Government Economic Service

GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES
UNCLASSIFIED

GES presentation
•Economics of Government intervention
•What economists in government do
•Application process
We won’t duplicate the information online:
https://www.gov.uk/government/organisations/civil-service-government-economic-service
https://www.gov.uk/government/publications/2017-government-economic-fast-stream-scheme
GES
Faith Bannier Josh Lidmila Alex Shirvani
Department for Business, Energy and Industrial Strategy

Economics of Government Intervention
Government intervenes in the market for two reasons
GES
Efficiency Equity
Making the optimum use of
scarce resources
Addressing market failures to
create Pareto improvements
Non-political: doesn’t make value
judgement on what is right
An ‘efficient’ distribution may
involve considerable inequalities
Redistributing resources to offset
inequality
Political: involves democratic
judgement on what is ‘fair’

Efficiency interventions
First rule of welfare economics:
A perfectly functioning market will lead to a Pareto efficient outcome:
•The right factor mix of inputs is used in production
•The right things are produced, given existing inputs
•Things are consumed by people that value them most
We can’t usually get a ‘Pareto optimum’ but we can make Pareto
improvements when we make markets work better
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Efficiency interventions
When markets work better the UK is better off
•We produce more with the resources we have
– GDP is higher
•We make sure our input factors are utilised better
– More people have jobs, and jobs better suited to their skills
•We produce the right things (comparative advantage)
– We can sell more exports
•Consumers have greater choice
– People buy things that improve their personal welfare
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Efficiency
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Market failures
Sometimes free markets won’t achieve Pareto efficiency
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Imperfect competition Natural monopolies, transport,
energy markets
Externalities Negative: pollution, things with
bad health impacts
Positive: spillovers from R&D,
social benefits from education
Asymmetric information Healthcare, credit markets,
insurance, quality/safety of goods
Public goods National defence, street lighting,
national justice system

Tackling market failures
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Information, education
and advice
Publishing league tables, crime
stats, public education campaigns
(‘talk to Frank’), labelling,
advisory services
Direct provision Government directly providing
policing, armed forces, bird flu
vaccine
Economic instruments Taxes, user charges, subsidies,
grants, tax credits, tradable
permits, loan guarantees
Regulation and
legislation
Regulation of rail fares/utility
prices, compulsory motor
insurance, trading standards,
health & safety laws, banning
tobacco advertising

Tackling market failures
GES
For further information read the
Home Office document
“Understanding policy options”

Equity interventions
A Pareto efficient outcome might not be seen as ‘fair’
It is Pareto efficient if one person has everything!
Government may also intervene for reasons of ‘equity’ (ie
redistribution of wealth) to tackle social deprivation
•Free prescriptions
•Extra money for schools in deprived areas
•Fee incentives to encourage access to HE to students from less well
off background
Equity interventions depend on political/moral viewpoints
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What economists in government do
There are two main types of government intervention
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Regulatory Spending
Westminster/devolved
government/EU brings in,
changes or scraps a regulation
Economists look at the impact of
the regulatory change (costs v
benefits)
This is called an Impact
Assessment
The Treasury allocates money at
fiscal events (Autumn Statement,
Budget, Spending Review)
Departments bid for money from
the Treasury to finance their
spending projects
Economists help put together
Business Cases for these bids

Impact Assessments
A regulatory change has benefits and costs
Example: proposal to introduce minimum alcohol unit price
GES
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/157763/ia-minimum-unit-pricing.pdf
Benefits: improved health, reduced
NHS costs, reduced alcohol-related
crime, reduced lost productivity due to
alcohol (total: £21bn per year), some
businesses will gain (eg pubs if people
substitute from cheap supermarket
alcohol)
Costs: higher prices to consumers, low
income consumers especially affected,
businesses face familiarisation,
transition costs, exchequer may face
reduced tax receipts

