The TaxPayers' Alliance - Burning our Money

On The Show This Morning...

A morbid and depressing display... funded by taxpayers

Meet Alison Goulding. She has "five tellies - including a £1,000 widescreen - a hi-fi, Sky TV, two Play-Station 2s and four DVD players. Her huge garden boasts a full-size trampoline, two sets of swings and FIVE mountain bikes.

She also has 8 kids from two failed marriages, and "her family pocket more than £20,000 a year in handouts, even though none of them has done a day's work this century. They pay NOTHING for their three-bed house, which boasts a new ultra-modern kitchen."

Alison, 38, lives with her lover Ian Hurditch, 40, in Beeston, Nottingham. Sadly, Mr Hurditch has an unusual back condition which prevents him taking paid employment. True, it did abate long enough for him to erect a new porch for their house. And it must have also let up enough for him to father Alison's ninth child, which she is now carrying. But paid work is out of the question.

Now you're in the picture, there are a couple of particular points we should highlight.

First, Alison's not at all grateful for the support we taxpayers give her: in fact, she's incensed we're so niggardly. Those £10 Boots gift vouchers we send each of her kids at Christmas? "Rubbish - you can't get anything decent for that from Boots."

The second point is that her kids are her meal ticket. Thanks to Labour's grandiose and half-baked plan to "eradicate child poverty", each one means big money.

And Alison is an expert on entitlements (no doubt assisted by the summary benefit rate card helpfully provided by her local authority). Right now, she's working to have one son diagnosed as "socially backward", which will mean she can cop a special £2,366-a-year handout. And she's trying to have another diagnosed with Attention Deficit Hyperactivity Disorder, which will deliver more housing points and force town hall chiefs to meet her demands for a bigger home. As she says:

"My sister has nine kids and the council gave her two houses knocked into one. Then she moved to Cornwall and the new council bought a private house for them. I don't know why they can't do that here."

It's as simple as that: the more kids she has, the more cash she gets:

"I love giving birth - it's always so quick for me. People say I should stop breeding but it's not their business."

Not their business? Even though they're the ones having to pay?

Is your blood boiling yet?

OK, let's remind ourselves of the big picture.

There are currently 5.4m people of working age who are not working but drawing benefits instead- ie being supported by us taxpayers. They cost us £16bn pa in benefit payments alone*, plus the further cost of lost tax revenue. And despite endless programmes and pledges to get them into work, their number has remained roughly unchanged since 2000 (see this blog on the hopeless New Deal).

The major benefits they draw are for unemployment (Jobseekers), incapacity, and lone parenting.

Traditionally, unemployment benefit dominated. But that's declined sharply from the levels recorded in the 1980s and early 1990s. These days, Government figures show that by far the most widespread benefit is Incapacity Benefit (IB), with 2.7m recipients.

Now, as everyone surely knows, many of these IB claimants are actually disguised unemployed. In terms of "incapacity" they are typically men with "bad backs", and women with "depression", both conditions which it is apparently impossible to diagnose objectively. And they are heavily concentrated in three weak economy areas- Scotland, Wales, and the North of England. Those areas together account for 50% of IB claimants, even though they only account for 37% of the overall population.

Precisely how many IB recipients are capable of work is unknown. In 2005, the Department for Work and Pensions estimated around one million, with Labour proposing they should somehow be found jobs (A new deal for welfare: Empowering people to work). On that basis the real unemployment figure- ie working age people who could be working but are claiming benefit instead- is around 2m.

That still leaves out of account "lone" welfare parents like Alison who could in theory work. Plus various other able-bodied groups included in the 5.4m total.

Overall, it seems reasonable to assume that at least half of these 5.4m welfare dependents could work- call it 2.5-3m who could be supporting themselves rather than sponging off the rest of us.

So why don't they?

Is it because there are no jobs?

At first blush, you might think that was a big part of the explanation. But after 15 years of economic growth, the facts say otherwise. For example, 0.7m of these people (14.4% of the working age population) live in London, where it is absurd to argue job shortage: indeed such is London's demand for labour, a net 400,000 immigrants have been sucked in over the last five years alone. A further 0.9m live in the East and South East, where the argument is nearly as absurd.

In Alison Goulding's area, the East Midlands, there are 0.4m non-working but working age welfare claimants (13.6% of the working age population). Yet in five years, labour shortage has sucked in a net 64,000 immigrants. And even in the supposedly severely incapacitated North East, there was net immigration of 13,000- taking jobs which could have been filled by locals.

Clearly there's something else going on here. And that something else of course is the curse of welfare dependency.

If Alison and her back-challenged boyfriend went out to work, by the sound of it, they'd be looking at the minimum wage. On that basis, if they both worked a full-time 35 hour week, they'd gross a combined £20 grand pa.

But since they're already getting £20 grand pa net, why would they bother? After all, they've already got careers producing kids and knocking up porches. What's more, instead of going out on a cold wet morning to wait for the bus to work, they can sit at home in the warm watching the Jeremy Kyle Show on the big screen telly. Work is not a rational option.

Sure, you and the government can go on about how work is good for you, sets a good example to the kids, and gives you the prospect of a better future. But against Jeremy Kyle and a plateful of hot fudge sundae Pop Tarts, it's a non-starter.

