Examination of Witnesses (Questions 1040-1056)
SIR NICHOLAS
STERN
7 JUNE 2006
Q1040 Chairman: Would you not feel
with massive spending departments where there has been unprecedented
spending in Education and Health you would expect the largest
input in terms of economists in those in order to make sure that
money was being well spent?
Sir Nicholas Stern: I do think
there is significant scope for expanding the use of economists
in those two departments.
Q1041 Adam Afriyie: The Government
has made a great play about evidence being used in the formation
of government policy. Under the Professional Skills for Government
programme what specific training and incentives will be on offer
to promote the use of evidence in policy making?
Sir Nicholas Stern: In Professional
Skills in Government there are a range of subjects in which the
people at different levels in the ladder are expected to perform;
they are supposed to have experience on these different aspects.
Obviously analysis and use of evidence is regarded as a core skill
and there are specific aspects of that where people are required
to get training. I would be more than happy to send you the training
programmes and what is involved in those training programmes if
you would like to look at that in detail.
Q1042 Adam Afriyie: Are there incentives
involved as well?
Sir Nicholas Stern: As we build
up this whole story of Professional Skills in Government these
will be core requirements for promotion and advancement. Yes,
you have to have those skills.
Q1043 Adam Afriyie: Once this programme
is fully up and running, assuming that it works, what improvements
are you expecting from the current position to the new position
with regards to the evidence being used in government policy making?
Sir Nicholas Stern: Partly it
will be the individual skills which people apply themselves that
they have learned. They will learn about trials, they will learn
about the basics of cost benefit analysis and so on. In some cases
they will apply those skills themselves. In other cases they would
actually be aware that these skills are there and can be used
and they will call them in. I think that awareness part of the
story—what cost benefit analysis can do, what serious analysis
of trials can do—will increase the demand for evidence whether
or not they actually do it directly themselves.
Q1044 Adam Afriyie: In a way this
is a wonderful thing and will no doubt make staff feel better,
but how will you actually monitor or measure whether or not that
training has been affective or that awareness is actually having
any output in terms of any changes in the way that government
policy is made?
Sir Nicholas Stern: I think what
we would like to do over time is understand how those skills are
being used; we could do that directly and we could apply the techniques
themselves. We could do sampling across the country.
Q1045 Adam Afriyie: Do you have plans
to do that sort of thing? Are those plans in place now where you
will monitor whether the change in the way you are providing evidence
to the Government is actually having an impact?
Sir Nicholas Stern: We will certainly
be doing monitoring of the whole story. I could let you have the
details of what we will be doing.
Q1046 Adam Afriyie: Do you have detailed
plans of how you are going to monitor?
Sir Nicholas Stern: Those are
being developed.
Q1047 Adam Afriyie: The definition
of science includes natural sciences and social sciences but seems
to exclude economics. Why is that?
Sir Nicholas Stern: Economics
is a social science, along with all the others. It is a question
of labelling academic subjects. Economics is a social science.
That does not mean that the kind of grouping used in that kind
of definition is actually an operational definition.
Q1048 Chairman: Sir David King, your
friend, says not. He actually says that the Government's definition
of science does not include economics in its broadest sense.
Sir Nicholas Stern: That is exactly
the distinction I was drawing. If you ask somebody from the London
School of Economics where I was a professor: Is economics a social
science? You will get an unambiguous answer: Yes. If you are talking
about administrative structures and whether a particular administrative
structure happens to follow the broader scientific definition
you will get something different, and that is what we have, something
different. It is a social science. That was the question, and
economics is a social science.
Q1049 Adam Afriyie: Sir Nicholas,
today how effectively do you think the social sciences are coordinated
in order to affect government policy making?
Sir Nicholas Stern: I think that
interaction is quite good actually. I see a lot of Karen Dunnel,
the National Statistician, and the Government Statistical Service
which, as you know, has some parallels with the Economic Service
which is under Karen. Sue Duncan has a reporting line to me; she
is Head of Social Research. There is the CRAG group which I think
you were told about last time—the Coordination of Research
and Analysis Group—where we meet regularly there as heads
of profession. Dave King is there and myself, Sue Duncan and so
on, and operations researchers. I think that coordination is quite
good. That is at the level of the heads and we try to set a good
example, but it is department by department that I think the cooperation
works well but in different ways, as I was describing before.
My colleagues who are coming after me as chief scientific advisors
could describe a department by department coordination which is
of course where the hard detail analytical work is carried out.
Q1050 Adam Afriyie: It sounds like
you are comfortable that things are going well, but there must
be some key weaknesses to the current system. What might they
be? Would you identify any weaknesses to the current system?
