Sunday, April 30, 2006

Gieve On The Runway?


My good friend G Fawkes Esq jogs my elbow to point out that Sir John Gieve's new job at the Bank of England is under threat. As we blogged here and here, Sir John is the one who as Perm Sec to the Home Office presided over a number of appalling cock-ups, including the complete shambles in their finances.

As was pointed out at Wednesday's PAC meeting, the HO's accounts were so wrong that "the gross value of the debits and credits recorded totalled £26,527bn - 1.3 times the GDP of the entire planet and 2,000 times the Home Office budget".

Despite which he was appointed Deputy Governor of the Bank in charge of financial stability.

Now there are calls for his resignation:

"The fact that Mr Blair allowed Sir John to take up his post at the Bank knowing that he had left these problems at the Home Office has brought anger from MPs. Richard Bacon, Conservative MP and member of the PAC, said: "It is an eloquent comment on the nature of public appointments by this Government that Sir John can leave a catastrophic mess at the Home Office and walk into a job as deputy governor of the Bank of England. This is the sort of thing you'd expect in a Gilbert and Sullivan opera."

Vince Cable, Liberal Democrat Treasury spokesman, said the Bank had "acquired a seriously tainted official. Charles Clarke's position is untenable and this applies a priori to the man who was running his department."

Maybe the concept of personal accountability can make a surprise appearance...although we're not holding our breaths.

htp Guido Fawkes

PC Labour- At Work And Play

He'll never notice after a few bevvies

The Home Office Annual Report- like those of all departments under sleazy incompetent Labour- devotes considerable attention to political correctness:

"We are dedicated to promoting equality, fairness and respect. We will create a working environment where diversity is recognised, valued and celebrated. In delivering our business to our diverse society, we will take care to assess the impact of our policies on race, religion and belief, gender, gender identity, disability, sexual orientation and age equality.To ensure sustained leadership, we have launched a five-year Group-wide race and diversity programme."

For an organisation that should be focused squarely on keeping our streets safe, that sounds like a recipe for confusion and general arse covering. And guess what. Whatever macho Home Secretaries may say, it is.

Steve Moxon, who worked for the Immigration Directorate until he was dismissed two years ago for leaking details of how immigration applications were being passed without proper checks, has been talking about it: in particular, the role of Directorate's thought police- the 540 strong HR department:

“The worst sin appeared to be initiative. What everyone did and was expected to do was watch their back. Human resources in the Home Office is of gargantuan size. An HR ethos of political correctness rules above all, intimidating the very people whose working life it is supposed to enhance.

Two weeks of inept training was all I received. The only type of training that interested management was in political correctness. Our schedules were awash with race awareness days, diversity weeks and asylum seminars. We had training days on transsexuals — how often is the average immigration case officer going to meet a transsexual?”

Meanwhile, training in how actually to get the job done was rudimentary and incomplete. No wonder nobody's got a grip.

All that of course strikes the vilest contrast to the predatory sexual antics of the ludicrous Fuckwit. These days, molesting junior employees is quite rightly a sacking offence in most large British companies. But not apparently in government. As we know, what made companies take it seriously was not PC-dom but the risk of getting sued for zillions. In government they don't seem to worry about that....but then it's not their money.

Recent Bonfires- 14

In the news this week:

City academy cost £50m- "THE school backed by a millionaire at the centre of Labour’s cash for peerages row is the most expensive state school ever built in Britain, it has emerged.
The Business Academy Bexley... has cost at least £50m in taxpayers’ money. Of this, £35m — almost double the cost of an average secondary school — went on building the school to a glass design by Lord Foster, complete with a mini stock exchange. However, glass-sided classrooms proved noisy and impractical and had to be modified. Sir Cyril Taylor, chairman of the Specialist Schools and Academies Trust, called glass buildings “hot in the summer, freezing in the winter” and added: “Nasties throw bricks at it.” “Too much of the money has gone on glossy buildings and not enough on improving standards,” said Alan Smithers, professor of education at Buckingham university. “It would have made more sense to have refurbished the existing schools.”
(Sunday Times 30.4.06)