Last week at the Public Accounts Committee, the DWP's Permanent Secretary was asked if the government's New Deal welfare to work programme would get better results if there was a bit less carrot and a bit more stick (see this blog). Predictably, he declined to answer the question, but he did admit that many benefits are "not sanctionable"- ie recipients can go on drawing them irrespective of whether they cooperate with attempts to get them a job. There are no consequences.

That's clearly barmy. But more fundamentally, it's barmy to have a welfare system that incentivises people like Alison to stay off work eating Pop Tarts and having nine children.

And what life chances will any of her nine kids have? I think we know the answer- at best, they will become the welfare dependents and porch builders of the future; at worst, they could end up inside.

Let's take it as read that there is no magic bullet. But the current welfare system for people of working age is a social and fiscal disaster.

So what to do?

As a minimum, we should abandon the arbitrary and wildly unrealistic definition of poverty as 60% of median income, and revert to the traditional 50%. Nobody would starve at that level and it would hugely increase the relative attractiveness of paid employment. What's more, it would save taxpayers about £50bn pa, or £2 grand pa per British household (see this blog- £50bn equals abolishing Inheritance Tax and slashing 13 pence off the standard rate of Income Tax).

In addition, Frank Field's four key welfare reforms (blogged here) are all worth pursuing:

• welfare benefits to be time limited, as under Clinton's reforms in the US
• authority over welfare spending to be localised- closer to the coal face (again cf US)
• incapacity benefit to be decided by local officials, not doctors, but current recipients to retain benefit for a year after finding paid work
• immigration to be tightly controlled so more jobs can go to current welfare recipients already here

Painless? In the short-term, no. But nobody has come up with a real world alternative. And unless we implement a radical programme along these lines we'll find ourselves dealing with more and more Alisons.

And her children.

All the way to eternity.

PS Yes, we realise there is another highly seductive approach, in the shape of the Citizens Basic Income. But sadly, we still hasn't found a way of making the sums add up (see this blog). We must get back to work on that.

*Footnote- do you think £16bn pa as the benefits cost of these people sounds too little? We do too. It is the figure calculated by the NAO, but against stories like Alison's it feels very light. We know there are around 3m households like hers that are workless and living on benefits. And if they all get £20 grand pa, that adds up to £60bn. Even halving it gives £30bn. We suspect the NAO has omitted some key items- we will investigate further.

Redbox Ripoff

Better value at 40p

"More than £50,000 has been spent on the famous "red boxes" used by government ministers over the past few years, according to an MP's survey.

Prices of the boxes, which are used to store government papers securely, ranged from £385 to £750 each." (BBC: HTP Heather)

The biggest spender was the totally useless DTI - now the Department for Business - which spent £13,337.50 on 18 boxes, 740 quid each.

Why? The Depratment for Business "only" has seven ministers.

And why are we spending such ludicrous amounts on these small wooden boxes which seem to last no time at all? Yes, we know some are covered in roan deer leather, but again, why?

And what about security? You could probably break into one of those things armed only with a plastic knife and fork.

Compare that to the SHOCK-ALARM SECURITY LEATHER BRIEFCASE from Ralph Thomas of Austin Texas. For a mere £200 (special offer, bulk discounts possible) that has all kinds of hi-tech security features. Under prohibitions imposed by Thomas Inc, we're unable to list them all, but suffice it to say they include remote arming of a 30,000 volt whole-surface pulse electric shock. In the event of theft, the rightful owner simply presses a button on the master control to deliver a serious jolt to the thief, and also sound an 85 decibel alarm.

But virtually anything would be better value than a £750 wooden box.

Weekly Waste Watch- 79

Consultants don't do flood defences

In the news this week:

Defra blows another £1.1bn on consultants- "Vital flood defence funding was cut while ministers spent a record £1 billion on management consultants... Defra spent £140million on consultants in 2002-3, reaching £290 million in 2006-7. It has spent £1.1 billion since 2002. The bill is three times the amount the Environment Agency spent on building flood defences last year, despite warnings of severe weather that culminated in the this year's disastrous downpours." (Sunday Telegraph 28.10.07)

£87.43m on MPs' expenses- "Official figures on the annual claims made by MPs showed that parliamentarians recorded an average £10,000 increase in the amount they claim in expenses on the previous year. Each MP picked up an average of £135,773 to cover the costs of second homes, groceries, postage and office staff. The total cost of the MPs' expenses has risen by an inflation-busting five per cent to £87.43 million in the past year... The Cabinet's golden couple claimed more than £300,000 in expenses in the last financial year, including £30,000 for the cost of their "second home". The six-figure expenses bill was racked up by Ed Balls, the Children's Secretary and his wife, the Housing Minister Yvette Cooper. Despite typically spending the working week in London, the couple are able legitimately to claim that their "main home" is in Mr Balls's constituency of Normanton in Yorkshire." (Telegraph 26.10.07; see also the TaxPayer's Alliance here and here)

EU lobbyists bunged £0.5bn pa- "The European Commission pays out €800 million a year – more than half a billion pounds – to 10,000 lobby groups, such as Friends of the Earth. According to the environment commissioner, Stavros Dimas, this is necessary to remedy Europe's "democratic deficit" by ensuring that their voices are heard "at European level". How strange that Mr Brown and his colleagues seem so determined that our views on the EU treaty should not be heard "at European level". (Sunday Telegraph 28.10.07; see also Business Week 18.10.07)

