John Redwood

|

The government needs to slim down its "waste line"

Friday, June 13 2008

By the Rt. Hon John Redwood MP

For the last ten years Gordon Brown has encouraged an intellectual rigor mortis in any debate over taxation or public expenditure. Whenever any Conservative MP has suggested that not every pound spent in the public sector is a pound well spent, or that the government should try reducing the amount it spends through taxation and public borrowing, the Prime Minister’s immediate reaction has been to accuse the Conservatives of wishing to cut vital services and to challenge us on how many doctors, teachers or nurses we wished to cut. This is both crude and silly. I know of no MP who wants fewer doctors, teachers or nurses, nor do I know of anyone who does not wish to see the necessary resources given to our schools and hospitals.

There is a growing realisation that the government has badly squandered the economic legacy it inherited from the last Conservative government. The last decade has been a period of unprecedented growth in the world economy. As Chancellor Mr. Brown should have taken the opportunity to reduce the tax burden and make the UK economy leaner and more efficient, as was being done in countries like Ireland.

Instead, by frittering away the proceeds of growth, going on a debt binge and by introducing more than a hundred tax increases, he ploughed millions of pounds into the public sector while worrying little about how they were spent. Today food and fuel prices are rocketing, demand is faltering and house prices are falling. The government finds its sums do not add up and it has no way of reducing the tax burden on businesses and families to ease the hard times ahead.

Britain is the only developed country which is going into the economic downturn raising taxes instead of cutting them. As for our public services, the trains still do not run on time, too many schools are still failing our children, too many people are still being treated in dirty hospitals, and our soldiers face shortages of the vital equipment they need to carry out their duties.

So where has all the money gone? Some of it was indeed well spent, and like all others I welcome the increased numbers of doctors, teachers and nurses which have been recruited over the last decade. Unfortunately, they account for only a small proportion of the public sector’s expansion since 1997.

More telling has been the growth in the Whitehall bureaucracy. In the time Labour has been in power, the cost of government has gone up by over fifty percent and the number of civil servants increased by more than 300,000. They have added another layer to our system of government by introducing unelected regional government in England.

Central grants to these bodies have increased by thirty two percent in seven years. There are now more than 3,200 press officers across the government departments and public quangos, and the number of NHS managers has grown at almost triple the rate of NHS nurses. For every extra £100 spent by the NHS, £56 is spent on higher wages and administration, and another £9 is lost through inefficiency. There have been nine major reorganisations of the NHS in nine years, which is estimated to have cost a total of £3 billion.

The Home Office spent £6.5 million on an unsuccessful attempt to persuade the police force of the merits of a reorganisation. The Department of Environment and Local Government has been renamed on four separate occasions, each time requiring substantial expenditure on new signs, headed notepaper and more. We could fill a book on the number of new rules, regulations and requirements – most of which are “gold plated” by our Euro-enthusiastic Labour Party – which have been imposed on us by Brussels, each one requiring more and more enforcement officers, compliance officers and other box tickers and form fillers.

The large increase in the number of bureaucrats and civil servants is not allied to an improvement in efficiency. With growing regularity, Ministers have had to come to the House of Commons to apologise for botched projects, wasteful expenditure, and delayed implementation. Not only did the Millennium Dome greatly overrun its budget, it then lay idle and purposeless once the Millennium celebrations were over.

The Scottish Parliament, originally estimated to cost between £10 million and £40 million, ended up costing £431 million. The Government have been particularly inept at handling large IT projects. Between 2001 and 2006, four major projects spanning four departments have gone wrong. The overall budget for these projects, which were forecast to cost £9 billion, overran by nearly £34 billion.

The government spent £539 million on a new computer system for the Child Support Agency, only to discover that it worked no more effectively than the previous one. The Department of Work and Pensions also wrote off £141 million on a new computer system. At the beginning of this year the Guardian estimated that the cost of various abandoned government IT projects had reached £2 billion since 2000. Since then, two more have been abandoned: the “Police Portal” and the “integrated prisoner tracking”. These will add considerably more to the £2 billion figure.

The government has been especially wasteful in its procurement methods. The Public and Commercial Services Union run a “Waste Report” scheme, where they invite their members to contact them with examples of waste in the civil service. Some of the stories they have publicised include a Ministry of Defence contractor charging over £60 for a computer mouse that would otherwise cost £5, and HMRC employing consultants on an average daily rate of £750, who sit opposite civil servants doing the same job for £120 a day.

There are many similar anecdotes examples of wasteful practices in local government, such as the revelation by Hull City Council that it costs them £50 to replace a 35p light bulb, an action requiring the attention of four members of staff. Even more money is lost due to official incompetence. The Ministry of Defence managed to lose 200,000 sets of body armour which were badly needed by our troops in Iraq. Benefit fraud and errors caused the DWP a loss of £2.5 billion last year, and £57 million was paid out to dead people in 2006.

Just before the last General Election, the government did show some signs of realising that it needed to get a grip on how much money was being thrown at the public services and ensure that it was being spent wisely. Its own Review Committee, headed by Sir Peter Gershon, calculated that the Treasury could cut £22 billion of annual expenditure without having any adverse effect on important frontline services.

Yet when the Conservatives proposed tax cuts of just £4 billion at that election, the Labour machine again went into overdrive, with Cabinet ministers, like sheep bleating “four legs good, two legs bad”, repeating the mantra that our secret agenda was the large scale sacking of doctors, teachers and nurses.

The public have moved on from this. People now feel their incomes squeezed and are no longer inclined to believe Labour’s line that good public services require higher taxes when they have already paid so much for so little in return. Nor are people likely to be scared off by claims that tax cuts would mean a “black hole” in the public finances.

Having seen the amount of money the Government has squandered on Northern Rock, on botched IT systems, on more and more unnecessary layers of government and “jobs for the boys”, they see that Labour has created a far bigger black hole than that which they ever believed the Conservatives would create in the public finances.

David Cameron has been right to say that the proceeds of growth will be shared between lowering the tax burden and improving the public services. The main priority for any new government after the General Election will be to get the public finances under control. This will involve some difficult decisions about our spending priorities, and taking much greater care to ensure that taxpayers get as best value for money as possible.

As we have seen in London, where more and more examples of Ken Livingstone’s prolificacy have been uncovered and jettisoned by the new administration, it is possible to cut out waste without affecting the overall numbers of doctors, teachers or nurses. The British people, badly feeling the effects of the credit crunch, hope and expect that this best practice being pioneered by a Conservative administration in London is extended to the Treasury after the next General Election.

The Rt. Hon John Redwood MP is Member of Parliament for Wokingham and is the Chairman of the Conservative Party’s Economic Competitiveness Policy Review.