FT writer attacks public sector cushiness

The analysis by Jonathan Guthrie is dense, the conclusion damning. A business in a financially tight corner like the government's would become more efficient. But

Both parties are addicted to the idea that they can buy popularity with spending pledges. Labour is nervous of the increasingly assertive public service unions. Cost reduction drives launched earlier this decade have run into the sand.

Median pay is higher in the state sector, people retire earlier on far better pensions, and sackings are much rarer.

The Gershon savings are mostly unattained, and the Lyons target of moving 20,000 jobs out of London looks likely to be missed. He quotes a few examples of poor value for money.

• This week, the Commons public accounts committee reported that the government is spending a jaw-dropping £2.3bn in administering £4.1bn in compensation to sick miners.
  
  
• Last week, taxpayers learnt they were paying GPs 58% more money to work fewer hours.
  
  
• Last year, "a Tory-sponsored study found no evidence that £12bn spent yearly by the public sector on business support supported anyone other than public servants".
  
  

Optimistically, he proposes that the job of state bodies is to supply services, not employment. "Most of all", he concludes, "chancellors and their opposition counterparts should stop spouting litanies of spending, either promised or delivered, as if these guaranteed better public services. They may as easily betoken epic wastage".

We do not despair of the Taxpayers' Alliance just because state sponsored waste continues. It just makes their important work more important. Today, for instance, they highlight the attempt of the highest paid Council Chief Executive in the country to ignore the Freedom of Information Act because it's more convenient for him and his colleagues.

Here, as in the other examples, the taxpayer is absent from the table. A business has its owners or outside shareholders to answer to. The taxpayer is supposedly represented by ministers. Most of them are kept too busy to delve into efficiency - and if they do stumble across over a problem, the last thing Downing Street wants them to volunteer to the media is that the government is wasting taxpayers' money, even though that money belongs to the people of our country.

That's why accountable transparency (first discussed on this blog here) is so important. It would save millions of pounds. Untold (literally untold) millions. Accountable transparency is spreading in the USA. So why not here? Too inconvenient, one suspects.

Public falls out of love with the Olympics

The Taxpayers' Alliance reports that 64% of those questioned in a poll consider the financial risk of the olympics is not worth taking and the money could be better used in other ways.

89% think the government's latest increased budget of £9.35bn will be exceeded. 45% expect the final bill to be 60% more than the current budget, while 26% expect it to rise even higher – to £20 billion.

Asbestos rules cost taxpayers unnecessary money

Government blithely loads extra costs onto taxpayers - for instance through Home Information Packs.

The Taxpayers' Alliance outlines why UK asbestos rules are unnecessarily and expensively restrictive.

Council tax protest in Barnet

Yesterday there was a council tax protest down the road from here, in Barnet.

Let's hope to see plenty more.

Police forces - a case of state sector inefficiency

As a taxpaying civilian I read police blogs (some linked to here on the right) detailing the idiocies of police procedures with appalled fascination.

Is this a case of injelititis? - dim bureaucrats only promoting safely dimmer bureaucrats? What would it take to cut out this stuff?

Are all police forces complacent throughout their top ranks? Is there any hope of change at all? Or do I have to resign myself to being bled for ever to pay for this inefficiency?

I am not railing at the police bloggers, by the way! I respect all of them I've read, and I wouldn't have their jobs for anything.

We can view this more broadly, looking at police forces as just one example of state sector inefficiency (if that's not too weak a word). Just in the past few weeks we have seen the distorted priorities of the smug Environment Agency, and the proliferation of organisations and senior posts among those who are supposedly delivering us a high value olympics.

The Taxpayers' Alliance regularly highlights these and other examples. The more publicity they can get, the better. We must aim to reach the point where taxpayers become sick of hearing about how their money is being wasted.

In the case of police forces, blogs regularly expose similar tales of waste across the country. The pattern is clear enough by now. So what next?