£5bn lost to benefits fraud and error- "Benefits worth £500 million were paid out in error last year. In a decade, £5 billion has been lost through fraud and error. Prisoners, students and those with jobs and money in the bank have all enjoyed payouts to which they were not entitled. Since 1997, more than £17 million has been wrongly paid to prisoners, who are not eligible for many benefits during their incarceration. Students have received £33 million while those who are in hospital for the long term - and are not entitled to Jobseeker's Allowance or Income Support - were handed £10 million. More than £1 billion has gone in benefits to those who have jobs and are not entitled." (Mail 26.10.07)

Total for week- £6,687,430,000

New Deal No Deal For Taxpayers

How to get shameless workshy dole recipients back to work and earning their own keep is one of the oldest problems in welfare. Indeed, it was the principal driver for the Poor Law reforms of the 1830s (see this blog and James Bartholomew's outstanding Welfare State We're In for details). Of course, those reforms were later reversed, and under the entitlement culture engendered by today's Big Government, the problem is more acute than ever.

Today there are 4.2m people of working age living in workless households. The vast majority are supported by taxpayers, costing us an estimated £12.7bn pa, including £3.4bn pa on benefits for lone parents (source: NAO Report). That's equivalent to nearly 4 pence on the standard rate of income tax.

Getting these people into work is generally called Welfare to Work, although New Labour naturally branded their programme with an upbeat Newspeak title- the somehow familiar sounding New Deal.

Now, as taxpayers, we ought to be applauding the New Deal: get those people back to work and we could save a huge amount of money. The trouble is, the New Deal doesn't seem to be saving us money at all. In fact, according to the NAO's report published in July, it costs us even more than just paying the benefits.

The following table summarises the costs and benefits for each of the ten (!) separate New Deal back to work programmes. "Net fiscal benefit per participant’ estimates the cost effectiveness to the Exchequer of the programme. It is based on the cost of the programme, minus the direct benefits to the Exchequer (such as increased tax receipts and reduced benefit payments when people move into work) and the costs of any additional in-work payments such as Tax Credits" (report para 5.3):

As we can see, only two of these ten programmes end up saving us money. With all the rest, the costs of running the programmes significantly exceed the savings we make. Hardly surprising when one of these programmes has cost £76,540 per job.

Looks like we'd have been much better off without the New Deal, saving ourselves the £6bn the programme has already cost (Report figure 1).

So what's going on? On Wednesday, your correspondent attended the Public Accounts Committee meeting that tried to find out.

Appearing before the PAC were three mandarins led by the Department for Work and Pensions' Permanent Secretary Sir Leigh Lewis. But despite being given one-and-a-half hours, they were entirely unable to demonstrate the New Deal delivers taxpayer value. In fact, it became painfully clear the whole programme is another all too familiar amalgam of wishful thinking and bureaucratic treacle.

Here are some key points:

PAC question: How can we be getting taxpayer value if the costs exceed the benefits?

DWP answer: We think there must be many additional benefits which have not been quantified. Lower NHS costs, lower costs from crime,and a load of other stuff

PAC question: How can you possibly know that?

DWP answer: We've had three studies conducted by academics. We paid them and they confirmed we're right.

PAC question: How do you know your "clients" haven't simply got jobs they'd have got anyway because of the strong economy?

DWP answer: Because we say so. Trust us.

PAC question: What about churn? Surely most of these people get pushed into a low grade job for a few months, then lose it, and then have to start all over again.

DWP answer: There's absolutely no evidence to support that conclusion. Or more precisely, there's absolutely no evidence. The simple reason being we don't collect any.

PAC question: What about immigration- surely large-scale immigration must be making it much harder to place our own native workless into jobs.

DWP answer: You are falling for what our economists call the Lump of Labour fallacy. It's well known that immigration boosts the economy and so must be good for jobs. QED. (for an exposition of how most economists outside Whitehall now agree that mass immigration really does take income and jobs from native workers see this blog).

PAC question: Why have you set up such a ludicrously complicated structure? The NAO report says that in Glasgow alone the local programme involves 125 organisations and 325 individual programmes, projects and services.

DWP answer: Yes, well, this is work in progress (even though in reality some of these programmes have now been running for over a decade)

The overall conclusion is clear. The New Deal delivers shocking value for taxpayers. It is costly and ineffective, and has spawned yet another gigantic bureaucracy.

In essence, it is yet another social service. But by masquerading as a measure to boost GDP and somehow make us all better off, it is managing to deliver the worst of both worlds.

MPs record expenses "extortionate", says TaxPayers' Alliance

• TPA says MPs "should be ashamed of themselves"
• Increase per MP calculated by TPA
• TPA calls on Commons authorities to follow Scottish Parliament in revealing itemised expenses

Responding to the publication of MPs’ expense claims for 2006-07 today, the TaxPayers' Alliance described the rises as “extortionate”. TPA Chief Executive Matthew Elliott said:

“MPs should be ashamed of themselves. Families are struggling to pay higher tax bills whilst MPs are spending more and more of our money on themselves each year. What’s worse is that they won’t even give us a full itemised breakdown of their expenses as MSPs do in Scotland. No wonder voters have little respect for politicians when they see so many MPs with their snouts in the trough.”

