Nov 2010 19

The Cabinet Office has released all departmental spending over £25,000 since the Coalition Government came to power. As long-time advocates of spending transparency, we’re naturally pleased with this. Taxpayers deserve to know how their money is spent and we’re finally starting to see some useful spending data to help generate accountability. The spreadsheets are in the same format so users can manipulate the data and group types of expenditure together, which is a huge improvement on past releases. We’ve heard one or two complaints that some of the items are a little unclear so some more descriptive and less esoteric accounting procedures would be welcome but overall it’s a very positive step and the type of thing we’d love to see more of.

Our Director Matthew Sinclair was on Radio 4’s Today programme this morning (8.55 am) discussing the Government’s measures with David Walker, former Head of Communications with the Audit Commission. While Mr Walker didn’t say publishing this data was a bad thing, he was more sceptical of the Government having to itemise their spending. This is something that that is done routinely for American Federal spending on and many states also publish full spending data, so there is absolutely no reason why it cannot be done here. It’s our money, after all.

Selected professional data handlers were given these data sets a week in advance and some interesting graphics have been put together. It shows what can be done when the Government puts the numbers out there.

Below is a selection of some of the more interesting, eyebrow raising examples we have found skimming the data this morning. We would like to hear about some more from readers too. Use this link to access the raw data provided by the Cabinet Office and if anything catches your eye feel free to post the items below.

Equality and Human Rights Commission, September only

  • £7,019.74 for a car for the Chair and Chief Executive
  • Another £1,899.46 under the category “Taxis”
  • £11,985.00: communications – external affairs – research from 8hwe Limited.  They are the “UK’s first and leading dedicated message development agency” and report that because “of the sensitive nature of much of our work, which often involves crisis and reputation management” they choose not to name their clients.  They also say that they work for government on “strategy development and implementation, behaviour change, modelling and segmentation, scenario planning and consumer insight.”
  • Nearly £650,000 under the category “Rent”. Another £3,991.24 to Norton Rose for Business Rates.

Department for Energy and Climate Change

  • £19,699 for car hire and leasing for ministerial team and parliamentary support
  • £41,779 for overseas hotels in June and £45,560 in August

Central Office of Information

  • £23,250 on agency staff in August alone
  • £ 30,457.58 on the expense area “cultural diversity” in one month alone

National Offender Management Service

  • Around £15.8 million on Contact ICT Maintenance in June alone
Nov 2010 18

Following my post a couple of days ago on councils opting to leave the LGA, it has since been revealed that their Chief Executive got a £70,000 pay and pension increase last year. That takes his total remuneration to over £300,000. The LGA say that it reflects a promotion but this shows how out of touch with the public they are. The Chief Executive of a trade association funded with taxpayers money should not be receiving such hefty pay deals. It seems they ape many of the worst traits of some of the councils they represent – such pay increases are above and beyond anything ordinary workers would have received at the start of the financial year, with many looking at pay freezes or even pay cuts.  Senior staff at bodies like the LGA should be setting an example and cutting their already enormous remuneration packages.

This is just one of many problems with the LGA. It claims to represent  all ‘member councils and the people and communities they serve‘ but their motives and actions often say otherwise. The LGA lobbies central government to further their own political interests, which  is a complete misuse of taxpayers’ money, and too often the actual needs of residents are overlooked. Matthew Sinclair explains the injustice of taxpayer funded lobbying and political campaigning here.

As I mentioned the other day, the LGA claimed frontline services would be decimated after the Spending Review. Surely the subscription costs handed over to them by councils would be better spent on these frontline services that they so keenly champion? The chances are your council is a member of the LGA – if they are then you can write to your local councillors here, urging them to leave and save thousands of pounds.

Nov 2010 16

Yesterday, details of another group of councils opting to cancel their expensive subscription to the Local Government Association emerged. The list, published on ConservativeHome, shows how more councils are realising that the £50,000 membership subscription fee could be better spent elsewhere, helping to protect frontline services. With imminent cuts in council spending, the fee charged by the LGA is a cost many councils have decided they simply cannot afford.

The localism agenda is one which the LGA should in theory be fully supportive of. Yet their philosophy seems slightly confused. They are torn between wanting greater power for local authorities and increased funding from central government. The two do not marry well. The LGA have become a group who shamelessly defend local authorities at every juncture. They seem completely oblivious to wasteful council spending.