"These dollars belong to the people of our state"

Accountable transparency is the new democracy. This is the heading to a very important piece in the Financial Times. Grover Norquist, of Americans for Tax Reform, discusses what he calls "accountable transparency" - making state budgets, contracts and individual expenditures available to the public on the internet.

For example (more details here) -

• The governor of Texas has put his own governor's office expenses on the web in a searchable form.
  
  
• Also in Texas, any school district that cannot prove that it is spending at least 65% of its education budget in the classroom must publish its payments - every single expenditure item - online for citizens to inspect.
  
  
• Indiana's governor put his state's contracts on the internet on the day he took office.
  
  
• Five states have passed laws mandating various levels of transparency. Legislation was introduced or debated in a dozen others and, says Norquist, is set to pass next spring.

Governor Matt Blunt of Missouri has put up the Missouri Accountability Portal ("Map Your Taxes") website, which posts a wide range of government expenditures.

As Norquist explains, you can look up the actual expense records of your favourite politician and bureaucrat. A linked website provides access to the actual contracts let by the state. There are other plans, including the posting of state employee salaries.

The Governor says:

One of my goals has been to transform state government by using technology to improve efficiency and enhance transparency. The old-way bureaucrats like the paper-based system, which empowers them and is less accountable to taxpayers. Few Missourians can take the time to root through mounds of paperwork in some department to find out where their taxes are going. Missourians deserve openness in state spending.

And - in words which everyone paid by the state should have visible to them all day - he adds:

These dollars belong to the people of our state

The Map Your Taxes website has received more than 600,000 hits in its first few weeks.

Norquist points out that accountable transparency is working up from the more local levels to the national level, and that it is popular with the media. Most of the information in most states is already legally public information. And it needn't be expensive. Governor Blunt "put the entire state finances online without a single additional appropriation - just using existing staff and resources".

Here we have something extremely unusual - a simple idea which is powerful enough to bring about a huge increase in democracy at minimal cost.

Its time seems to be coming in the USA. How long will it be before it starts to cross the Atlantic?

One can foresee determined rearguard actions being fought by politicians and officials in the UK. (To take a trivial example, MPs' expenses, anyone?) But "these pounds belong to the people of our country".

One of the jobs of the Taxpayers' Alliance is to unfurl this banner and bring the issue into our political discourse.

Will an MP make a start by introducing accountable transparency for his own office?

And what of the EU? Who will take up the long fight to make accountable transparency mandatory for all EU expenditure?

"These euros belong to the peoples of the EU."

More olympic costs

The Taxpayers' Alliance have calculated that the 2012 olympics will add almost £4 billion to construction inflation in London and the South East between now and the start of the Games.

This is because the huge demand for construction of olympic facilities will have knock-on effects in the wider construction industry. Capacity will be stretched, so prices will rise.

And doesn't Brown want to build more houses too?

Taxpayers' Alliance launches in the West Midlands

As reported in the Birmingham Post:

Taxpayers' Alliance spokesman Blair Gibbs said: "The cause is backed by some of Britain's most respected academics and business people. We are not linked to any political party and accept no public money."

The WMTPA intends to campaign to cut taxes on business, to reduce income tax and to lower council tax. The group is opposed to road pricing, green taxes and inheritance tax and wants all regional quangos abolished.

Mr Gibbs added: "This is a new voice for those who want a different future for the West Midlands.

"We will be holding meetings, investigating waste using the Freedom of Information Act, engaging with the media and organising direct mail efforts to spread our message. We will expose waste, attack reckless spending, and campaign against all those politicians who meddle in vital services."

A good example is the £54m white elephant in West Bromwich, a place which certainly hasn't got money to burn. "The Public" is at least two years behind schedule, and is well over the original budget. The TPA described it as

A giant symbol of unnecessary spending.

This idea of unnecessary spending is a powerful one. I'm sure we'll be hearing more of it.