The TPA has compared this year’s expense claims to last year and has produced a ranking of all the MPs by their overall increase.  This analysis reveals that the MPs who increased their claims the most are:

   

NB: Sinn Fein MPs are excluded from this list given the dispute over their expenses that occurred recently, which reduces the 2005-06 figures, thereby inflating the increases.

Contact the TaxPayers' Alliance if you wish to see the full rankings.

The TaxPayers’ Alliance has been campaigning for the House of Commons authorities to publish MPs’ expense claims in full, to include a breakdown of all receipts and invoices, as occurs in the Scottish Parliament.

Heather Brooke, freedom of information campaigner and TPA supporter, said:

"The totals published today are merely the tip of the iceberg. If the Government is serious about open government then it needs to follow the Scottish example and publish a detailed breakdown of all claims. Instead we find the House of Commons spending thousands of pounds on expensive lawyers battling to keep secret the details of how MPs spend the public's money. What have they got to hide?"

MPs’ EXPENSES: Tories best value for money, Plaid Cymru worst

The TPA’s analysis of today’s expense claim figures for MPs ranks the main Parties by the average amount claimed per MP in expenses. Travel expenses are excluded given the different geographic spread of the Parties.

Matthew Elliott, Chief Executive of the TaxPayers' Alliance, said:

“Conservative MPs should be proud that their average expenses are lower than the other political parties.  However, their expense claims have still gone up by around 7 per cent, far more than inflation, so there is still room for improvement.  Plaid Cymru MPs should go to the back of the class.”

Non-job of the week

Last week Sandwell Council deservedly got a lot of flack from us by advertising for two positions in their welfare rights department.  This week, Nottingham City Council is advertising for ten positions in its welfare rights department.  Top City firms may be handing out redundancies, but the welfare rights industry is clearly booming.

Think about that contrast for a minute.  The profit making sector is showing signs of weakness but week on week the state sector continues to swell its ranks.  Who is going to pay for these jobs?  We are.  But what if, as some suggest, there’s an economic slowdown on the horizon.  Fewer people working in the profit making private sector will be subsidising the growing gut of the state.  How do they pay for it?  Through high taxes, of course.  And for what?  For bureaucrats in Sandwell and Nottingham and every other council to go and hand out more and more of your money to more and more people ‘entitled’ to it. 

This isn’t a perfect world; there are winners and losers.  But look at the alternatives to spending taxpayers’ money inviting bureaucrats to hand out more and more benefits.  Charles Murray’s plan would give everyone a national minimum to look after their own welfare, dramatically shrinking the state as a result.  You could raise the income tax threshold to allow hard-working, less well off families to keep more of their money.  Instead, the government are taxing the poorest to pay for big government, a state raking in even more when the 10% income tax band doubles in April, hitting the poorest hard and trapping them in a system of complex benefits.  And yes, they are complex.  Government gives with one hand from the welfare rights directorate, and takes with another from the overpayments bureau.  Ronald Reagan said “government isn’t the solution, it’s the problem”.  Who now thinks he was wrong?

So, we present to you our ten-in-one non-job of the week, from Nottingham City Council:

“The Welfare Rights Service

Team Manager - £28,221 - £30, 843
Welfare Rights Officers x5 - £18,450 - £24,708
Administration Assistant - £14,778 - £15,825
Senior Welfare Rights Officers x3 - £25,437 - £26,928

The Welfare Rights Service is committed to addressing poverty and social exclusion, through the provision of specialist benefit and debt advice, targeted take-up campaigns and by addressing social policy issues.

A community based advice service delivering welfare benefit and debt advice, casework and representation to residents in the North and West of the city via advice sessions at the Bulwell Advice Centre and community outreach venues and targeted take-up campaigns.

An advice service delivering Welfare Benefit advice, casework and representation to some of the most vulnerable residents known to the authority, via referral from Social Care professionals, and awareness raising via the provision of planned training programmes.”

So please feel free to tell Nottingham’s taxpayers where their money is going and the crisis our country faces if the public sector keeps expanding like this:

Letters Editor
Nottingham Evening Post
Castle Wharf House,
Nottingham,
NG1 7EU,
United Kingdom
Email: malcolm.pheby@nottinghameveningpost.co.uk (the editor)

Government Regional Shambles

The man who cost us our shirt

BBC File on Four has broadcast an investigation into yet another shambles bequeathed to taxpayers by John Prescott (listen again here). It's likely to cost us another EU fine running into tens of millions (cf the £436m EU fine for Margaret Beckett's fiasco at the Rural Payments Agency).

This time it concerns incompetence at government regional offices. Each region was inflicted with one as part of Labour's plan for ruling us through a new regional quangocracy (see many previous blogs). Among other things, these offices are responsible for ladling out billions in EU regional support grants, and according to FoF their financial accounts are so shambolic, the EU has stopped the money and is likely to levy hefty fines:

"Six English regions were scrutinised over concerns over 'poor standards' of monitoring the spending of grants... the North West could be fined tens of millions of pounds."

