The Special Partnership
Author: Chris WebberDate: 01/04/2009
Publication: Citizen Today
Barack Obama welcomed Gordon Brown to Washington for the first time last month and, judging by the usual political pleasantries, the two leaders seemed to get along well. As they pointed out, collaboration and cross-country learning will be crucial in helping the two countries come up with effective responses to the continuing financial crisis. Despite some important institutional differences, the US and UK have a long history of sharing policy ideas, and the relationship looks like it could be set for something of a revival over the next year.
Most immediately, Obama is leading the way on fiscal stimulus, with a package worth around 4.8% of US gross domestic product compared with the UK's relatively paltry 1.3%. Many economists would argue that the UK's package is not large enough, and that a bigger chunk of the money should be channeled to city level decision-makers for distribution, as is happening in the US.
There is plenty of scope for policy sharing on responses to the recession, but the range of possibilities on longer-term policy challenges is much larger. Recognizing the opportunity presented by a new presidency, policy experts in the UK have been loading up the transatlantic conveyor belt with ideas and evidence for the new administration.
In truth, the UK is running a substantial deficit when it comes to the trade in policy ideas between the two countries. From welfare policies to infrastructure financing mechanisms, the UK has regularly borrowed from the US. To date, relatively little has gone in the other direction, but there are signs that this may be about to change.
There are a few reasons the east to west route may be opening up. First, after eight years of an administration focused principally on international and security issues, there is a renewed focus on domestic policy in Washington.
Second, as the Great Depression of the 1930s demonstrated, crisis drives radicalism. The scale of the economic, social and environmental problems now facing the US means that politicians are coming under increasing pressure to come up with new solutions in areas like welfare, education, health and transport.
Finally, despite being just as deep in the recessionary quagmire as the US, the UK has introduced some valuable policy innovations over the last 10 years that are relevant to US policymakers at the federal, state and city levels.
What kind of lessons are we talking about? One of the most useful is the importance of political leaders closely aligning themselves to key policy areas. In the UK, Gordon Brown, first as Finance Minister and now as Prime Minister, the former Prime Minister Tony Blair, and the former Deputy Prime Minister, John Prescott, all led on priority policy areas like welfare reform, economic growth and urban regeneration.
Having high-level political champions drive forward policy reform in these areas smoothed the path of change and attracted more public investment. The combined influence of the Brown, Blair, Prescott triumvirate has been credited with playing a key role in the revitalization of the UK's cities over the last 10 years.
The creation of a new Office of Urban Policy in the US is a sign that Obama wants to take urban policy seriously. But the fact that the Office now reports to a level below the president, whereas it had initially been intended to report directly to him, shows that the cities agenda is already coming under pressure from other priorities.
On social policy rather than leadership, Obama might be interested in taking a look at how the UK borrowed and adapted one of the cornerstones of the US welfare system, the Earned Income Tax Credit (EITC). The EITC has been split into two separate credits for use in the UK, the Working Tax Credit and Child Tax Credit. The UK system is more generous and provides stronger support for low to middle income families. Payments also go out on a monthly rather than an annual basis, helping families to meet on-going expenses during the year. Though the UK is set to miss its ambitious target on child poverty, the evidence shows that tax credits and other changes have helped to bring child and working family poverty down since they were introduced.
US policy-makers can also take lessons from the UK on tackling congestion. Since the former Mayor of London, Ken Livingstone, introduced the congestion charge to the UK's capital in 2003, the volume of traffic entering the congestion charge zone has fallen by over a fifth. Meanwhile, the £125m profit generated by the congestion charge is ploughed back into the public transport system, helping, along with the congestion charge itself, to increase bus use by some 15%.
Some US cities, including New York, Miami, Seattle and San Francisco, have been looking at introducing their own road pricing schemes, but progress has been too slow and the federal government should consider giving cities an extra nudge in the right direction.
The UK has also been relatively more successful in curbing urban sprawl, increasing building density and revitalizing city centers. Planning guidelines have encouraged local planners to prioritize town center development, while avoiding out of town big box retail development wherever possible. The government has also set guidelines stating that 60% of all new residential developments should be sited on brown field land by 2008. The target was surpassed in 1999, and
by 2006 it had reached 74%.
Many US cities, including Houston, Phoenix, and Kansas City, have serious problems with urban sprawl, which increases car dependency and makes it harder to switch to more sustainable forms of transport. Obama has very little direct influence over either congestion charging or planning, but he can use the federal grants system to try and encourage the policy changes he wants to see.
Another valuable UK innovation has been the use of independent policy reviews led by highprofile policy experts and academics. These have helped to strengthen the evidence base on key policy issues, encouraged more open debate about options for change and provided specific recommendations on how policies can be improved. Areas reviewed have included education and skills, innovation, welfare reform, health, planning and transport. By no means all the recommendations have been taken up by the UK government, but many have and the reviews have often helped to create a consensus around the need for change.
Independent policy reviews led by respected US experts might be one way of encouraging the "open and inclusive government" that Obama and his team have argued for. They might also help to undermine some of the more blatant examples of congressmen and women in the US appropriating government spending on localized projects in their own district, an issue that Obama himself came under fire for during his presidential campaign and that has long been a problem in Washington.
The desire for change in the US is undeniable. But coming up with the ideas and managing the processes needed to deliver change is much easier said than done. Cynics and opponents have questioned the substance behind Obama's inspiring campaign rhetoric. He now needs to step up and deliver. The challenges he faces are enormous, but he and his team can learn lessons from elsewhere in the world. They could do worse than to start by taking a look at the UK.
A version of this article first appeared in Ernst & Young's Citizen Today.
