A modest public spending proposal

What if ministers had to make an announcement every time the government spent £2m?

Thick of It
Masters of the ministerial announcement: Peter Mannion and colleagues in The Thick of It. Photograph: BBC/Des Willie

The other day I received an email that could herald a revolution in Britain's public finances. It was a press release from the government, proudly informing me that Danny Alexander, the chief secretary to the Treasury, would be announcing a £2m investment into research into a new type of semiconductor.

Now the research itself is nothing out of the ordinary: it's an experimental technology much like thousands of others being tested around the world. What's remarkable is the sum of money. It struck me as odd that a cabinet minister saw fit to travel halfway across the country to hold an event to announce an investment that represents less than 0.00003% of the government's annual expenditure.

But then it hit me. Alexander is a clever man and keeps a close eye on public spending in his role as the government's chief financial officer, so I can't help but think there is a clever plan afoot. Perhaps this is the beginning of a new regime: could it be that from now on, each and every time the government spends £2m, it will receive its own announcement by a minister?

The more one thinks about this, the better an idea it seems. For a start, it would focus policymakers' attention and encourage thrift. As any viewer of Yes, Minister or The Thick Of It will know, ministerial visits and speeches are a pain to arrange and run the risk of embarrassing accidents. This in itself will cause cautious officials to think twice before signing off expenditure.

It would also be a vivid reminder of the cost of a whole range of policies. It would be hard for the government to forget the reality of Britain's 2.5 million unemployed people if Iain Duncan Smith were forced to visit a Jobcentre Plus to announce each £2 million of Jobseeker's Allowance spent (this would involve six or seven speeches a day, day-in, day-out). Defence ministers might travel to Faslane in relays to give the three speeches a day required to tell us the price of the UK's nuclear weapons. We would be reminded of the £1.5bn cost of providing winter fuel allowance for better-off pensioners with a steady stream of micro-announcements throughout the colder months (perhaps they could take place at Chatsworth, Blenheim palace, and other picturesque residences of some of the wealthier recipients).

Of course, this new plan will have some drawbacks. One was pointed out to me by Adrian Brown, from Boston Consulting Group's public sector practice. If each £2m policy took five minutes to announce, the 119 government ministers (yes, really) would take four-and-half months of nine-to-five speechmaking just to describe a year's government expenditure. But even this might have its upside: it would certainly keep them out of trouble, and with all that practice, standards of parliamentary oratory would quickly rise to Gladstonian standards.

All this is just a bit of fun, of course. But there is a serious point to note. Government announcements of support for innovation, entrepreneurship and science aren't always as small as £2m. But they are often very modest in the grand scheme of public spending.

Not long ago I totted up the discretionary commitments the government made in these areas in the spending review period just coming to an end. The much-vaunted ring-fencing of the research budget cost about £1bn of incremental expenditure. The increase in R&D tax credits cost just under half a billion. Tax breaks for entrepreneurial investment like EIS and SEIS cost just over £300m, while policies like Catapult Centres and SMART awards cost around £200m or less each.

These sums aren't peanuts. But compared to the £8.5bn incremental cost of the foreign aid ring-fence or the £6bn costs of protecting NHS spending, they're vanishingly small. It's depressing that headline innovation policies often end up receiving as little funding as Eric Pickles's £250m fund for emptying household bins. Perhaps the £2m press release could serve as a reminder that we should invest more in innovation?

Stian Westlake is executive director of research at Nesta, the UK's innovation foundation. He is on Twitter @stianwestlake