Naturally the Department of Communities and Local Government denies everything, but nobody was prepared to be interviewed, so we can draw our own conclusions. Indeed, while FoF seems to have overlooked it, DCLG's annual report records deep in an accounting footnote a provision of £66.9m for EU fines (see notes 27.1 and 27.2). £66.9m is serious money, even for a department as wasteful and incompetent as DCLG.

A number of other interesting snippets:

• A couple of the government's own regeneration grant schemes in the West Midlands (in Walsall and Aston) tipped tens of millions down the drain: the money never got through to local community projects, either being diverted into the local authorities' general spending pot (so much for "ring-fencing"), or being simply frittered away by hopeless low-grade wasters appointed to oversee things.
• We've had £4bn of EU regional grants since 2001, including grants for restoring old railway lines, and grants for London, the most prosperous city in the EU. Why on earth are taxpayers being forced to pay for that?
• The EU has got a brass neck fining Britain's hopeless bureaucracies for having ropey financial accounts- their own auditors have refused to sign off the EU's dodgy accounts for each of the last 12 years

Weekly Waste Watch- 78

My bonus is clearly in the national interest

In the news this week:

£53m bonuses for Treasury mandarins- "SENIOR civil servants in the department responsible for the tax credit fiasco have been paid more than £53million in bonuses. Nearly half the sum was paid in the last 12 months... Critics pointed out that the performance-related rewards were handed out as the tax burden on middle-income households soared and the Treasury-run tax credit system descended into chaos." (Express 20.10.07)

Olympics consultants have already grabbed £62m- "Olympic chiefs are facing fresh criticism over their handling of the budget for the London 2012 Games after the Olympics Minister Tessa Jowell admitted that consultants are to receive more than £60 million for their work on the project. The Olympic Delivery Authority spent £50.49 million in 2006-2007 and between April and July this year spent a further £10.7 million in 2007-2008. In addition, Jowell says, the Department of Culture, Media and Sport spent £721,266 in 2006-2007 and between April and July this year spent another £202,314." (Telegraph 18.10.07)

£22m bribes for failed asylum seekers- "Failed asylum seekers are to be offered up to £4,000 to go home voluntarily. The support packages - which can include help towards private school fees - are intended to arrest an alarming slump in the number of bogus refugees being removed from the country. The deal includes money for housing, childcare fees and even help setting up a business. There is also a cash payment of £500 at the airport. But the part of the increased package which provoked the most comment was the possibility that failed asylum seekers could claim money towards private school and university fees for their children. The total budget for the scheme - to be met by the taxpayer - is £22million a year." (Mail 20.10.07)

Idle Welsh quangocrats paid £2m pa- "FORMER quango employees are being paid around £2m a year without having been found a proper job by the Welsh Assembly Government... Around 70 members of staff are still waiting to be slotted in to new roles more than 18 months after three quangos were merged with the Assembly Government... “The whole thing has been ill-thought-out, ill-planned and quite obviously ill-delivered.” (Western Mail 17.10.07)

£20,000 compensation for barmy NHS psychotherapy- "A woman who falsely accused her father of rape after undergoing a discredited "recovered memory" psychotherapy has won a £20,000 payout from a local health authority. Katrina Fairlie claimed a hospital psychiatrist almost ruined her life after he extracted false memories that her father had sexually abused her. Miss Fairlie, who withdrew the baseless allegations months after making them, revealed during other sessions with consultant Dr Alex Yellowlees that she witnessed her father murder a child and named him and 17 other men, including two politicians, as paedophiles." (Mail 20.10.07)

Total for week- £149,020,000

More Tax Funded Compensation

Eastbourne has changed since 1954

"A military helicopter destroyed the conservatory of a £1.75 million mansion when its pilot swooped too low to look at a sunbathing au pair, a court heard yesterday.

The four servicemen flying the Merlin helicopter were said to have dropped to 500ft or lower for the "frolic" in July. The house's owners claim the downdraught from the aircraft seriously damaged the 23ft-high glass conservatory, leaving it needing to be replaced. Barry and Anna George, who own The Old Stables in Eastbourne, East Sussex, are claiming £250,000 in damages plus legal costs." (Mail)

In theory, pilots are supposed not to go below 1,000 feet over built up areas, irrespective of how attractive the au pairs may be. But these boys seem to arguing that their chart was wrong, plus their instruments weren't working properly.

Hmm.

This is by no means the first time taxpayers will have had to compensate the victims of "horseplay" in the services. A case reported by the National Audit Office involved squaddies "windsurfing" on the tailgate of a moving lorry, with taxpayers having to stump up for the resulting injuries to them, on account of the Army's failure to enforce discipline.

Last year we shelled out £82.4m on compansation claims against the military. Of course, a large chunk of it was unavoidable in the sense that the forces do dangerous things and people do get hurt. But according to the NAO, who reported on it in 2003, costs could be reduced if the military made a more serious effort to ensure its personnel behaved responsibly- as we can see from this chopper "frolic".

It could also reduce costs by getting its claims operation working more efficiently. Of the £82.4m paid out last year, £15.1m went on legal costs. That's a staggering 21% of claims paid, up from 14% in 1998-99. The NAO made a series of recommendations for cutting the bill, by speeding up the whole drawn out process and making better use of lawyers' time. As per, it seems the recommendations have been ignored.