Sir Nicholas Stern: I think we
do have to push harder on using evidence in government and I would
welcome, for example, the examples of Health and Education we
had before. I would welcome a still stronger presence of economists
in those departments. Those would be the areas where I think we
could move forward, and Defence also.
Q1051 Chairman: Defence as well?
Sir Nicholas Stern: Yes.
Q1052 Dr Turner: How crucial do you
think the Cabinet Office and the Treasury are in their roles in
policy coordination in persuading civil servants to actually take
note of evidence in policy formulation? Which department or individual
do you think is most effective in this role?
Sir Nicholas Stern: I think there
are ways of working that help a lot. I think the 10 year Comprehensive
Spending Review which is being carried out now will have very
strong emphasis on the use of evidence and it is one of those
occasions where you actually ratchet up the emphasis on the use
of evidence. It is the points where you make big, long run allocation
decisions where I think you push quite hard on. I think the Prime
Minster's Delivery Unit—which is the Cabinet Office entity
that is housed in the Treasury—is another place where the
emphasis on the use of evidence starts to bite and gets pushed
hard. I think with these kinds of examples—one a unit and
one a process—we are collaborating as Treasury and Cabinet
Office to press for even stronger focus on the use of evidence.
Q1053 Dr Turner: I interpret that
answer as being that the Treasury is actually more or less in
the driving seat which is what many of us would suspect. How relevant
do you think it is in that context that the Treasury does not
have a chief scientific adviser? Do you think that that is right?
Do you there is a case for one? What is your view?
Sir Nicholas Stern: Just on your
first observation, I think it is genuinely collaborative. The
fact that the Prime Minister's Delivery Unit is housed in the
Treasury I think is a measure of the collaboration and it is a
good example. The Treasury and the Cabinet Office are clearly
both cross-cutting departments, as they should be. What we do
is to draw on the scientific advice of the other departments.
Dave King is Chief Scientific Adviser to HM Government and as
such we can draw on Dave King's advice. We regularly draw on the
advice of the chief scientific advisors in other departments.
I think it is quite appropriate that the central partners of government
are able to draw on the scientific advisors of other parts of
government and they do exactly that. However, it is would be a
decision for Nick McPherson and the Treasury Board (I am a non-executive
member of the Treasury Board) as to whether they want to go forward
with that. Again, I think the current structure seems to function
quite well because we draw on the assets of government as a whole.
Q1054 Dr Turner: Finally, a lot of
people talk a lot about the precautionary principle in policy
formulation. A lot of it is nonsense and it gets stretched too
far. You have advocated taking a precautionary approach rather
than trying to define a discreet principle. How do you approach
this in your work and within the Treasury? Is there any guidance?
Do you think guidance is even appropriate or whether it is possible
to write sensible guidance on the precautionary approach or principle?
Sir Nicholas Stern: I think what
you need is good understanding of the economic analysis of risk
and how to analyse probabilities with different information. There
are probabilities of bad outcomes, good outcomes, what kind of
information you would need to estimate and revise those probabilities.
At the same time you need to understand consequences of different
outcomes in terms of lives saved or lost or whatever they might
be, and then the different instruments you can use to approach
risk, whether they be instruments which cut back through investment
or instruments that deal with building higher flood defences or
insurance instruments of various kinds. It is understanding how
you estimate probabilities, understanding consequences of risk
and understanding the policy instruments you can use, and that
is the analysis that you bring to bear. It is a very rich analysis
in economics and I do not think you can reduce it to one particular
principle or one particular rule. You can show the kind of economic
analysis of risk that is necessary to take an evidence-based analytical
approach to those problems. That is why I think it is so important
to get the standard of economics in government still higher. I
would like to emphasise that over the last five or six years—we
can give you the growth rate—the number of economists in
government has grown pretty rapidly. It is not as if that message
is not getting through; I believe it is getting though. I do not
think you can reduce the whole theory and practice and use of
evidence in risk to one narrow rule.
Q1055 Chairman: Can I just throw
one last question at you? You now have a desk in the Cabinet Office
as well as in the Treasury. Do you think Sir David King should
have that? Should David King have a seat in the Cabinet Office
the same as you have?
Sir Nicholas Stern: I actually
do not use the seat in the Cabinet Office; I am actually sitting
in the Treasury, although my affiliation is in the Cabinet Office.
My affiliation is there because I am embarked on a project which
cuts right across government and affects every department but
actually the Treasury building is a very good place to run a research
team and that is my main activity at the moment.
Q1056 Chairman: It seems a very good
place to run everything from, Sir Nicholas. Thank you very, very
much indeed for coming to see us this morning.
Sir Nicholas Stern: Thank you
very much.
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