Judy Terry is a marketing professional and a former local councillor in Suffolk.
How can the public sector waste and lose so much money, not just when major projects go massively over budget, but with poor decision-making, a lack of accountability, and irresponsible taxpayers?
Monitoring value for money is a key part of both councillors’ and non-executive directors’ roles; they are elected or appointed with responsibility to challenge, as well as support. They are paid to do just that. MPs have various committees to do the same; most are pretty robust, although there is little evidence that their recommendations are always pursued by the relevant Government departments. Taxpayers are actually shareholders in public services, and deserve better.
Let us start with Crossrail. At least we should have something to show for its potential budgetary overspend (costs rising to £15.8 billion, or even £17.6 billion) and year’s delay (or longer). Europe’s most important and complex engineering project for generations, it will hugely benefit the capital’s transport and economic infrastructure. Nevertheless, one has to ask how it got so out of control. Two Chief Executives took off to new jobs, as did four key directors, and the chairman was ousted, as problems with signalling, trains, and stations escalated. Losing an estimated £600m fare income also adds pressure to Transport for London’s fragile finances, bringing Crossrail 2 into question. One would expect London’s Mayor and his management team, including elected councillors, to be keeping tabs on such a major infrastructure project.
I won’t mention HS2, well, only in passing. No-one seems to have a handle on the costs, least of all the top management, who regularly abandon ship. According to media reports, it could hit £100 billion. Meanwhile, advertisements for a new HS2 Non-Executive director offers £950 per day in return for just two days a week. Nice work if you can get it…! Or maybe not. The job description requires candidates to have the skills to ‘challenge board decisions in a high profile organisation tasked with delivering against demanding objectives’. Good luck with that.
A report by the Cabinet Office’s Infrastructure and Projects Authority warned that “the required in-service date of 2026 is driving an unacceptable programme schedule compromising the accuracy and quality of the programme’s outputs”. And, according to engineers, costs could rise by a further £400m because a 12 mile stretch of the route passes through ground ‘which turns to porridge when it rains’, requiring deep concrete foundations to be constructed. HS2 admits that the final track design isn’t finished (so how could the original budget have been set?).
Unfortunately, there is nothing to show for London’s much vaunted Garden Bridge, beyond some elegant drawings. Cancelled by the current Mayor of London as construction costs escalated, following an alleged spend of £46 million of public money; architects’ fees accounted for £2.6 million, so what happened to the rest? Even the tenacious Dame Margaret Hodge couldn’t get to the bottom of that question when commissioned to investigate.
Now Suffolk County Council is wrestling with a spectacular £43 million increase on the original estimated £97 million for a three bridges project known as the Upper Orwell Crossing, to relieve traffic congestion in and around Ipswich.
The Government had committed £77 million, and the County £19 million, with the balance to be funded locally. £8 million has already been spent (on what?), enough to have covered the costs of the two smaller bridges, which would open up an important island site for development – and now in doubt.
An independent report (costing the taxpayer another few thousand pounds) commissioned to re-evaluate the project clearly identifies several key issues. Most important, however, the original budget was an ‘estimate’ without a final design and engineering input, or the cost of purchasing land. It confirms that the new ‘budget’ can also only be an estimate without further work on viability. The County’s Cabinet deferred its decision until January. But one has to ask how on earth could such a key project have ever been approved – by the County’s Cabinet and Government – in the first place without a detailed, costed, plan. The current leadership wasn’t in charge at the time, including the Chief Executive and Council Leader. Nevertheless, someone should be held to account.
Even the BBC finds itself condemned by the National Audit Office (NAO) for its ‘poor planning and lack of expertise’ in developing a new site for EastEnders, just yards from its present location. Now five years late, costs have risen by £27m to a spectacular £87 million.
The Taxpayers Alliance discovered it also wasted £11,000 on mugs, T-shirts and banners to inform staff of a new production system. Surely an email would have been sufficient.
Despite no-one taking responsibility for misspending public money, and David Dimbleby’s claims in a Today interview that the BBC is ‘over-managed’, senior management awarded themselves a 30% salary increase, adding a significant wad of cash to their already generous retirement pensions. What an insult to hardworking licence-fee payers, who can only dream of similar largesse, and the over-75’s now at risk of losing their ‘free’ licence because the BBC can’t afford it.