Rather than encouraging councils to find ways to make savings effectively and efficiently, using examples of councils that have successfully done so, the LGA’s response to the Comprehensive Spending Review was to instantly claim it would mean devastating cuts to frontline services. A very unhelpful response. Instead of praising those councils who have made innovative savings, and increased efficiencies, and rather than helping other councils make such savings, the LGA are themselves an obstacle to localism.

If this body is to continue to exist then it has to become more transparent, more accountable, less bureaucratic and more in touch with reality. If they do not they may see more councils queuing up to leave. The LGA can either choose to help councils or pursue the less helpful strategy, similar to that of trade unions.

After having listened to evidence being given to the Communities and Local Government Select Committee yesterday, it became increasingly apparent that now, more than ever, it is imperative the localism agenda is given space to flourish. This is something that has to be decided at an individual council level and here at the TPA we will continue to highlight areas of waste at Local Government level. At the same time we will continue to highlight innovative ways councils are reducing spending and increasing transparency. Councils and local residents know where there is fat to be cut. With increased council transparency and an effective message, the public can be involved in this process, when the axe does then fall, there would be wider agreement.

Undeniably the localism process is one that will take time, however is one that must begin post-haste. With trust in politicians devastatingly low and unprecedented cuts on the way, there has never been a more essential time for such a shift. If local councils were truly accountable to their residents, they may be far more restrained in the appropriation of taxpayers’ money. Mike Denham explains the compelling arguments for localism here.

The exact contents of the Decentralisation and Localism Bill, revealed later this month, is something to examine closely. Here lies a great opportunity, one which central government must help facilitate and which local government must embrace.

Nov 2010 11

Iain Duncan-Smith launched his long-awaited white paper on welfare reform in Camden Town this morning. The aims are well known: “simplifying the system” and “making work pay” are mantras ringing around the heads of politicos this afternoon. The stats announced at Arlington House this morning sounded great – 2.5 million households will have higher benefit entitlements; 350,000 children and 500,000 adults will be lifted out of poverty; 700,000 low earners will receive more.

We also heard there would be “no losers” but page 53 of the white paper notes:

“This simplification means that, in the long term, some households will be entitled to less under Universal Credit than they would have been had the current benefits and tax credits system continued.”

Of course the intention here is to get people back to work, so those receiving less than they do now could be a positive thing. And trying to ensure that there are no “losers” in the welfare system means that taxpayers lose out. But you can see how sensitive the issue is.

Last month we submitted to the consultation 21st Century Welfare. We recommended a Negative Income Tax (NIT), which you can read more about in our research paper Welfare reform in tough fiscal times. It’s an apt title, because welfare reform is usually something you’d want to attempt while supported by a healthy economy. And it has been tried; just ask Frank Field. But it’s so important this opportunity is seized now, despite the deficit. Our proposal would have saved money immediately: dropping the poverty line to 50 per cent and varying withdrawal rates can pay for a switch to a NIT.

Our proposal is actually name-checked in the white paper. While we disagree with the DWP’s conclusion on the NIT – it seems like they largely disagree with us about dropping the poverty line to 50 per cent of median income – the Universal Credit outlined today is similar to our proposal in lots of ways. It’s simpler, merges the raft of benefits currently administered down to one and will be accompanied by sensible but firm conditionality. We also suggested a 55 per cent taper rate but the Universal Credit will have a 65 per cent withdrawal rate. See our video for an explanation:

The reforms have their critics. One article yesterday said the focus should be on creating jobs, and this argument was echoed on a blog today:

“Despite all the media spin, prior to the recession unemployment fell dramatically under the last government. This was not a result of harsher benefit sanctions, but of a growing economy.”

Yes, true. But what’s also true is that the welfare bill exploded at the same time – by 40 per cent in the last decade. Many of the jobs created during the good times went to overseas workers; not necessarily a bad thing in itself but it’s indicative of how the current welfare system makes it worthless for benefit claimants to take lower-paid work.

