.
4. Recessions compared
Note: In the past it has taken between 36 and 48 months to return the level of output to where it was at the start of the recession. Source: NIESR
5. The tough 2010s
• Minimum 5 per cent of GDP lost for ever. Loss could be as high as 10
per cent.
• Trend growth rate 1991 to 2009 ( trough to trough) was 2.0 per cent but
contained bubble effects. Note between 1997 and 2007 half GDP
growth financial services, property and construction.
• Barclays worst case forecast in IFS Green Budget is trend growth of
1.75 per cent
• There will be deleveraging and build up of saving
• Yet 3 million economically inactive, 2.8 million involuntarily idle and 2.45
million unemployed.
• Public sector has generated half jobs growth since 1997. Cannot be
repeated 2010-20.
…….Where are growth and jobs to come from in the 2010s?
7. Knowledge economy and the 1980s recession and recovery
1.6
1.4
1.2
1
index 1980 =100
0.8
0.6
0.4
KE market based KE public based Manufacturing Other Services
0.2
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
Total employment, EU KLEMS database definition 1980=100. KE market based is telecoms, high tech, business, financial, and cultural services; KE public based is education and healthcare
8. Knowledge economy and the 1990s recession and recovery
1.4
1.2
1
0.8
index 1990=100
0.6
0.4
KE market based KE public based Manufacturing Other Services
0.2
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Total employment, EU KLEMS database definition 1980=100. KE market based is telecoms, high tech, business, financial, and cultural services; KE public based is education and healthcare
9. Defining the Knowledge Economy
“ Economic success is increasingly based on the effective
utilisation of intangible assets such as knowledge, skills,
and innovative potential as the key resource of competitive
advantage. The term knowledge economy is used to
describe this economic structure”
Source: UK Economic and Social Research Council 2005
10. Knowledge based industries defined by the OECD
Note: manufacturing classified by R&D intensity; services classified by ICT use and employment of graduates. Recreational and cultural industries recognised as
knowledge based by EU but not OECD, and includes libraries and museums.
Market based Knowledge Public based knowledge Other market based Other public based
industries industries industries industries
• High to medium high • Education • Low to medium low • Public administration
tech based tech based
manufacturing • Health and social work manufacturing
• High tech services • Distribution, hospitality
(telecommunications,
computer services, • Transport
R&D services)
• Other services (dry-
• Financial services cleaning, hairdressing,
refuse collection
• Business services (real
estate, advertising, • Recreational and
accountancy, legal, cultural services*
technical, consultancy)
• Creative Industries
11. Key drivers of the knowledge economy
Growing as proportion of GDP in all western & advanced Asian economies
Driver One
New technologies, especially General
Purpose Technologies ( GPTs), create
new goods, services,
processes
and business models with multiple
spill-overs.
Driver Two
Shift in demand towards higher
value added,
experiential services and tech
based goods as consumers have
become more sophisticated and
diversified.
12. The rise and rise of “intangibles” – proof positive of the emergent
Knowledge Economy
Intangibles investment share 1970-2004
Business investment in intangibles as a share of market sector value added adjusted to take account of
intangibles. HMT October 2007.
16%
14%
12%
share of market gross value added
10%
8%
6%
4%
2%
0%
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 20 21 22 23 24
13. Intangibles and tangible forms of investment
Tangibles Intangibles
Buildings Computerised Software and databases*
information
Plant and Innovative property Scientific and non-scientific R&D
machinery Mineral exploration, copyright, licence costs*
New products from the finance industry
New architectural and engineering designs
Vehicles Economic Brand equity (strategic advertising plus market
competencies research)
Firm specific human capital (employer
provided training)
Organisational structure (share of
management time spent on strategy plus cost
of external consultants)
14. Business investment in intangible knowledge based
assets across the OECD
16% 140%
Ratio intangiblestangibles
14.6% Share of GDP
14% 13.5% 120% 120%
120%
13.0%
12.6% 110%
12% 100%
100%
10.5%
10.1% 90% 90%
10% 9.6%
9.3% 80%
9.1%
80%
8% 7.4% 7.3%
60%
60%
6%
40%
40%
4% 30%
20%
2%
0% 0%
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15. Health spending to 2020
• If there is “ ring-fencing” be sure it will be tightly defined –
only around 30 per cent of NHS spending really front line
• Total wage bill to 2014/15 can rise by 2 per cent per annum
in nominal terms.
• To preserve real wages and increments up to 100,000 job
losses
• Demand pressures will not reduce
• What to do?
16. Now the money has run out we have to think
• Structural approach to reform – more foundation trusts,
more polyclinics
• Managerialist approach – more targets, more performance
metrics
• Let a thousand flowers bloom – emphasise experimentation
and the local
• A fourth way – public value plus behavioural economics
17. Implications for the public sector
Delivering public value is all about ...
Authorise
Organisations seek public
legitimation by engaging
with stakeholders
Public
Value
Create Measure
How public value is produced Developing approaches to measuring
public value
...organisational responsiveness to refined citizen preferences
18. Five routes to behavioural change
• Set default option ( NHS Direct )
• Information ( preventative health )
• Self-contracting ( personal health targets )
• Architecture ( hospital design – design bugs out)
• Social norms ( lifestyle choices)
19. “Flexi-security”
Efficient active
Efficient active
labour market
labour market
policies
policies
Constructive Social dialogue
Adaptability,
Contractual
Contractual Life-long
Life-long
innovation
flexibility
flexibility learning
learning
and security
Modern social
Modern social
security
security
20. Conclusions…
• In Knowledge Economy health spending rises. Health spending will be
plus 10 per cent of GDP in 2020.
• Necessarily there will be more co-financing
• There must be more emphasis on preventative health and smart use of
diagnostic and clinical techniques
• From Big Pharma to Smart Pharma
• This means behavioural change - think imaginatively about behavioural
economics to induce behavioural change
• There will have to be a new workplace bargain, more flexibility about job
roles. Big leadership and management challenge.
• Now the money has run out – we have to think!