According to another report by the NAO, the British Army’s £495 million recruitment contract with Capita to develop a website is three times over budget and 52 months late. Is the contractor penalised for not meeting targets? I doubt it. The most likely explanation is that the ‘client’ kept making changes to the original specification after the project was commissioned, adding to costs and extending delivery. This is a common problem with IT.
The MOD is also responsible for 11,000 empty homes costing the taxpayer £25 million a year in management fees. There doesn’t appear to be any strategy for bringing them back into use, with an analysis of current or future demand within the Military.
Instead of pouring our money down the drain, these valuable assets – some in prime locations, vandalised and rotting, should be handed over to local authorities. Selected disposals could provide funds to invest in restoring and refitting them for those in need, reducing the housing ‘crisis’.
Dare I mention Motability? In another report, the NAO criticised the ‘lavish rewards’ available at what is essentially a government backed monopoly. The Chief Executive, in place since 2003, is paid (I won’t say earns) £1.7m a year, and is in line for a £2m bonus. A package described as ‘totally unacceptable’ by Parliament’s Work and Pensions Treasury Committee. In the first seven years of the bonus scheme since 2008, five directors received £15.3 million.
The NAO also found that customers had been charged £390 million ‘more than was required’ since 2008. Under the Motability scheme, an individual’s mobility welfare payments are transferred to the organisation in return for a leased car, with insurance, maintenance and roadside assistance. However, only 36 per cent of eligible customers use the scheme; there is no explanation for this.
Amongst other criticisms, the watchdog found that Motability Operations had generated more than £1 billion of unplanned profit since 2008 and held £2.62 billion in reserves as of March 31 2018, whilst benefiting from tax concessions amounting to £888 million in 2017. Responding to the report, the Department for Work & Pensions noted that it ‘strengthened their concerns about the financial model’. Really? How has this been allowed to continue without challenge, and what will happen to the billions ‘in reserve’? Surely the Government had its own representatives on the board, to ensure value for taxpayers’ money?
The NHS doesn’t escape. BBC Look East recently reported that £34 million is wasted annually in the Eastern Region, as prescription drugs (within their use by dates) are destroyed when returned to GP surgeries and pharmacies. Reasons for their return are unclear, but could relate to over-prescribing, wrong drugs supplied, drugs disagreeing with patients, or perhaps a death. Less responsible patients probably put surplus drugs in the bin (a risk to the environment?).
Inevitably, this is the tip of an expensive iceberg; if is happening in one part of the country, then it must be happening elsewhere, with the potential cost to the health service running into billions of pounds. Someone needs to get a grip. As an eastern region MP, I’m sure that Matt Hancock, the Health Secretary, will do just that. A bit of a techie, himself, he will no doubt also be horrified at the millions (or billions) spent on failed software systems for the NHS, diverting funds from patient care.
Shamefully, we’ve just learnt that the NHS loses £200 million a year because 15 million (one in 20) GP appointments are missed annually; a surgeon friend told me that the situation is much worse, with patients not turning up for hospital appointments, or even operations. This is selfish, and irresponsible, so perhaps we need some research into the reasons. Text reminders can work, but not everyone has a smart phone, or speaks English.
Health & Wellbeing Boards should prioritise these issues for investigation in their own areas, setting specific timescales for outcomes to proffer advice to Government.
More than a decade on, it’s easy to forget John Prescott’s legacy: a failed mission to have regional Fire Service HQs. The last time I checked, seven of the 11 luxury new developments, each boasting the latest in coffee machine technology were still empty. PFI contracts continue to cost the taxpayer millions of pounds each and every year (at the time of writing, my BT internet connection is taking another week’s holiday so I can’t check the figures, but I think it is £25 million). Prescott was warned his plan wouldn’t work, but he didn’t listen.
There remains a culture in much of the public sector that there really is a magic money tree and no-one will ever be held to account for wasting it on unworkable vanity projects. Believe me, as a councillor, I’ve seen it, intervening to stop some; savings can add up to millions of pounds, not least on procurement. The lesson is stop and listen; is something actually viable, and is it a good use of public money?
But, let’s end on a positive note. Works to increase capacity on the A14 around Cambridge are on time and on budget… Happy 2019.