Overall it’s great to see real action being taken to tackle the benefits system. We can all agree that it’s horribly complex – so much so that DWP don’t actually know how many types of benefits there are. And we can also all agree that the system has trapped people in dependency, and quite often poverty. It’s notoriously difficult to get anything done at DWP, as the last eight Secretaries of State serving in a little less than nine years will testify. The job seemed to be a poisoned chalice under the last administration and frankly that’s understandable. So it’s extremely encouraging to see the department heading in the right direction. Look out for more on this as the details are unpicked from the white paper.

Nov 2010 10

The Public Accounts Committee (PAC) released a new report yesterday about increasing passenger rail capacity. And the conclusions are not very pretty.

The PAC is reporting on the progress of the Department for Transport’s (DfT) five-year, £9 billion investment programme to improve rail travel, in particular by increasing the number of passenger places on trains by March 2014. They are currently 18 months into the programme.

Here is a paragraph from the summary:

"The Department's latest plans show that all the relevant targets will be missed. There will be 15% fewer extra places delivered in London in the morning peak and 33% fewer into other major cities, compared to the numbers the Department stated would be needed just to hold overcrowding at current levels. Despite the impact of the present economic downturn on journey numbers, we are concerned that the failure to meet the targets set will lead to substantial increases in already unacceptable overcrowding levels by 2014 and beyond. Rising demand for rail travel combined with serious cuts in public expenditure make it imperative that the rail industry becomes more efficient, otherwise the passenger will suffer. The Department told us that levels of crowding, and ticket prices, depend on policy decisions about the level of government subsidy. We are strongly of the opinion that this view is misguided as it ignores the scope for efficiency savings to release resources for front line services. The industry's ability to provide a good quality rail service, including acceptable levels of crowding, depends crucially on the efficiency of all players in the rail industry, and of Network Rail in particular."

So whose fault is it that the five year plan is already missing its target? Well, it’s very complicated and the complexity involved in trying to work out how the rail industry actually works may be the problem. As is stated in the report:

“The unique and complex structure of the rail industry makes it inherently cumbersome and expensive, and provides little external challenge to its vested interest in its own growth.”

It would appear the DfT – who are responsible for ensuring extra space on trains from train operators – are not looking to drive down costs, arguing the fate of the rail system depends upon how much taxpayers’ money they receive. This shows that the department rely too much on inputs rather than real reform that would not require train operators to expand their fleets or substantially redevelop stations to avoid excessive overcrowding. To get extra places on trains the taxpayer has to bear much of the train operators' costs as well as providing funds to Network Rail for it to build longer platforms.

Thankfully, the PAC is sceptical that throwing yet more taxpayers’ cash at it, without reform, will solve the problem. The main conclusion is that for future franchises the DfT “should impose clear obligations on operators to avoid overcrowding, and to bear the costs of meeting that obligation themselves.”  This is currently a requirement for only one rail franchise: Chiltern Trains.

So what about Network Rail and the Office of Rail Regulator? Well the problems at these two bodies are much more worrying. A conclusion in the report states:

“The Office of Rail Regulation does not have a grip on Network Rail's efficiency and appeared remarkably relaxed about the continuing gap in performance between Network Rail and international comparators.”

It is an indictment that despite the Rail Regulator being formed in 1994 it still does not have a full understanding of Network Rail’s costs. The inability to drive efficiency savings at Network Rail is largely down to their status as a guaranteed monopoly company.

“Network Rail does not pay dividends to shareholders. It is a company which has 100 members at present including the Department and 26 'industry members'. The industry members are drawn from Network Rail's trading partners, principally the train operating companies. The other company members are members of the public. The Government indemnifies Network Rail's debts which reduces the pressure from lenders on it to increase efficiency. Network Rail is also the monopoly provider of railway infrastructure in Great Britain.”

But the majority of its funding comes from the taxpayer and it is misclassified as a private company. The Rail regulator argues that Network Rail’s monopoly status makes it difficult to challenge their costs. International benchmarking is the only value for money comparison that they can make. With efficiency savings required by the Regulator only expected to narrow the gap between Network Rail and its European peers by two thirds over the next four years, it is safe to say that Network Rail is performing poorly.

Despite the poor performance of Network Rail, their executives are still very well remunerated. In 2009-10 the outgoing Chief Executive’s total remuneration was £1.2 million, £613,000 of which was salary.

