Cut of the day 12: cutting wasteful gov’t spending

In business I learned that a budget is no authority to spend. Cash control, eliminating wasteful spending, and having to show a return on money spent, were the mantras of everyday life in business.

Not so in government, as it appears from Sir Philip Green’s Efficiency Review of government spending.

Sir Philip’s report is admirable in its conciseness and clarity. Interviewed by the BBC’s business editor, Robert Peston, he said that the processes involved if the government spending of £191 billion were ‘shocking’.

A couple of Sir Philip’s examples are:

  • Between £600m and £700m could be saved on the £2bn telecoms bill
  • Government property costs £25 billion annually, and there’s no central control of property leases, with rents being paid for unoccupied offices

If the coalition government can get spending under control, make government more efficient, and get the economy growing, then the UK will be the model for post industrial, post welfare society. It’s a big challenge. But, if Sir Philip Green can identify big savings from wasteful expenditure in less than three months, then there must be other areas of savings too.

Amazingly, all these savings may provide money to spend on vital infrastructure investment in the UK, which would offer employment opportunities.

[Future] Cut of the day 11: Public sector pensions

Readers here may have read my posts over the years on the pensions crisis facing this country, most recently HERE. It’s pleasing that this issue is being addressed sensibly, as shown in the interim report of the Independent Public Service Pensions Commission.

One of the issues that has troubled me is the unaffordability of those at the top of the public sector pay scales and their pensions.

To illustrate another of the problems, that we are all thankfully living longer, I’ve captured a graph from the report that illustrates the problem perfectly. 

I think we’re all going to have to pay more for our pensions. That seems to be a preferable choice to cutting the pension. I’ll come back to this topic when I’ve read the report and considered its recommendations.

UPDATE: Those good fellows at Citiwire has a neat summary of the Interim Report – 10 public sector pension myths busted by the Hutton review. It’s good to see tha they report on the review’s which says high flyers do best, writing, “Final salary schemes primarily reward high earners which is why Hutton has described them as ‘fundamentally unfair’”. Totally agree.

Cut of the Day10: Government energy consumption

The Prime Minister is challenging Whitehall Ministries to compete to slash the energy used in their departmental headquarters over the month of October. This is more about sensible housekeeping than budget cuts, but welcome all the same.

I do like the idea of a league table of energy use by government department, and hope that it’s something that will continue beyond the end of October. Not as exciting as fantasy football league, but I’ll take a look at the league table through the month, and report back if it’s a close contest.

Meanwhile, over at the Department of Energy and Climate Change, they’ve released statistics on national energy consumption and energy trends

A dry topic I know, but the first graph in their report [shown here] shows a pleasing reduction in the country’s energy use, hopefully not all due to the recession. 

Elsewhere in the Energy Statistics bulletin there’s data on a big drop in imports of coal, and surprising large changes between reporting periods on where our energy is created. I’d imagined small changes over time, but take a look yourself, that’s if you’re interested of course. It’s a statistics bulletin after all.

Cut of the day 9: Quango cull

Wowee, a leaked report obtained by the Daily Telegraph tells of the government’s plans to cull 177 quangos [definition of a quango HERE].

Already there are squeals of protest about the cull. In business change is part of business life, something not usually to be feared, but something that gives new energy and focus. Yet in government, when something is set up, it seems to be forever.

While at first it might appear sensible to create a body that specifically looks at one issue, and at ‘arm’s length’ from government. Any such advantage is quickly lost through bureaucracy. It might not be true of all quangos, but there’s a natural tendency for them to feel important, being an arm of government, and naturally therefore feel an entitlement to smart offices, trendy logo’s and a PR and marketing budget.

There’s something else that quangos are associated with, and that’s patronage and honours. The choice of leaders of quangos is an opportunity to reward political acolytes, and to get political appointees into what is effectively an arm of the civil service. A properly functioning democracy needs an apolitical civil service.

The profile that comes with leading a quango, which is promoted by the quangos own PR and marketing machine, is an opportunity to gain an honour. I know that this is a crude generalisation, but all I ask is that you look at the background and honours of those who run quangos, Dame Suzi Leather is one such example. The chief executive of a council wouldn’t be allowed to be active in party politics, so why is it acceptable in government.

John Redwood offers a spot on analysis of why quango-culling is a good thing, and Guido Fawkes  identifies savings from a cull of the Union Modernisation Advisory Fund [description HERE].

Cut of the day 8: No council tax revaluation

Not quite a cut in the strictest sense of the word. Eric Pickles’s cancelling of plans for council tax revaluation in England, means increases in council tax that would have resulted from the revaluation will not now occur.

Here’s what Eric Pickles said in his announcement,

“We are today confirming that there will be no council tax revaluation which could have pushed up taxes on people’s homes.”