P.S. Members of the West Midlands Taxpayers' Alliance ruling council include Peter Roberts, the man who managed to get 1.8 million people to sign a petition against road pricing on the 10 Downing Street website.

Giving too much money to Scotland

The “Barnett Formula” means that people in Scotland receive £1,500 more government spending that people living in England.

“Britain is now suffering from a fiscal apartheid, where each English household gives £350 per year to Scotland for services they do not enjoy south of the border. This situation is unfair and unsustainable.” - Matthew Elliott, chief executive of the Taxpayers' Alliance

That means my English household is subsidising Gordon Brown's constituents.

P.S. And every household pays £900 a year to cover bungled Government projects. This is starting to mount up.

Hey, that's our money they're wasting

The government continues to waste our money. Not its own money, our money. Your money and mine.

The government is paying above the market rate for employees from outside.

Taxpayers are set to get a £2m bill for removing the toll booths on the Forth Road Bridge - just a year after £5m of public cash was spent upgrading them.

And large businesses are subjected to an excessive number of tax investigations with only small sums of money at stake, according to a National Audit Office report. Almost 60% of the inquiries being pursued in February this year were expected collectively to produce less than 1% of the total tax yield generated by compliance checks. And the point of them is...?

The Taxpayers' Alliance highlights government waste every day. They are the only organisation campaigning for the government to stop wasting huge amounts of the money that you and I work for and never see because it's snaffled in tax.

Register your support for the Taxpayers' Alliance - it's free.

Jane Moore reports in The Sun that "Carl and Samantha Gillespie are enjoying the dry warmth and comfort of their new £500,000 detached home in a quiet, leafy suburb of Berkshire. Bought at your expense".

Carl and Samantha have 12 children between them and their last council house burnt down when one of the youngest ones played with a cigarette lighter. So West Berkshire Council spent £350,000 buying them a new home, plus a further £150,000 on renovations, including double glazing, furniture, carpets and central heating.

Government projects are a mere £23 billion over budget

The TaxPayers' Alliance have calculated the scale of cost overruns in public sector capital procurement projects.

A number of high-profile public sector building and defence projects have finished years late and many times over-budget. Remember the Euro-fighter? the Dome? the Scottish Parliament?

They investigated the official record of over 300 schemes - including roads, hospitals, science facilities, IT systems, art galleries and defence systems - which have been completed since the start of 2005 or are ongoing. They then compared the initial cost estimates with the final outturns or latest estimates for each one.

* The total net overrun for the 305 projects was over £23bn above initial estimates. This is the equivalent of over £900 for every household in Britain.

* The average overrun was more than one third.

* 14 projects overran by more than the Millennium Dome.

* 57% of projects overran, compared with only 14% that came in under-budget.

* The worst two departments for overruns were the Department of Health and the Department for Culture, Media and Sport (formerly headed by Tessa Jowell, who is now keeping an iron grip on the costs of the olympics):

* Projects under the responsibility of the Department for Culture, Media and Sport (formerly headed by Tessa Jowell, who is now keeping an iron grip on the costs of the olympics) were 286% over-budget on average.

* Projects run by the Department of Health were £13.9 billion over-budget.

* The best department was the Department for Work and Pensions. Projects under its responsibility were 28% under-budget on average.

The TaxPayers' Alliance have suggested a new “Law of Capital Procurement”, stating that

public sector capital projects can be expected to overrun by at least a third

The TPA say

These figures expose a consistent pattern of poor project management in the public sector. Taxpayers are footing the bill for the failure of politicians and civil servants to manage large projects effectively. This inadequate record stems from a failure to properly specify what is desired from a project before the project begins, underestimating costs to get the project approved, and paying over the odds in an attempt to solve the problem.(My italics)

They could have added that government amateurishly goes for huge big bang projects. These take years because they're so big, and because they take years the requirements change during the project.