£1.5m bailout for another failing academy- "The government agreed a £1.5m bailout of one of the most troubled city academies just 10 days before last year’s general election. The emergency Treasury grant was to Unity city academy in Middlesbrough — which two months earlier had been identified as failing to provide an adequate education. One former Labour councillor in Middlesbrough said: “Academies are very political. It would have been crippling for Labour to have allowed that to happen just before the election.” (Sunday Times 30.4.06)

Public pensions black hole deepens by £7-14 bn- "Overspending on National Health Service pay settlements has deepened the black hole in the Government's public sector pension plans - by £7 billion. Taxpayers will have to cover the cost of the enormous shortfall, caused by a Whitehall "miscalculation". Stephen Yeo, a senior partner at the actuaries firm Watson Wyatt, calculates that the new GP contracts and other NHS awards have added as much as £14 billion to the public pension liability. "These figures are astonishing," said Mr Yeo. "Just one year of NHS pay rise has cost the taxpayer more money than the Government would have saved if it had raised the public retirement age from 60 to 65." (Sunday Telegraph 30.4.06)

Another £2m on consultants at BBC- "It is a relocation plan that is costing millions, may not happen for two years - if ever - and, astonishingly, is engaging the services of up to 15 consultancy firms...used by the BBC to advise on its planned move of three key departments from London to Manchester. They have already cost the licence-payer £1.4 million and BBC insiders predict that the bill could top £2 million by the end of the summer." (Sunday Telegraph 30.4.06)

Total for week- £14.0535 bn

Saturday, April 29, 2006

Headteacher Crisis Worsens


We've blogged before about the crisis facing state schools which can't attract suitable applicants for vacant headships. The National Association of Headteachers now reports it's getting worse:

"About half a million children are in schools without permanent head teachers because of a mounting recruitment crisis. Lack of applications for what was once the most sought after position has led 1,200 schools in England alone to rely on deputies or temporary agency staff to run them...Staff are reluctant to take on the responsibility of headship and most vacancies have to be advertised two or three times."

Yes we know the heads have an axe, but as we said before, with all the interference and demands now heaped on them by the DfES- let alone the penalties for missing tractor production targets- state school headships have turned into jobs from hell.

The Cult Of The Amateur


So Charles Clarke can't resign because- setting aside Straw and Blunkers- he's the only one with the requisite experience to sort out the mess. His plan is to bullet a few Civil Servants instead. Just like the Commissar did to poor Crisp.

But hang on...following the same logic, shouldn't the Civil Servants be even better qualified to sort out the mess? After all, Clarke's so-called experience only actually boils down to 16 months, whereas those officials must have years.

Well actually it isn't quite like that, as was vividly displayed at Wednesday's PAC probe into the whole appalling fiasco (see this blog).

The current Permanent Secretary at the Home Office is Sir David Normington KCB. He's certainly a bright man, having been educated at Corpus Christi, Oxford; and he's got an entire career's worth of Civil Service experience behind him. But he's actually only been at the HO for three months, having been drafted in by Clarke from the DfES which he'd headed for...ooh...all of four years. Prior to 1995 he was at the Department of Employment. So he knows even less about the Home Office biz than Clarke.

Sir David's predecessor was Sir John Gieve KCB, who was eased out by Clarke following a whole series of unfortunate discombobulations- from the thousand Awol foreign convicts and those screwed up HO finances, to all that awkward stuff with lover-boy Blunkers. But Gieve hadn't got much HO experience either, having been in post for only four years. Before that he'd headed a directorate at the Treasury, and the word is that he only went to the HO as a consolation prize for not getting the top Treasury job. He's now gone off to the Bank of England as Deputy Governor in charge of financial stability(!). Educated at Charterhouse and New College, Oxford, he too is a bright man who has spent his entire career in the Service.

Now you may be detecting a bit of a pattern here. And actually these two knights have something else in common as well: they both applied for, and failed to get, the post of Cabinet Secretary. So both are now in jobs that are consolation prizes.