So can the DfT, who provide the majority of Network’s Rail funding and underwrite their debt, demand more efficiency from Network Rail?  Well no, because Network Rail is a “private company”:

“Network Rail receives a subsidy from the Department (£15.3 billion for the five years to March 2014) and the Department indemnifies Network Rail's debts, yet its accounts are not audited by the Comptroller and Auditor General and he does not have authority to conduct value for money examinations of Network Rail.”

Nov 2010 09

The new Number 10 transparency website went live yesterday and at first glance it seems like an excellent initiative. It’s great that members of the public can see what their hard earned taxes are being spent on.  

When completed in 2011 it will be a portal through which people can view departmental spending and the salaries of civil servants. It will also be possible to check departments against pre-determined ‘business plans’ to check their progress. But does it really give power back to the people? Will it generate real accountability?

Douglas Carswell MP mentions on his blog that it could become just another gesture of openness, of which we’ve seen plenty over the years. He argues that the fundamental problem with this venture is that the Government will not be answerable to the electorate, but to the executive.

And what are the consequences for failure? This was discussed over at the Coffee House blog, with Pete Hoskin arguing that there needs to be a procedure for apportioning blame. Offenders need to be held to account if their spending is reckless or wasteful to avoid this becoming a futile exercise.

Both raise good points. The TPA have pushed for spending transparency for years but we’ve also said that it must be useful. For example, releasing data in a format that can people can understand and use is crucial if transparency is to be more than a gimmick. The same applies here; transparency has to mean something, and not be an end in itself. If we are to have true accountability then it has to be outward. As Carswell pointed out in his blog post:

 “If we are serious about making government more accountable, it needs to be made outwardly accountable.  Whitehall needs to be made to answer more to Parliament – and Parliament to the people.”

It’s fantastic that transparency is being taken seriously. But this should not be seen by Number 10 as the end of the story; they need to build from here. If the Government can bridge the gap between transparency and accountability then this will be a meaningful first step. If they fail to do so, then this whole exercise will have been undermined.

Nov 2010 08

A couple of weeks ago I blogged on how Councils can still deliver front line services and absorb necessary spending cuts. Last week, some local authorities made announcements about savings they have either already implemented or have in the pipeline.

Bexley Council announced details of how it plans to make savings of £36million over the next 3 years. Their main priority is the protection of key services like the collection of rubbish and repairing roads – so they have identified many other areas where savings can be made. They have outlined plans to cut 20 per cent off the wages of the senior management team, withdraw provision for private health care for senior staff, and seriously reduce the car mileage scheme. Additionally they have identified savings by freezing councillor’s allowances until 2014 and scrapped their annual black tie civil reception.

Bexley have also announced plans to centrally manage procurement to deliver maximum value and drive down costs – echoing the proposals made by Sir Philip Green a couple of weeks ago.

Some sensible moves. Seriously cutting back office functions and identifying areas of waste while still being able to deliver essential public services is what all local authorities should be looking to do.

Amongst all that, a question lurks: why do some councils provide senior staff with private healthcare? Not only are taxpayers paying for the NHS through their taxes, but they are also footing the bill for the private healthcare of some council employees. This is an outrage – if employees want to fund private access to healthcare themselves then fine. Our Town Hall Rich List suggests that many of them are more than capable of doing just that.

Leicestershire County and Nottingham City councils have also announced plans to cut costs. They have identified £2million of savings by pooling their administrative functions, human resources, payroll and finance services. This is only an initial step for these two councils – they have not drawn the line there, and have kept the door open to merging other services in the future. This is similar to the plans by Hammersmith and Fulham, Westminster and Kensington and Chelsea Councils to pool certain office functions and resources.

Articles like the one in the Observer yesterday about the impact of the Comprehensive Spending Review on local areas make for frustrating reading. The article, commenting on a leaked document  from one London Authoruity claims that areas would "visibly decline" and the "deterioration of estates would lead to antisocial behaviour" and "reduction in overall standards of cleanliness for litter, detritus and fly-tipping."

A source in the Department for Communities and Local Government dismissed such claims and echoed my sentiments: councils should not even think of touching frontline services until they had driven down costs in back offices, cut the pay of their chief executives and stamped out all "crazy non-jobs" such as development officers.

It’s great to see councils starting to take such innovative steps to reducing their spending and increasing efficiencies. There is a lot of low-hanging fruit to pick before councils even begin to talk about the threats to frontline services or council tax hikes.

