The document provides information about the work of economists in the UK government. It discusses how economists work to improve market efficiency and equity through regulatory impact assessments and business cases for government spending. Economists evaluate existing policies and work across departments to apply economic theory to areas like taxation, welfare and industry regulation. The career progression for economists and application process for the Government Economic Service are also outlined.

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

2. GES presentation
•Economics of Government intervention
•What economists in government do
•Application process
We won’t duplicate the information online:
http://www.civilservice.gov.uk/networks/ges
https://www.gov.uk/faststream
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES
Faith Bannier
Intellectual Property Office
Alex Shirvani
Department for Business, Innovation
and Skills

3. Economics of Government Intervention
Government intervenes in the market for two reasons
GOVERNMENT ECONOMIC SERVICE
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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’

4. 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
GOVERNMENT ECONOMIC SERVICE
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5. 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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6. Efficiency
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7. 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

8. 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

9. Tackling market failures
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES
http://www.ei-lat.ge/images/doc/understanding_policy_options.pdf
For further information read the
Home Office document
“Understanding policy options”

10. 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
GOVERNMENT ECONOMIC SERVICE
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11. 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

12. Impact Assessments
A regulatory change has benefits and costs
Example: proposal to introduce minimum alcohol unit price
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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

13. 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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14. 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
GOVERNMENT ECONOMIC SERVICE
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GES

15. 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

16. Other things economists do
GOVERNMENT ECONOMIC SERVICE
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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

17. Career path
Assistant Economist (£26k-32k)
- 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 +)
- No longer rotate jobs
- Significant responsibility, lots of economics
Grade 6
- Still an economist but more ‘strategic’ role
Senior Civil Service
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES

18. Application process
Apply for the Economist option on the Analytical fast stream
https://www.gov.uk/civil-service-fast-stream-how-to-apply
GOVERNMENT ECONOMIC SERVICE
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19. Economic Assessment Centre
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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

20. Fast Stream Assessment Centre
UNCLASSIFIED
Group Exercise
45 minutes : Discussion in a group of 5/6 to defend
your policy option
Policy Written
Exercise
90 minutes: Read a pack of information and write a
report to recommend one of two policy options
Leadership Exercise
30 minutes to prepare: how you would lead a team
to solve a problem
10 minute presentation, followed by questions.
Interview
45 minutes: evidence of something you have done in
the past, measured against competencies
(Use STAR structure)
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES

21. Application timetable
Apply in either Round 1 or Round 2
You can only apply in one round per year, so if you are apply in Round
1 and are unsuccessful you have to wait till Round 1 next year, you
can’t apply in Round 2 as well.
* Dates may change!
GOVERNMENT ECONOMIC SERVICE
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GES
Round 1 Round 2
Open for
applications
(next one Sep 2016) 1 Feb 2016
Application deadline 30 Mar 2016
EAC 18 May – 17 June
2016*
FSAC 11 June – 22 July
2016*

22. Student placements
The GES provides year-long sandwich student placements
and 6 to 12 week summer internships
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
First year undergraduates aren’t eligible
Summer placement applications usually open
December/January
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES

23. Find out more
1.Check out the GES and Fast Stream websites
2.Check out the Green Book and Understanding Policy Options
• If you can’t access them online, email me for the pdfs
1.Look at the Economy part of the ONS website
• Follow on Twitter / like on Facebook
1.Look for Nicholas Barr’s book The Economics of the Welfare
State
Contact for questions:
faith.bannier@ipo.gov.uk
alex.shirvani@bis.gsi.gov.uk
GOVERNMENT ECONOMIC SERVICE
Making economists better
Making better use of economics
GES