If this chopper case goes against us, expect not just to shell out £250 grand in compensation, but at least another £50 grand in legal costs. All for an ogle.

PS On the subject of tax-funded compensation claims and legal fees, regular BOM readers will be familiar with the scandal over miners compensation (eg see this blog). The latest news is that while £3.4bn has now been paid to ex-miners for work related diseases, a jaw-dropping £1bn has been paid to lawyers (29.4%). And some small firms of solicitors have done spectacularly well- our old friends Beresfords of Doncaster have now clocked up £123m, with Jim Bereford raking in a £16.7m salary in 2006; Thompsons made £131m; Raleys, of Barnsley, got £77m, and Watson Burton took home £32m. But we can't blame them for being rapacious: they are simply taking candy offered by a baby- to wit, our clownish Simple Shopping government. And yet my friends, we're the ones who are really the clowns- we're the ones who let the Shopper give away our money.

Non-job of the week

This week we have yet another local government non-job that squanders taxpayers’ money.  Our target this week is Sandwell Council who think they’re not handing out enough benefits.

Their advertisement for a ‘Welfare Rights Team Manager’ in the Guardian jobs pages this week reads as follows:

“Welfare Rights Team Manager
£36,636 - £39,132

The Welfare Rights Team Manager will manage over 40 staff located around the borough that provide visiting and open door services to our residents. They will be expected to develop services, work well with partners, and show initiative and a real understanding of best practice in the field.”

But read the ad on the Sandwell Council website…and you see why this is our non-job of the week:

“Our Welfare Rights service has an excellent reputation and has had huge success in creating wealth for the residents of Sandwell. During the last 12 months benefit gains of over £21 million have been generated for people living in the borough. We want to build on that success and are reshaping and refocusing our services to do this.   

The Welfare Rights Team Manager will manage over 40 staff located around the borough that provide visiting and open door services to our residents. They will be expected to develop services, work well with partners, and show initiative and a real understanding of best practice in the field.”

Creating wealth by getting people onto benefits?!  On the back of spending £21 million of your money on benefits, Sandwell Council have to employ a team leader to supervise the FORTY other welfare rights officers working to increase spending taxpayer-funded benefits on only 280,000 residents.  That’s yet more money – on top of the £21million of handouts – for bureaucrats in the Town Hall. 

The irony here is that, alongside the job publicising how good Sandwell Council is at spending taxpayers money on benefits, they advertise for a ‘Welfare Rights and Anti-Poverty Manager’.  I don’t know about you but by making dependency sound attractive, Sandwell Council is creating the problem rather than working to cure it.

In all the weeks I’ve been searching for local government non-jobs, this is truly the most unbelievable job promoting dependency on the state.  So please do write to the Sandwell local papers objecting to this obscene waste of money from Sandwell Council:

Letters Editor
The Express & Star
51-53 Queen Street,
Wolverhampton,
WV1 1ES,
United Kingdom
Email: letters@expressandstar.co.uk

Letters Editor
The Black Country Bugle
Bugle House,
41 High Street,
Cradley Heath,
B64 5HL,
United Kingdom
Email:  editor@blackcountrybugle.co.uk

Front Line Desk Jockeys

Gershon efficiency agreements in preparation

It's been a while since we blogged the government's ludicrous Night at the Opera Gershon "efficiency" cuts (see many previous blogs eg here). But they popped up again last week both in Darling's Pre-Budget Report, and a report from The Public Accounts Committee. And the two perspectives were somewhat different.

According to Darling's version, everything's absolutely tickety. The Gershon programme has already delivered "annual efficiency gains of over £20 billion... and is on track to deliver the goal of £21.5 billion by the end of March 2008". Moreover, there have been "gross reductions of over 79,000 civil service and administrative and support related military posts towards the target of 84,150, with over 13,000 of these reallocated to frontline roles" (para 3.28).

But according to the PAC, things are very far from tickety. Based on the most recent NAO probe (see this blog), only one-quarter of the reported cuts are "reliable". The rest are almost certainly a figment of the commissars' fertile imagination.

So on that basis, of the claimed £20bn savings, real savings are about £5bn.

Always remembering of course, that even those "savings" have probably only been achieved at the cost of a deterioration in service quality. For example, the PAC found that "savings" at the Department for Work and Pensions had increased the average time taken to process Jobseeker’s Allowance claims from 11 days to 16 days. And the Department of Health, while reporting over £1 billion of efficiency gains from reducing the average length of time patients stay in hospital, had taken no account the fact that emergency readmissions had risen consistently.

One of the slipperiest concepts is the so-called non-cashable savings, which are meant to comprise reassigning people and resources from the dark back-reaches of the bureaucratic quagmire to work on "the front line". Here's a nice chart Darling produced to demonstrate how successful they are at squeezing "administrative" functions.

Looks pretty neat, huh. Admin costs down by one whole percent of public spending.

The only problem being (apart from the obvious point that most of the "savings" are still to come) that the definition of what comprises the front line and what comprises admin is a tad hazy. For example, the PAC discovered that HMRC includes "managers, administrative support and IT staff that are employed in any of its business units" as being ‘front line’.

In other words, the fall in admin costs is complete bunk.

The whole Gershon nonsense remains an exercise in rearranging deckchairs. But what we taxpayers should be really angry about is that all over Whitehall there are people being paid by us to work on it.