Nov 2010 05

Eyebrows have been raised this week after the Prime Minister appointed his “personal photographer” to a civil service post. The Daily Mail thinks that it’s “defying his own austerity regime.”

Surely someone in Number 10 must have anticipated a backlash from this move?  This position shouldn’t be funded by the taxpayer. Number 10 has claimed that “he will work for cabinet office, not just the PM.” That doesn’t mean it’s all of a sudden value for money. Many in the public and private sectors fear for the security of their own jobs, so taxpayers will not be happy to fork out for an official Government photographer. The coalition parties should fund the post out of their own coffers.

 Cutting unnecessary spending, eradicating waste and wiping out the deficit should be the priorities of the Coalition Government. This move contradicts that necessary agenda and Downing Street should be prepared to practice what it preaches.

Nov 2010 05

Chips A list of all the RDA-owned freehold land and property assets has been released by the Government. Laura Sandys MP submitted a Parliamentary Question to the House last Thursday and the list is now available online. Immediate eye-brow raisers are the Dog and Partridge pub in Dudley, as well as another boozer and a fish and chip shop in Scarborough. Another blog has also spotted a greyhound stadium in Portsmouth and an ice rink in Durham.

There are 379 properties in total. Have a look through the list and see what property your RDA owns. Would the property be put to better use in private hands? Does RDA ownership of any properties hinder other businesses from developing or growing? Who gets these properties when the RDAs wind down? If any strike you as particularly odd then write to your local councillor or MP here and let them know. Selling these assets would raise a lot of money and would stop these local leviathans calling the shots in England's regions.

Nov 2010 03

When Eric Pickles announced he was to scrap the Audit Commission earlier this year it certainly didn’t signal the end of stories of waste by the quango. The Daily Mail carries a story today about some of their spending over the last few years – revealing just a few of the reasons behind his decision to axe the body.

The Daily Mail reports that over £4.8 million was squandered on lavish parties and highly questionable workshops for their staff. The £4.8 million included spend on things such as a gay rights workshop, £8,000 spent on events at Newmarket races, and £20,000 on a senior stakeholder briefing held at the new Connaught Rooms. In figures released to MPs over £730,000 was also spent on hospitality in its own offices, with a further undisclosed amount on landscaping the grounds surrounding their offices.

One of the organisations who arranged workshops, Steps, explain what the £15,025 paid to them was spent on:

“Steps Drama is helping the Audit Commission to embed a culture of respect amongst its 2,100 employees by co-delivering a training workshop which aims to raise awareness of diversity and encourage individuals to challenge discriminatory behaviour. Called Managing Change for Diversity & Equality, the workshop combines presentations from senior managers at the Audit Commission with drama scenarios, delivered and facilitated by Steps that bring the issues to life. It has been delivered 32 times, in off-site locations throughout England, with around 30 Audit Commission staff attending each session. Three actor-facilitators from Steps run an initial drama scenario, portraying employees in a parallel workplace who have narrow views and negative attitudes to issues such as work-life-balance, sexual orientation and disability. The delegates, as a group, question each character and give advice on how they might change their behaviour in the future.”

For a body that was supposed to audit accounts, this a huge waste of time and money. In our paper on unnecessary jobs we explained that public bodies often have statutory requirements to fulfil, as they do with diversity and equality. But this example shows how above and beyond some organisations went to promote this policy agenda. The result is always spending more taxpayers’ money.

We would welcome the spending of all quangos revealed to this extent. Waste like this has slipped under the radar for years but with transparency we have accountability. And that is something taxpayers’ find so infuriating about quangos – they’ve been too distant for too long. They must be called before their relevant Select Committee annually so that elected politicians can scrutinise previous budgets and approve future spending plans.

Nov 2010 03

Back in the summer the cut to the road safety budget catapulted speed cameras to the forefront of the road safety debate. Many councils – Oxfordshire, Wiltshire, some areas in Northamptonshire and Somerset – axed speed cameras, deciding that they were not a top priority in a shrinking road safety budget.

The TPA and the Drivers’ Alliance released a report around this time that studied speed cameras and their impact on casualty rates. The report’s analysis shows that since the implementation of speed cameras in 1992 – coupled with a one-dimensional focus on speed as the centre of road safety policy – road casualty rates have declined more slowly than in prior decades.