Which brings us to the cult of the amateur, one of the longest standing criticisms of the British mandarinate. As the Fulton Report concluded right back in 1965: "administrative class officials...move too frequently from job to job with no specific professional education or formal training for their work. The Service lacks skilled managers...most of the work of most Senior Civil Servants is not managerial, but rather relates to matters such as the preparation of explanatory briefs and answers to parliamentary questions...there is not enough contact between the Civil Service and the rest of the community...because Civil Servants are expected to spend their entire working lives in the Service..."

You might have thought that innumerable reports and reorganisations over the subsequent forty years would have changed the situation. But you'd be wrong.

Nobody's saying Sirs David and John are not high quality guys. But neither are remotely qualified to manage a complex £13bn pa organisation of 73,000 people dealing with the dirty nuts and bolts business of keeping our streets safe. And it's a fair bet they have no real interest in doing so.

Oxbridge grads just don't join the administrative grades of the Civil Service to manage large organisations: as I can vouch from personal experience, they join because they want the intellectual challenge and excitement of shaping national policy. And being stuck in one department learning how all the nuts and bolts fit together is not the way such careers get developed. These are big picture men who want to end up sitting at the PM's elbow, not traipsing round Britain's sink estates visiting a load of poxy probation officers in the drizzle.

We've said it before, but most successful private sector businesses don't work that way. They are invariably headed by people who know their industries backwards, are enthusiasts for the details, and have often spent their entire careers with one company working their way up from pretty close to the bottom. Terry Leahy at Tesco, John Bond at HSBC, and John Brown at BP are all one-company men.

The cult of the amateur lives on in our Civil Service. One more reason why the state should stop trying to manage everything.

Friday, April 28, 2006

BUMQA Nomination- Strategic Health Authorities


A few weeks back I met up with a government waste expert in the cost efficient surroundings of a student coffee bar behind the LSE. Over a sumptious cheese toastie we discussed the BUMQAs and the difficulties of choosing the winner among such a vast array of magnificently useless quangos.

The expert was William Norton- among other things a consultant to the James Review- and he's now produced a excellent paper for the TaxPayers' Alliance on those strong BUMQA candidates, the Strategic Health Authorities (see here).

As we know, SHA's are an expensive group of quangos which exist primarily to add a further layer of bureacracy between patients and healthcare professionals. William looks in detail at London SHAs and concludes they cost £24m in management costs alone.

As Matthew Elliott, the TPA's Chief Executive, says: “Resources should be transferred from the backroom bureaucrats to doctors and nurses on the frontline, enabling them to give patients the best treatments and medicines they require. It’s disgraceful that drugs like Herceptin have been blacklisted by health officials when money is being wasted on the Strategic Health Authorities. To put it simply, taxpayers want less bureaucracy and better healthcare.”

The SHAs are firmly in the BUMQA running.

PS You're quite right- that splendid new Home Office logo doesn't really belong here, other than William discovered it.

Thursday, April 27, 2006

PAC Racks Meltdown Mandarins


Committee Room 15 was packed and sweaty yesterday as the Public Accounts Committee attempted to make some sense out of the meltdown at the Home Office. Charles Clarke had already been served in the Commons main chamber, and on the PAC menu we had Sir David Normington, the new Permanent Secretary to the HO, and Sir John Gieve, his predecessor. They were arraigned to answer questions on both the non-deportation of those foreign murders and rapists, and their shambolic financial accounts.

Shocking new details emerged. First, on the non-deportation of those foreign thugs:

  • The rate has actually increased threefold since last September, the point at which Clarke reckoned he’d tightened his grip: the monthly average is now 41, compared to 14 in the previous four years
  • Top management were long aware of the communications breakdown between the Prison Service and the Immigration and Nationality Directorate (presumably like colleagues in any big organisation, they simply hate each other’s guts). However, their response was simply to convene yet more committees and issue yet more “protocols”. There was no attempt to “send prison governors a rocket” directly from the top, as one PAC member suggested
  • Neither Perm Sec seemed to have any real knowledge about their prisons: neither could even say how many there were, and it was clear they see the whole thing as a rather disagreeable function located far down in the bowels of the ship, well away from the bridge (what a contrast with say, Sir Terry Leahy of Tesco who not only knows how many shops he’s got in every one of the many countries in which they operate, but has visited hundreds of them personally)
  • Management information is shockingly poor. We know the HO didn’t collect any of this info before it was requested by Richard Bacon on the PAC. And even now, they don’t have the monthly numbers broken down by category of offence. Most extraordinarily, they have no idea from which individual prisons these thugs are being set free, so they can’t tell which individual governors are falling down on the job. Normanton said blandly he “had not sought that information”
  • Normanton admitted the HO had lost track of even the most serious offenders: they have no idea where they are, despite constant assurances that all released murderers etc have a "very close eye" kept on them
  • Although the entire system is a dangerous fiasco, it isn't possible for the HO to simply order the suspension of all releases of foreign criminals- Normanton suggested that "might be illegal" even though all prisoners leave jail long before the official end of their sentences. In effect, this whole outrageous set-up is beyond his control.

Things were just as grim on HO's finances (see previous blog):

  • Following the £3m black hole in the 2004-05 accounts, Normanton said he expected 2005-06's would also be qualified. Amazingly, he admitted he hadn't informed Charles Clarke of this- presumably because Clarke can't handle any more disasters, and anyway isn't expected to be around when they're eventually published
  • Publication of the 2005-06 accounts has already been put back by 3 months to September
  • Since 1998-99 only one year's accounts have not been qualified (although strictly, 2004-05's accounts were not qualified as such- they simply failed to appear at all)
  • Preparation of the £13bn pa HO accounts has until very recently been left in the hands of 3 relatively junior (HEO and EO grade) staff posted at an outstation in Liverpool. That's how seriously senior management took it.
  • Normanton signed off 2004-05 accounts knowing they were wrong, because he was "advised" he had to. There seems to have been no common sense over-ride at all.

You hardly know how to respond to all this. The overall impression from the entire extraordinary session was of top managers who are routinely hands-off with respect to the grubby details of delivery, for whom it is just as much of a mystery as it is to the rest of us. They came across as a more urbane version of those old school British Rail employees who greeted every passenger complaint with a shrug of the shoulders.

At one point, the exasperated PAC Chairman pointed out that a private sector MD could go to jail for presiding over such shambolic accounting arrangements. Normanton's unconcerned response was "Maybe- but all kinds of things happen in the private sector."

The truth is that both of these Whitehall knights looked as if they'd be much more at home sipping sherry in the Senior Common Room ruminating on the Hegelian dialectic. Which is where they should be despatched soonest.

PS I was sitting at the back crushed up against a rather stern no-nonsense grey haired lady who, judging from her sotto voce snorts, was extremely unimpressed by HO responses. She put me in mind of the fearsome Miss X, who used to be in charge of public spending accounts at HMT 25 years ago. I think we need her back.

Wednesday, April 26, 2006

Home Office Meltdown- Lessons In The Bleedin' Obvious


OK...big breaths (pleath thupply your own punchline).

As the Home Office lurches from crisis to crisis, it's turning into a sick and horribly tired joke. But somehow we must steady ourselves and draw the right conclusions.

Yes, Clarke is another Big State meddler who wouldn't be able to run a whelk stall in the real world. And yes, he's surrounded by hopeless mandarins and party apparatchiks like Baroness Scotland, Tony Mcnulty, and Andy Burnham. And yes of course we all want to see them sacked.

But this meltdown reflects something much deeper than the personal incompetence of these clowns. And we need to register and act on the real lessons.

First, the HO is much much too big. It employs 73,000 staff, costs £13bn pa, and as we've been hearing over the last 24 hours, like all big organisations, it operates in silos. New Labour used to talk fancifully of "joined up government" without having the faintest notion how to achieve it. Hopefully we can all now see that's not a real world option. SMALL IS ALWAYS BETTER.

Second, its grasp is much greater than its reach. Like all Big Government organs, the HO is constantly seeking ways of accumulating more power, be it centralising police forces or the imposition of ID cards. But in reality, it's unable even to manage its own internal accounting systems- as the PAC will be exploring this afternoon.