Weekly Waste Watch- 77

His Most Excellent Grace is not for dissin'

In the news this week:

Labour's Speaker blows £21,516 on libel lawyers- "Michael Martin, the Speaker of the House of Commons, has been accused of showing “contempt towards taxpayers” after spending £21,516.06 of public money on legal battles against the press. The office of Mr Martin, who earns £136,677 a year and lives in the Palace of Westminster, employed the elite libel law firm Carter-Ruck earlier this year to counteract a string of media articles that questioned his impartiality." (Telegraph 12.10.07)

BBC bosses' £17 grand parties- "The Director-General of the BBC Mark Thompson is to attend a cocktail party in India costing a reported £12,000 just as he finalises plans to cut up to 2,800 jobs. Mr Thompson and three fellow executives have jetted off to Mumbai for a lavish bash to celebrate the BBC's success in India... Meanwhile, BBC bosses splashed out a reported £5,000 on wine and canapes at a party for MPs. The event was held at the Atrium restaurant below the BBC's Millbank base in Westminster." (Mail 11.10.07)

Taleban police crashes cost £500,000- "Richard Brunstrom, Chief Constable of North Wales, was last night under pressure to explain why his own force, labelled the “Traffic Taleban” for its fervent pursuit of speeders, finished top of a league table for accident-prone police services. Mr Brunstrom’s force has paid hundreds of thousands of pounds in compensation for crashes – more than any other comparable police service for which data was available. Critics also questioned why no police driver has faced internal disciplinary proceedings in the past ten years, despite the fact that the force has paid out nearly £500,000 in compensation since 2000." (Times 13.10.07)

£1bn pa on wildly overpriced wind-power- "A recent recommendation from Ofgem, which regulates gas and electricity industries, [said] that the Government should end its Renewables Obligation, under which the wind industry receives a hidden subsidy of nearly £1 billion a year (eventually due to rise to a staggering £32 billion a year), paid by all of us through higher electricity bills. This compels the electricity companies to buy all the power generated from wind at around twice the normal market price. Without a subsidy, as the British Wind Energy Association pointed out, the industry would become so "uneconomic" that investment would dry up." (S Telegraph 14.10.07)

Ludicrous green homes plan costs £23,547 each- "The cost of installing energy-saving measures such as solar panels would take more than 200 years to recoup in reduced bills... a study from the Royal Institute of Chartered Surveyors shows that some of the measures, such as solar panels to heat water, would cost £5,000 to install but reduce average bills by only £24 a year and would take about 208 years to pay back. The RICS data shows that putting in all eight measures, including insulation, condenser boilers and double glazing, would cost £23,547. This would knock only £486 off fuel bills and would take 48 years to recoup." (Times 13.10.07)

Total for week- £1,000,562,063.06p

The Bumper Book of Government Waste 2008

** Buy your copy from the Politico's Bookshop **

It's back and, depressingly, the figure is even bigger than last time.

Welcome again to the world of waste. In this new edition of The Bumper Book, Matthew Elliott and Lee Rotherham have unearthed a staggering £101 billion of government misspending - all paid for by you, the taxpayer.

It's such an enormous figure it is difficult to get one's head around it. What could be done with £101 billion? Well, you could for example, paper the entire East Midlands and London with £5 notes, and still have a few billion left over to build one hell of a crane from which to admire your handiwork. Or even convert the £101 billion into one penny coins, pile them on top of each other, and reach the moon and back five times.

But perhaps more usefully, the government could cut the tax burden of every household by over £4,000 a year.

Mind blowing isn't it?

Here are just a few examples of where all of that money has gone:

• £280,000 on a conference addressed by Blair and Brown on value for money in the public services.
• £400 million on 'cost control' for the Olympic Games.
• £3 million by tax inspectors at HM Revenue and Customs on flights, including £2.1 million on flights to Scotland.
• Over £16 million on the creation and upkeep of VIP lounges in Heathrow and Gatwick despite the fact they are not government-owned.
• £100,000 on assessing whether £400,000 reportedly spent on modern art for seven hospitals was money well spent.

But then it's hardly a surprise that they don't have a tight grip on our finances when you see an official statistic from the government, claiming that an impressive 102% of all 3 year olds are in nursery school. With this level of numeracy, no wonder we're in trouble!

If you're a British taxpayer, you need to read this book - even though it will hurt.

** Buy your copy from the Politico's Bookshop **

£150m Northern Rock Gift

When the Northern Rock crisis broke, we blogged that taxpayers should on no account be made to bail out NR shareholders. And the Bank and Treasury denied they would do any such thing.

But today they've executed a complete U-turn, and handed Northern Rock shareholders an exquisitely wrapped giftbox.

The authorities have done this by extended their deposit guarantee to cover all new NR deposits, as well as those existing when the bank hit the wall.

So now you really can move all your money to NR, benefit from their market leading interest rates (eg 6.31% on an instant access Base Rate tracker account), and rest secure in he knowledge that you're fully guaranteed by HMG. It's the best of all possible worlds... as long as you're not a UK taxpayer.

But the real winners are NR shareholders. Because now their bank can get its hands on all those fresh new retail deposits, it will no longer be so dependent on penal borrowing from the Bank of England. Profitability is automatically boosted- especially when NR trims its deposit rates, as it undoubtedly will.

