Published:

6 comments

Judy Terry is  a marketing professional and a former local councillor in Suffolk.

The Financial Times recently reported a former Treasury official’s comment that ‘there has been no austerity’. Instead, since 2010, £60 billion a year has been added to the country’s debt, now standing at £1.7 trillion, and rising by the minute.

So, isn’t it time to clamp down on the billions lost through poor project management and a lack of oversight, which allows budgets to rocket out of control across the public sector?

Every time you open a newspaper, HS2 has added another few million to its costs; a year ago, the National Audit Office noted the first phase was already £204m over budget, equating to a £55.7 billion price tag, which was about double the original estimate. In 2014, PWC identified a 30 per cent increase in costs for Crossrail, and a recent report by the National Audit Office says the new nuclear power station at Hinkley Point has risen from an initial £6 billion to £30 billion.

And does anyone now remember the Kid’s Company scandal just a couple of years ago?  It swallowed £50 million of public money, but no-one has yet been held to account for alleged financial errors.

In Norfolk, delays and ‘changes required by Network Rail’ on the £178.5m Norwich Northern Distributor Road, means costs could rise by as much as £20m, according to a recent council report. The obvious question is: since this project has been on the to do list for many years, why didn’t Network Rail fully comment at the design stage? Plans were widely available for public consultation prior to going through the Planning and tendering process.

An exercise in how not to commission publicly-funded projects emerged from Margaret Hodge’s report into the spiralling costs of London’s proposed pedestrianised Garden Bridge, which resulted in the Mayor of London cancelling any further public involvement earlier this year. Nevertheless, £37.4m of public money was spent, and the government’s agreement to underwrite cancellation costs means the total bill could rise to £46.4m.

Originally budgeted at £60m, and supposedly privately funded, but lacking public support, this shameless vanity project indulged a famous luvvie, and certainly never represented value for taxpayers, especially as costs rose to an estimated £200m, with annual maintenance costs of £3m. Contrary to normal procedures, Hodge explains there was no competitive procurement process for design or engineering, and the weak business case was cobbled together after contracts let and money spent; its purpose/benefits were never challenged nor meetings recorded.

Despite this huge bill, there is nothing to show for it beyond some illustrations and a lot of publicity, as well as a foreign trip and some wining and dining.

As we continue to be shocked by the issues around poor housing and inadequate safety in aging tower blocks, a Garden Bridge was hardly a priority. £50m could have been far better spent – perhaps on fire safety measures.

But it’s not just in London where bridges are a preoccupation.

Following the election, and the loss of Ipswich to Labour, the new MP, Sandy Martin, has decided to oppose the rigorously costed £77m business plan to build a trio of bridges across the Orwell to relieve some of the most appalling traffic congestion in the town, whilst releasing redundant land for essential development.  This would be the first major infrastructure investment in Ipswich for 30 years; supported by the County Council, Local Enterprise Partnership, and Government.  It represents good value for money, but can only be funded in its entirety. Several million pounds has already been spent on feasibility studies and design as the project was developed.

Formerly Opposition Leader on the County Council, and an Ipswich Borough councillor for a couple of decades, Martin denies having any knowledge of the details, and now states a preference to reallocate some of the funding to a northern by-pass. Whilst also much-needed, this is a separate project currently under discussion by all parties.  Although having pledged to stand down if elected, he remains a county councillor (in receipt of his allowances) and will doubtless see Cabinet reports and get further briefings from the Council Leader and officers, and at Full Council!

I’ve previously mentioned how the two-year programme to relieve traffic congestion in Ipswich has become interminable, well beyond its timescale and budget. Adding further insult to the local population, the road accessing the station, which was closed for a couple of months earlier this year for extensive roadworks, inconveniencing thousands of commuters, has now closed again because the water company needs to do some (planned) infrastructure renewal. Most people would have expected the jobs to be done in tandem, to save money (as well as reduce public inconvenience)!

We have some excellent, efficient, reforming local authorities and publicly-funded organisations, but the spotlight inevitably falls on those where parsimony certainly doesn’t appear to extend to top bosses holding the taxpayers’ purse strings. There is a sense of entitlement, despite being amongst the highest paid ten per cent in the country, enjoying enviable pensions. To them, public service evidently means lining their own pockets.

Whilst in most businesses, resignations mean that someone is choosing to leave a post, without any expectation of a payoff, it is commonplace to reward senior public sector staff when they ‘resign’, even if otherwise likely to be dismissed, or when they move onto another even higher paid post!

For example, there are regular reports of senior executives in the health service not being held to account for failures. Following a damning report into Southern Health’s mental care services by the Care Quality Commission, the CEO eventually resigned only to transfer immediately into a new £240,000 a year role created for her under a 12 month contract, without any competitive appointment process.

The former Chief Executive of Kensington & Chelsea Borough Council, who resigned in the wake of the Grenfell disaster, is not alone in receiving a ‘golden goodbye’. Whilst it is reported he is to get £100,000, a former director of Norfolk County Council’s Children’s Services, rated ‘inadequate’ by Ofsted, received £70,000, ‘for loss of office’ when he resigned.

According to Norfolk’s recently published annual accounts for 2016/17 his interim replacement was then paid £15,000 for each of the two months he was in post before a longer-term replacement was found. The accounts also revealed that another director received a £252,500 redundancy payment.

It’s also quite commonplace for senior staff to be self-employed by their own tax-efficient companies, or to negotiate special allowances, including removal costs; £60,000 was given to a newly appointed council director moving a few miles up the road from a neighbouring county. This was excessive, when the average costs, including legal and agent’s fees, and a removal firm, are in the region of £10,000-20,000. Stamp duty no doubt made up the difference!

And, in April last year, the Chief Executive of a county council received an eight per cent salary increase, giving her an extra £14,000, taking her salary to £170,000, whilst most of her staff were stuck with the basic one per cent annual cap on increments.

For hardworking JAMs, (Just About Managing) who can only dream of such riches, this is an abuse of their money, especially when there are increasing demands on services and rising pressure to ditch ‘austerity’.

Given recent events, ditching the one per cent cap has growing public support, but I suggest a caveat that any increase is focused on those on the frontline, on salaries below, say, £40,000 a year. This would allow a more meaningful increase to go to those who devote their lives to helping others, saving lives, teaching, and doing the menial tasks the rest of us rely on. The autumn Budget Statement will make interesting reading, but we’re unlikely to see the Chancellor committing to Labour’s brand of irresponsible borrowing.

If in doubt, David Smith’s Sunday Times article, ‘Bin There, Done That: Corbyn’s Spending Fever Won’t Work’ should be essential reading for anyone under 50. It is a timely reminder of what happened to the UK when public spending got out of control under Labour in the 1970’s. With a 83 per cent top tax rate, public spending at a record 47 per cent of GDP, and inflation at 26.9 per cent, the country was teetering on the brink of bankruptcy when bailed out in 1976 by the International Monetary Fund (IMF) which it had helped to establish.

With Brexit on the agenda, it would be difficult to recover from a similar humiliation in today’s economic environment.

6 comments for: Judy Terry: The public sector pay cap should apply to Council chief executives too

Leave a Reply

You must be logged in to post a comment.