In a commercial organisation, the so called "user requirements" can be frozen for the duration of the project, and this is part of the deal the user makes when they commission their project. But in the public sector ministers are untrammelled. Thus the public sector is an inherently unfavourable environment for large projects.

What the analysis suggests is not just that government must do better. It is that the public sector is an inherently bad place to do big projects.

Council tax

The Taxpayers Alliance reminds us that

Since 1996 ... Labour has overseen an average 91 per cent increase in council tax with some pensioners paying up to and over a third of their yearly income on just this one tax.

Tax credits waste

The Taxpayers' Alliance notes that the amount of overpayment in the tax credits system has fallen.

Reuters reports that the total has fallen by £100 million to a total of £1.7 billion this year. This is still a huge amount. A mistake is still made in almost half of tax credit payments. These mistakes mean families facing ruin thanks to overpayments being claimed back after having been spent and the British taxpayer funding criminal gangs that take advantage of the system’s flaws

With these huge costs to ongoing mistakes focussing attention on the problem some improvement was to be expected. What is remarkable is how slowly things are getting better. At this rate it will take 27 years, assuming that the same rate of improvement can be maintained, to create an error free system. This implies that it will take over a decade even to halve the number of errors.

They calculate that £1.9 billion of taxpayers’ money has been written off in overpayments. As they say, improvement at this pace just isn’t good enough.

The dynamic effects of tax

There's been another of the regular calls to abolish stamp duty on share purchases.

The Treasury of course rejected the call, with its usual static, accountant's approach.

"Stamp duty makes an important contribution to the public finances and provision of public services. Any suggestion of abolition without a sensible alternative source of revenue risks either significant cuts in public expenditure or tax increases elsewhere," a spokesman said.

As reported, this ignores the dynamic effects predicted from the abolition.

Oxera found that abolishing stamp duty would cut companies' cost of capital, enabling increased capital expenditure which would boost GDP by up to 0.78 per cent.

This would raise the overall tax take by between £1.27bn and £4.1bn, with the impact "likely to be towards the upper end of this range".

The gains would offset the loss of £2.93bn of tax otherwise raised from stamp duty.

Abolition would also trigger a jump in share prices, Oxera said, adding £146bn to UK equity values and creating a £281m windfall from capital gains tax. Almost all of this uplift would take place even if the government announced only a phased withdrawal of stamp duty, since the market would price in the benefit at once.

The Taxpayers' Alliance has repeatedly stressed the importance of dynamic analysis.

Incompetence & overspending

This blog favours smaller government, partly because governments aren't cost-effective in the way they spend taxpayers' money.

To take some recent examples of waste, we learn this week (more detail here) that

• Spending on temporary staff by Whitehall has run up a bill of £200 million over the past four years at a time when the Government is supposed to be firing thousands of civil servants
• The Passport Service has spent almost half a million pounds of public funds – just to change its name.
• Regional development agency One NorthEast has committed itself to spending up to £63,000 leading a delegation of property professionals for a four-day conference on the French Riviera.
• A group of senior Royal Bolton Hospital managers is to travel to Barcelona for a three-day conference at a cost of almost £3,000 - despite hospital bosses preparing to axe 95 jobs to balance the books
• A senior local government official is to be paid more than £100,000 in taxpayers' money on top of a £200,000 retirement package after convincing councillors to make him redundant.

This is incompetence at the operational level, with apparently no serious restrictions on how the units waste our money. Wat Tyler picks up on more incompetence - the clamp on NHS pay after previous government miscalculations, the lack of jobs for junior hospital doctors coming through the system, and the failure of the Home Office to record details of serious criminal offences committed overseas for at least 10 years. But the ramshackle machinery bumbles on at our expense.

Wat also picks up a withering piece by Matthew Parris about policy announcements by Brown that go nowhere but still cost us money: "Warning: incoming Brown ideas. Likely impact: zero".