No wonder NR shares have shot up today. On our reckoning, NR's market capitalisation has already increased by about £150m.

This is a disgraceful climbdown by the Treasury, and a gross misuse of public funds. Northern Rock shareholders have been gifted £150m. All at the expense of taxpayers.

Weekly Waste Watch- 76

Crushed by bureaucracy

In the news this week:

Cost of Olympics venues spirals by another £295m- "The London Olympics were hit by a new costs crisis today. The bill for the aquatics centre is set to double to £150 million while the budget for the stadium will rise from £280million to £500 million. Balfour Beatty is the only remaining bidder to build the aquatics centre after two shortlisted rivals withdrew." (Evening Standard 4.10.07)

£10m for Diana inquests- "THE total cost of the inquests into the deaths of Diana, Princess of Wales, and Dodi Fayed could top £10m, including more than £2.7m in legal fees. Most of the cost will be met by the taxpayer... conservative estimates based on the 2003 Hutton inquiry, which lasted 10 weeks and cost £1.7m, suggest the Diana hearing will cost at least £5.3m. But the overall cost will rise to at least £9m, once last year’s £3.7m Stevens inquiry is taken into account." (Times 30.9.07)

NHS redundancies cost another £82.89m- " MASSIVE pay cheques and astronomical pensions for NHS bosses in the East of England have come under attack. Millions are being paid out as the region's NHS faces a total debt of £152 million and Cambridgeshire Primary Care Trust battles against a £52 million cash crisis and the axing of services and jobs... In total 764 people were made redundant or took early retirement at a cost of £82.89 million." (Cambridge Evening News 21.9.07)

Yet another £3.4m on NHS redundancies- "HEALTH bosses in York and North Yorkshire have spent £3.4 million on severance costs for staff in the latest NHS shake-up... The highest pay-out is a pension worth £369,753 for Paul Farrimond, the former director of mental health, at Hambleton and Richmondshire PCT... Staff made redundant can work again for the NHS after one month." (The Press 8.9.07)

Bureaucrats sting local carnival for £3000- "RUMBLINGS around Newton Poppleford that 2007 may see the end of the village's annual carnival could not be verified this week by committee chairman Roger Hart."I know there have been rumblings but I cannot answer them. I don't know what is happening." It now costs around £3,000 to stage the event, pay for signage, prizes and insurance. Mr Hart added that... officialdom and the rising cost of public liability insurance was a threat to the future of carnivals around the region." (Exmouth Journal 4.10.07)

Total for week- £391,293,000

Crossrail- How Much Really?

Plans finally given go-ahead

Yesterday, Gordon Brown gave a pre-election go ahead for Crossrail, Britain's biggest civil engineering project since Hadrian's Wall. It's supposedly going to cost £16bn, but if you believe that, you obviously haven't been paying attention.

The cross-London tunnelled rail project has been around since the days of purple velvet flares, and during its many decades enmeshed in Whitehall bureaucracy its costs have spiralled wildly.

Back in 1991, the Crossrail Bill reckoned it would cost £1.4bn. Which means that in just 16 years, costs are up by well over 1000%! Over the same period, the general price level (the GDP deflator) has increased by just 50%.

Even 4 years ago, costs were "only" £10bn. Now they're £16bn, 60% higher. And the project still hasn't got going yet.

You'd almost think they were plucking figures out of the air.

Or somewhere.

Now, let's set on one side the fact that this ancient much delayed project probably no longer meets London's current needs (see this critique by the excellent John Kay). As taxpayers, let's just focus on how much it's likely to cost us really.

Virtually all public sector projects over-run their budgets: as regular readers of BOM will know, international research shows 90% over-run (eg see this blog). They do so for a number of reasons, including incompetence, wishful thinking, and deliberate manipulation by politicians and public officials (aka Salami Slicing). The only real question is how much?

The TaxPayers' Alliance's own analysis of over 300 public sector projects completed since the start of 2005, or still ongoing, revealed that the average over-run is about one-third (see here). On that basis, the final cost of Crossrail might be around £21bn.

But that overall average does not necessarily capture the risks associated with mega civil engineering projects like this.

According to the Treasury's own estimates (see table posted in this blog) the prospective over-run on "standard" civil engineering projects in the public sector is up to 44%, and on "non-standard" projects it's up to 66%. There are no prizes for guessing which category boring two massive 20 ft diameter tunnels under the geologically challenged and crowded basement of London falls into. So that suggests a final price tag of £25bn plus.

But in truth, even that sounds light compared to other heroic tunneling projects. The Chunnel overran by about 80% (and that was quasi private sector), and Boston's notorious Big Dig, originally budgeted at $2.6bn, eventually came in at $15bn- an overrun of nearly 500%.

So £25bn? £30bn?

Whatever the eventual guargantuan bill, remember it's us taxpayers on the hook. True, the government has got a £500m contribution from Canary Wharf (private cash), plus a £200m contribution from Grupo Ferrovial SA's BAA unit (also private cash). But the rest comes in one way or another from taxpayers. Including the full cost of all overruns (as Ken Livingstone confirmed yesterday).

Taxpayers need to be afraid.

Very, very afraid.