Business cases
Establish the rationale for the spending (market failure)
Build an NPV model of the expected value to the economy
This will involve several assumptions – these must be underpinned by evidence
(academic research/evaluations of similar policies)
•Total economic costs: exchequer cost plus leveraged private spending
•Expected returns on the investment
•How much of the returns are additional (not displacement, deadweight,
leakage, substitution)
•Wider benefits: including spillovers, positive externalities
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Policy evaluation
Impact assessments and Business cases are examples of policy
appraisal – done before the policy is brought in
After the policy is brought in evaluation tells you how well it worked/is
working
Various evaluation techniques: randomised control trials, quasi-
experimental methods, difference in differences
Key point is establish the counterfactual (what would have happened
if the policy wasn’t brought in) and estimate the difference, eg
increased output, jobs, improved health
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The Green Book
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For further information on appraisal and
evaluation techniques
https://www.gov.uk/government/publications/the-green-book-appra
Parts to read before the Economic
Assessment Centre:
-Chapter 3: Justifying action
-Annex 1: Government intervention
(explains efficiency/equity and gives you
definitions of all the market failures)
-Annex 4: Risk and uncertainty
-Annex 6: Discount rate

Other things economists do
GES
Writing evidence papers Writing a published/unpublished
paper on the evidence base for a
particular theme
Managing external projects Develop a research theme/evaluation,
draw up an invitation to tender,
assess bidders, award contract and
manage the contractor up to
publication
Economic support for
Ministers
Written and oral Parliamentary
Questions, briefings and submissions,
briefing on pre-release statistics

Career path
Assistant Economist (£28k-32k basic, some depts +£2k for MSc)
- Rotate jobs every year in your department
- After 2 years can move department
- After 2 years may be opportunities for funded MSc
Economic Adviser (Grade 7; £45k -£55k)
- No longer rotate jobs
- Significant responsibility, lots of economics
Grade 6
- Still an economist but more ‘strategic’ role
Senior Civil Service
GES

Application process
https://www.faststream.gov.uk/
GES

Fast Stream Assessment Centre
UNCLASSIFIED
GES

Economic Assessment Centre
GES

Economic Assessment Centre
GES
Go to the EAC Open Day
Technical report 30 mins to type answer on pre-released question
written for economists
Plain English report 30 mins to type answer on pre-released question
written for non-economists
Short Answer Q’s 30 mins: 10 questions on variety of micro and macro
Interview 20 mins: short presentation on answer to pre-released
question (with follow-up questions from interviewers)
20 mins: questions on SAQs (to help you gain marks)
20 mins: question on your chosen specialised topic
You will be given a pre-released question a few weeks before the EAC date

Student placements
The GES provides year-long sandwich student placements and 6 to 12 week
summer internships.
Applications for 2018/19 sandwich scheme close 12pm Thurs 12th October!
To be eligible 50 per cent of your course must be in economics and you must
be on track for a 1st
or 2:1.
Sandwich students who complete their placement successfully and pass the
Economic Assessment Centre at the end of placement will now be offered an
initial 2 year contract on graduation: they can make this permanent through
successfully applying to the Fast Stream.
https://www.gov.uk/government/publications/how-to-apply-for-a-government-economic-service-sandwich-stud
Summer placement applications open February – check the website.
GES

Find out more
1.Check out the GES and Fast Stream websites
www.ges.gov.uk www.faststream.gov.uk/government-economic-service/
www.facebook.com/GovernmentEconomicService/
Twitter: @GES_UK
1.Check out the Green Book and Understanding Policy Options
•If you can’t access them online, email us for the pdfs
1.Look at the Economy part of the ONS website
https://www.ons.gov.uk/economy https://www.facebook.com/ONS
Twitter: @ONS
1.Look for Nicholas Barr’s book The Economics of the Welfare State
And our contact emails!
faith.bannier@beis.gov.uk
joshua.lidmila@beis.gov.uk
alex.shirvani@beis.gov.uk
GES

Government Economic Service

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Government Economic Service