How New Labour has wasted a billion pounds

published 23 January 2006

If you'd like to know just how the Government is spending your hard-earned cash, look no further than 'The Bumper Book of Government Waste' by Matthew Elliott and Lee Rotherham. But be warned - the truth is even worse than you could possibly have imagined...

The world of public sector spending is nothing like the real world. It consists of a range of man-made disasters, lunatic schemes, wishful thinking, dopey planning, and plain greed, so much so that cataloguing it is verging on the impossible. Even in a book this size, we've only managed to skim the surface. We've scarcely mentioned the spindoctors, for example, but then they only' cost a few million every year. This includes the £300,000 said to be the going rate for the three people hired to take over from Alastair Campbell. Then there's the Special Advisers, policy wonks brought into the ministers' office to play the politics that civil servants aren't suppose to do. Their numbers have doubled to 80. In 2004, they cost taxpayers £360,000 in foreign trips, to add to their £5.3m worth of salaries. That averages out at about £65,000 each, several thousand more than an MP gets.

The fact is that the Government has become a consultancy junkie. The Department of Health has symptomatically spent £608,000 on ten different firms of consultants solely to implement the cost cutting expected of the Gershon Review. In 2004, spending on consultants went up by nearly half to £1.86bn but that's an underestimate as it only counts the trade association that covers two-thirds of consultants, so the real total is more likely approaching £3bn. The average outsider brought in costs ten times the rate of a comparable civil servant. Even so, they are too often too close to the government to be valuable as independent consultants. One consultancy provides half the advisers of the independent regulator of Foundation Hospitals. Another wrote a suspiciously neutral report on City Academies in advance of the 2005 election. Ironically, Lord Birt, adviser to Blair, has been forced to retire as a consultant to the consultants whom his boss was consulting. There are even reports of former civil servants who had been made redundant being hired back in as consultants, to do the same job at an increased rate of pay.

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This Government is also prepared to spend vast amounts of your money advertising itself. The advertising bill now comes to over £200m a year, three times more than ten years ago. There are also fault lines within the civil service itself. Some are due to duff units being set up for politically correct ends, like the £90m revealed for the new Respect' unit, or the £19m direct costs estimate for "coordinating strategy across gender, race, disability and civil service work force representation". Then there is the Government's hypocrisy. Some New Labour figures who pontificated about the disgrace of a Royal Yacht being bought for the Sovereign to host trade guests on now find themselves revelling in a room of imperial swank. The Cabinet Office has a set of five carved gilt wood armchairs worth half a million pounds; a carved gilt wood furniture suite worth another half a million; a Harewood commode worth £350,000; and so on. Despite these assets, the Whitehall arts budget still dispenses £500,000 every year for decorating Whitehall buildings with paintings borrowed from museums. Incidentally, 10/11 Downing Street is valued at £23,625,942. That random detail might win you some money in a pub quiz some day.

Another aspect of Government waste we've barely touched upon in our book is overseas travel: for example, the Leader of the Commons having a six-day visit with his staff to Australia and New Zealand "to take forward work in the modernisation of the House of Commons and facilitate business links with the Welsh Development Agency". Yeah, right. Cost: £9,839. We calculate that in the year to March 2005, Blair's own travel cost the taxpayer nearly £800,000. The two previous years came to around £930,000. For 2001-2002, he and his team chalked up a whopping £1.7m bill. The list goes on and on.

The bill for all this is coming straight out of your wallet. Edward Gibbon tells us in The Decline and Fall of the Roman Empire that, in ancient times, a Locrian who proposed any new law stood in front of the assembly of the people with a cord round his neck: if the law was accepted, his life was spared. If the law was rejected, the innovator was instantly strangled. While we would not go so far as proposing the Locrian test for new Government spending projects, but greater ministerial accountability for wasteful spending is long overdue. Because it's our money.

Where your money's going

On Government advertising, which is up threefold in three years. One advertisement for the Inland Revenue had to be remade because Gordon Brown didn't like the dog: cost £20,000.
On beauty treatments and glamour photo shoots for teenage mothers as part of the Sure Start Plus scheme: cost £3.4m.
On paying for a battalion of imaginary troops, thanks to a massive fraud at the MoD: cost £2.5m.
On a new training centre for London firefighters that had no smoke detectors or sprinklers and caught fire: cost £22m.
On buying library books: administration costs mean that by the time a £10 book hits the shelves, it has already cost us £24.

MoneyWeek readers can pre-order The Bumper Book Of Government Waste (£9.99) at a special price of £7.99 with free delivery. Call 01730-233870 or visit www.harriman-house.com/moneyweek