Running such big organisations is a major challenge even for talented people with experience of how to get things done. This is not just a British problem. Maybe we shouldn't expect French presidential candidates to be awfully good at adding up the costs of their manifesto commitments, but there is a problem in Spain too, as The Financial Times reports.

They point to the present Spanish government's "inexperience, particularly in business affairs".

Mr Zapatero never worked in the private sector, having left academia to become a member of parliament at the age of 28. Joan Clos, minister for industry, tourism and trade, is a former mayor of Barcelona and an anaesthetist by profession.

Finance minister Pedro Solbes, a former EU monetary affairs commissioner, is the only member of Mr Zapatero's team with economic gravitas, and he spends much of his time sorting out the gaffes of his colleagues.

The ability to get things done in large organisations is an even more diffuse skill than "economic gravitas", and thus less easily recognised and valued. But the skill has to be found and cherished.

Lord David James has revealed the cost of some of the scams and incompetence which came about through putting people without the necessary skills in charge at The Dome.

Perhaps they are learning on the job? Perhaps we have to put up with Douglas Alexander telling lies about the road pricing debate while he finds his feet in a cabinet job (and incidentally is responsible for our transport system)?

But the trouble is, they don't learn. Government just doesn't see operational competence as precious, and is prepared to make ignorant decisions for the sake of good headlines without considering the operational drawbacks. Thus in the case of the Rural Payments Agency the failures were caused by decisions taken by ministers, but the officials had to carry the can while Mrs Beckett got promoted to be Foreign Secretary. It was ministers who decided to press on with this crackpot scheme, even though they had been told there was a 60% chance of failure, and the CEO - senior though he was - "only ever met Defra Secretary of State Margaret Beckett twice in his whole time as CEO. And the second time was when he was made to confess personally to her that the entire project had blown up. In reality there seems to have been virtually no contact between the important people up at Defra's plush Whitehall offices" and the operational arm at Reading.

Now The Financial Times tells us that Ministers have spent £6m on consultants for proposals to force house-sellers to pay for home information packs.

The pack includes an energy performance certificate, rating the home's energy efficiency. No cost-benefit analysis for the certificates has yet been released. No bodies have yet been accredited to train the assessors for the certificates. The regulations for the certificates and packs will not be issued until the end of this month.

Interested bodies are warning against it.

The National Association of Estate Agents said yesterday the "seriously flawed" proposals were being rushed through in a "nonsensical" manner, before the full results of pilot schemes were known. It accused ministers of taking an "unacceptable strategic risk". The Council of Mortgage Lenders said it remained "concerned about the overall impact of the packs on the housing market", while the Royal Institution of Chartered Surveyors has warned there are "insufficient working days available to train the requisite number of inspectors by June 1".

The government hasn't even followed its own policy on regulation.

The Better Regulation Commission urged ministers to "reconsider" the proposals last month, stating they "fall short of our expectations for good regulation". The watchdog warned that the government had failed to provide sufficient justification for its gold-plating of European requirements for energy certificates - a central plank of the packs.

But the government says this "should go ahead on June 1, given the importance of tackling climate change and cutting carbon emissions from homes. The date of June 1 was set over 18 months ago".

So this is partly another ludicrous new green policy, and partly testimony to the government's inability to set up a relatively simple (if misguided) system, even within 18 months.

The tragedy is that no political party is hounding the government over its waste and managerial incompetence, attitudes which - judging by this week's reports alone - seem to pervade the furthest corners of the public sector. Because it's not their money. It was ours.

In the US, political careers have been built on opposition to wasteful Washington bureaucracy. At the moment it seems to be just the gentlemanly Taxpayers' Alliance holding the ring. Nice people, but are there any other takers?

Petition against a tax on rubbish

With the support of the Mail on Sunday, the TaxPayers' Alliance has submitted a Downing Street petition on the proposed bin tax, which is being introduced without consultation.

The petition is now live, so please click here and sign up.