Speed graph
A statistical test confirmed that there is a statistically significant difference between the period before the introduction of speed cameras (1978 -1990) and the period after (1991-2007). Indeed if the 1978-1990 trend had continued to 2007 we would expect there to be over 1 million fewer casualties than actually occurred.  While progress would have had to slow eventually, there was no sign of that happening before the early nineties. The graph above shows how sharply the rate of improvement slowed.

In the summer it seemed that local authorities were reforming road safety policy, so that it was not so heavily focussed on enforcing speed limits. However news broke yesterday that Oxfordshire has decided to switch their speed cameras back on after the police force put up the bulk of the cash needed for the cameras to be reactivated after the council cut £600,000 of funding back in the summer.

Quite unsurprisingly supporters of speed cameras in Oxfordshire are still clinging to the old myth that without speed cameras safety will be seriously compromised on the roads. Woodstock town councillor and former mayor Peter Jay said: “I’m delighted that it appears that common sense has prevailed. Cameras are the only mechanism of effectively controlling speed.” 

Interestingly the councillor did not say “Cameras are the only mechanism of effectively controlling the number of accidents on the roads”. Cameras can and do slow drivers down in their immediate vicinity but is it the most effective mechanism to bring down the number of road accidents? Statistical analysis – including ours – seriously brings this into doubt.

It has been reported that a month after the switch-off, radar speed surveys showed drivers committed up to four times more speed offences at some of the camera sites. But what about the number of accidents, have they risen? It would appear not.

The development of speed cameras has not stopped as a new 3D speed camera that can catch drivers committing five offences at the same time could soon be introduced on Britain’s roads. The Assets cameras have been developed through a £7.1 million European Commission project and cost a whopping £50,000 each.

If the camera is rolled out across Britain thousands of taxpayers’ money will be spent on duplicating roles, which are supposed to be fulfilled by public bodies. The camera can read number plates and link into police databases to check for lapsed insurance – but the DVLA is already meant to fulfill this function. The company behind the camera also hopes it will be able to identify poor road surfaces and over-loaded lorries. Does that mean that human inspections will cease and cameras – which often have a high error rate – will be used instead?

Just when drivers thought they would not longer be hunted for fines a local authority is already reactivating cameras, without any evidence that the roads are less safe. There may even be an even more intrusive camera heading onto the roads.

Nov 2010 03

We knew that health and international development would be protected in the build up to the Spending Review. Ring-fencing health was always more popular than ring-fencing aid, but because it has the second biggest budget behind welfare that decision inevitably places huge pressure on other departments. Not only that, the healthcare budget has soared in real terms in the last ten years although studies show that this been met with a decline in quality and productivity.

John Appleby, chief economist at the King’s Fund, thinks that there is likely to be a clash over pay in the NHS at the end of the Spending Review period. After a two-year freeze, staff will be looking at pay-rises again and with a 0.4 per cent annual funding increase this may prove quite difficult.

At a Select Committee session yesterday he came up with some illuminating statistics. He said that there has been a 90 per cent real terms increase in the NHS budget since 1997. But crucially, he also said that 80 per cent to 90 per cent of that had been ‘siphoned off for pay rises for some particular people’.

Has this improved productivity?

"GPs and consultants in this country are some of the best-paid doctors in the world…I think the NHS itself would admit that they have not got as much out of these contracts with GPs and consultants – and possibly the workforce in general – in terms of productivity improvements that they should have."

Sounds like a nice way of saying no.

An explosion in expensive middle-management over that time in relation to staff such as nurses won’t have helped matters.

But the key to relieving the pressure of potential pay disputes is to put an end to the madness that is centralised pay bargaining. As I blogged back in July, the NHS White Paper has this on pay:

"Pay decisions should be led by healthcare employers rather than imposed by the Government. In future, all individual employers will have the right, as foundation trusts have now, to determine pay for their own staff. However, it is likely that many providers will want to continue to use national contracts as a basis for their local terms and conditions."

If the idea is to have a more decentralised system led by healthcare employers this simply can’t happen if centralised pay bargaining is retained. Local healthcare organisations would have no control over their biggest item of expenditure. Ring-fencing inputs – even when combined with nice ideas of patient-led local healthcare – won’t improve things until big obstacles like this are removed. Budgets aside, it also leads to poorer healthcare.

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