The BBC reports in on the change HERE, and ConservativeHome have more details on this new policy, and why it’s to be applauded, not least as government inspectors will not now be compiling a database of everything to do with our homes.

Cut of the day 7: Department of Culture, Media and Sport

No, it’s not the Department of Culture, Media and Sport being abolished, but there’s news in the Financial Times, and on ConservativeHome website of some serious spending cuts, which is where I saw this report,

“Jeremy Hunt, culture secretary, may control only a £2bn budget, but the Treasury is hugely impressed with what he plans to do with it. …. [he] has outlined cuts of 50 per cent in the running of his department in an attempt to protect frontline funding of arts and sport. … Mr Hunt’s aides say he was one of the first ministers to scrap official cars and end first-class travel. The Treasury is also impressed by his plans to move his department out of offices near Trafalgar Square with a view to sharing space with another Whitehall department, reducing an annual £10m rent bill.” – FT (£)

A few years ago, the memsahib and I visited the DCMS offices on an London Open House day. The guided tour focussed on the art on loan from the Government Art Collection. I sat in Dr Kim Howells chair, the then Minister for tourism and broadcasting, and admired his choice of art on his office walls. The offices are modern, light and spacious, not plush, but close to it. They are rather grandly placed just off Trafalgar Square [pictured]. So it’s to Jeremy Hunt enormous credit that he’s moving the DCMS offices.

Cut of the day 6: less street clutter

How often have you thought there are too many road signs, which simply clutter the road, and give sensory overload. Well, now something is being done about it.

Philip Hammond, Transport Secretary, and Eric Pickles, Communities Secretary, have jointly announced that, 

“Councils will today be urged to get rid of unnecessary signs, railings and advertising hoardings in a bid to make streets tidier and less confusing for motorists and pedestrians.”

Makes you wonder why the previous government never did this, I guess it was down to their authoritarian and controlling nature.

The government didn’t announce this as a spending cut, but as a way for Council highways departments to save money. So I’m bagging it as my sixth spending cut of the day.

This government announcement seems to have garnered plenty of supporters, in the Civic Voice, FixMyStreet, and LivingStreets.

Cut of the day 3: Use of lobbyists stopped

I’m a bit late with this one, as it was announced last week by Eric Pickles, Secretary for Communities and Local Government.

Eric wants to stop Local Government and Quango’s from using lobbyists. Claiming it’s wasteful for them to hire lobbyists to lobby government for more money or their pet project. In Eric Pickles’ article in the Guardian newspaper on the subject, he begins,

“Many councils and quangos hire public affairs firms using taxpayers’ money to lobby government for even more money: it sounds like something that shouldn’t be allowed, but it is happening with increasing frequency.”

There’s no need for this expenditure, when that’s the job of local councillors and the marketing teams in local government to press their case. I can imagine an odd exception or two, but Eric’s argument is sound. It’ll force councils to hone their own skills, and not rely on expensive outside help.

In his Guardian article, Eric provides some examples that he considered wasteful expenditure, and one is about us in Surrey. He says,

“… when Surrey police authorities tried to raise their council tax precept by over 7%, they hired top dogs Weber Shandwick, using public money to try to oppose a cap.”

Eric is leading from the front here, by informing his Arms Length Bodies [Quango’s to you and me], all nine of them, to cancel their contracts with lobbyists. If you’re interested in what’s been cancelled, take a look at the list at the bottom of his Department’s press release.

Cut of the day 2: Cut in government advertising

Here’s the second Cut of the day.  The government’s Central Office of Information [COI], who say it’s “objectives are to improve the effectiveness of and add value to government publicity programmes”, today announced a 40% reduction in staffing following a 52% reduction in spending on advertising and marketing.

The press release from the COI is stark, staff numbers will be reduced from 737 to 450. But we don’t get any background explanation to help us understand hether its better to cut, or better to save. So, I’m pleased that Gabriel Milland in The Spectator – The cuts start to bite – providing that background, saving us all the trouble of ploughing through the COI’s annual reports. Although I have to admit dipping into the reports.

What Gabriel helpfully tells us is,

  • Last year’s COI marketing  spend of an eye-watering £531 million – half of it going on advertising – was about 20 percent more than the next biggest spender, Procter & Gamble.
  • The COI’s turnover roughly quintupled from just £111 million in 1997. So a projected cut of £160 million in COI spending this year will still see the amount of cash it spends on its campaigns vastly outstrip historic levels.
  • Even at the height of the downturn, the COI kept growing – adding 50 staff last year alone.
  • Given the previous Government’s obsession with spin, it is not surprising that spending on what can roughly be termed “communications” mushroomed over the last decade.

I’ve clipped the following from its 2009/10 annual report. It shows the total expenditure for the last six years from 2004/5 in £millions. The big jump in 2008/09 was because of a merger with other government departments.

In 1998/99 expenditure was merely £173 million. Clearly these cuts aren’t enough for some, like Guido.