The TPA say that campaigning against green taxes is going to be a big theme for them in 2007 (hurrah), and with the help of the Mail on Sunday, this petition may yet prove very popular - especially since this campaign issue ties in so well with general resentment already over local government waste and scandalously high council tax bills.

Right-wing political groups

Congratulations to the Taxpayers' Alliance (TPA), who feature prominently in a Times piece reviewing "centre-right think-tanks and campaign groups" which discusses their co-operation. Starting from a low base in 2004, the TPA had far more media references in 2006 than any of the other groups.

The Times suggests that these are political campaigning organisations rather than academic think-tanks. The aim, it says, "is to create a broad 'conservative movement' such as the one that has swept the US".

Against this background, it's very encouraging to see the TPA taking to the streets and getting media coverage to put the case against rises for state employees. Maybe such activism - I summarised some data from them in my previous post - will even in time filter into coverage on programmes like Today, which tends to highlight demands by employees and unions, maybe simply because they make themselves available to the media when they are in dispute.

The fly in the ointment is that Cameron's Conservatives aren't interested in this sort of stuff. It's not mushy enough for them. That's why - recognising this - these groups are looking to create a "broad 'conservative movement'" out here in the country.

State employees strike

These are not public servants, they are employees of the state (that is, you and me).

The Taxpayers' Alliance gives a useful summary of some facts.

1. On average, public sector employees work 36 hours per week compared with 37.5 hours in the private sector.

2. The difference in hourly pay between the public and private sectors is even greater than the difference in annual pay. Average hourly pay in the public sector is £11.59 compared with £9.23 in the private sector.

3. The average number of days taken off sick is around 30 per cent higher in the public sector than in the private sector. In 2005, public sector employees took an average of 8.5 days off sick, compared with 6 days for the private sector.

4. The proportion of public sector employees enjoying generous final-salary pension schemes is 88 per cent, compared with only 16 per cent in the private sector.

5. PCS union members are still entitled to retire at 60 – five years before everyone else. This is true even for PCS members who joined the civil service last year.

Let's hear that on the Today programme, for instance.

Wasting more of our money

The Taxpayers' Alliance has more examples of waste, including -

• £210,000 Labour party tax dodge on property sale
  
  
• Worcester City Council spending £24,000 (so far) on a new logo - "The exact cost of the re-branding exercise has yet to be determined." No sensible private sector business would work like this
  
  
• £350,000 for overseas trips for Muslims to boost Britain's image
  
  
• £270,000 subsidy for the Church of Scientology.

But hey, it's only our money - mine and yours.

Caution in the North East

The North East Taxpayers' Alliance (NETPA) has obtained numbers about cautions administered by local police forces, which have made the front page of the Newcastle Journal. Under the headline "Letting them off lightly?", it reports

One in seven criminals who admit to assault, robbery and shoplifting in the North-East are handed just a caution by police.

One spokesman argued that the courts would only have imposed a similar penalty anyway, so this is cost-effective. The TPA comments

But what does this mean for the victims – many of whom will have been traumatised by the crime (we deliberately excluded “minor” crimes that caused no injury in our request)? And what signal does it send to young criminals about the seriousness of the criminal justice system? The fact that courts do not impose sufficient sanctions that deter is no excuse for the police not to pursue those guilty of violent assault, robbery and other serious crimes. It only goes to show how perverted the whole system has become that each component of the criminal justice system blames the other for systemic failure.

What has this got to do with tax? At first sight the TPA has strayed right off its brief. In fact its thrust goes well beyond just cutting taxes. It wants value for money. One theme is that people should have more say over the local services they are paying for.

This comes through in a quote from the TPA in the newspaper report.

"How can we hope to make our streets safer if the police are refusing, for whatever reason, to charge criminals for serious offences even when they manage to catch them?" ... Calling for elected mayors with power over police forces, [the TPA] added: "Giving burglars and violent criminals a caution is a disgrace. These are serious crimes."