Barmy budgeting: Use it or lose it? They’ll abuse it

By Joe Ventre, digital campaign manager


“Have you ever noticed how all of the roadworks happen around the end of the financial year?”

The anecdote is one that will be familiar to many readers, and refers to councils’ last-ditch attempts to use up their budget before it comes under review. Road repairs are one of the less egregious examples of budget-maximising expenditure, but it encapsulates the problem of arbitrary budgeting. When spending, whether local or national, becomes an end in itself and not a means of providing better services, taxpayers are the ones who lose out.  

The phenomena of purposefully maximising budgets is in no way unique to local authorities or even the wider public sector, but we all have an interest in putting a stop to it when it is taxpayers’ hard-earned money on the line. It is also nothing new. My dad often recalls from his army days his REME unit parading armoured vehicles around the German countryside in the 1970s, with the sole intent of using up their fuel quota. 

The reason for councils, government departments and health boards (to name a few) acting in this way is quite simple. They fear that if their budget isn’t used to its fullest extent, and the purse-strings aren’t shown to be stretched to breaking point, that the budget-setters will see no justification in granting them the same (or a larger) slice of the pie the next time around. What they tend to forget however is that this isn’t simply government money they’re scrambling for - it’s taxpayers’ money. It is not their money to waste, especially not to feed an expensive spiral which would see them waste even more the year after.

The attitude that suggests all that matters is how much was spent, with more always being better, is one of the great enemies of fiscal prudence and lower taxes. Look at any recent government announcement. Say, for instance, the announcement on the extra cash for local government, which we responded to this week. An entire section of the government press release is dedicated to boasting how much taxpayer cash is being spent! As government minister Michael Gove touched on in his recent Ditchley Lecture, outcomes should be what matter. Politicians have got far too comfortable throwing our money at the problem, rather than asking what really is the solution. ‘New money’ announcements may feed the 24-hour media cycle, but they often don’t change a single thing. To create a better, lower tax Britain, we need our leaders to change this attitude. 

Wasting taxpayers’ money is unacceptable in and of itself, but how this money is then wasted adds salt to the wound. An example that readers will recognise is the foreign aid budget. Unlike aforementioned council budgets, the foreign aid budget has an enforced lower limit of 0.7 per cent of Gross National Income (GNI); the waste of which has reduced what could be a considered and noble venture to a farce. In recent years, we have seen hundreds of millions of pounds given to China and India, and over £9 million pocketed by the “the Ethiopian spice girls”. International development is a classic example of this ’something must be done’ spending, chucking money out of the door in a kind of virtue signalling first identified by James Bartholomew back in 2015

Often local authorities’ uses of their budgets can be equally difficult to justify. This year alone we have uncovered shocking salaries, bonuses and expense payments in London’s City Hall and councils across the country. What often escapes the media’s notice when ‘new money’ is promised is that a huge amount of it will go on salaries, not least in local authorities. All the while, residents in these areas are clobbered with rate hikes, in what appears to be a never-ending vicious cycle.

A fundamental rethinking of how budgets are configured must take place across all levels of public bodies, with consideration for taxpayers placed at the heart of the discussion. With the tax burden already at a 50-year high and the true economic impact of coronavirus still yet to reveal itself, taxpayers can simply no longer afford barmy budgeting. Public bodies have a duty, now more ever, to plan meticulously and ensure the elimination of waste. Arbitrary spending targets, such as that of the foreign aid budget, must also be reviewed in the same light. If the approach to budgeting is simply “use or lose it”, then they’ll surely abuse it. 

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