Third, it is far too distant from those it is supposed to serve- ie us. Its bureaucratic culture is poor at recognising and dealing with change (witness its appalling inaction over the released foreign criminals), and personal accountabilities are often blurred (as in the accounting fiasco). There is now incentive to serve our communities- only the politicians in charge.

We already know what must be done: further centralisation- like ID cards- must be stopped, responsibilities for most criminal justice must be devolved back to local communities- those elected sheriffs would be a good start- and penalties must be increased (and simplified) to reduce the number of criminals on our streets.

It may be the bleedin' obvious, but we have to make sure we all learn it.

Tuesday, April 25, 2006

PFI Debt Hits £90bn


We've just updated our estimate of taxpayer liabilities under the Private Finance Initiative. Previously we've been quoting a figure of £65bn, which was produced last year by Capital Economics. Our new figure is almost 50% higher at £90bn.

This is calculated from the Treasury Budget forecast (Table C19), which gives annual payments under PFI contracts out to 2030-31. Total payments are put at £142bn, and discounted using an average 4.5% yield on conventional gilts gives the present value of £90bn.

So just to recap- and do pay attention- our overall total taxpayer debt is now £1.8 trillion, including this new higher total for PFI liabilities, and an allowance for those newly uncovered contingent pensions liabilities (see this post).

And of course, that still excludes our £7 trillion's worth of unfunded state pension liabilities.

Mid-Day Meltdown Update


I've just listened to the World At One, and I'm beginning to wonder if the government can even make it to the end of next week, let alone the next election.

Item- HM Revenue and Customs have overpaid tax credits by another £2.2bn- for the second year in a row. Since tax credits overall "only" account for £15.8bn pa, that means they're bogging up 15% of them, despite spending zillions on new IT systems (described by the PAC as "fragile").

Item- Charles Clarke has released another 1,000 murderers, rapists, and arsonists onto our streets due to some fresh cock-up (see this morning's blog). This time they're foreigners who should have been deported but were instead inadvertantly released into bushes outside a nurses' home. He has no idea where they are now. Sorry about that.

Resignations? Talk sense, will ya? Clarke at least says the whole thing is "deeply regrettable", which is a damned sight more than the Commissar has admitted about the NHS meltdown.

Thank God Mrs T and I have kept up our BUPA subs, and we don't (as yet) get tax credits. But this law and order thing...I'm not sure my air rifle is going to be enough.

Cost Effective Justice- 3


As we've blogged many times, cost effective justice requires as a minimum a doubling of prison places. What it doesn't require is the Home Office's proliferation of Panglossian liberal schemes like anger management courses for violent criminals.

This morning we hear that "prison managers have scaled down anger management courses for convicted armed robbers, wife beaters and stalkers because they can be counter-productive". The Home Office now say courses such as CALM actually help bad guys get back outside to start terrorising us again. They "have the potential to equip the offender with additional control mechanisms and increase his/her capacity to manipulate a situation to their advantage and power". Like persuading the Parole Board to release them early.

It really makes you scream. We've all known this for years, but it's taken the deaths of many innocent people- including John Monckton- to get the HO to see it. And you wouldn't want to bet on them not reintroducing it under another name.

We want those prison places NOW. Paid for as already proposed.

PS Tomorrow the HO is being grilled by the Public Accounts Committee on their shambolic accounting arrangements. As blogged previously, they are such a fiasco they failed to produce any reconciled accounts for 2004-05. The NAO discovered a trail of £1bn's worth of accounting "adjustments", and even then the books didn't balance. You'd have to think the Perm Sec would get the bullet, right? Er, well, actually Sir John Gieve was just given a new job: as Deputy Governor of the Bank of England in charge of financial stability!!!!. You couldn't make it up.

Thank God We're Not Paying For This


So now we have confirmation of just how our politicos spend their £40 odd million election expenses. From the hundreds of thousands on spinmeisters, to the make-up, to the fancy dress, it all has just one purpose: to gull us into voting for them.

The only good thing about this, is that we taxpayers didn't pay for it- at least not directly. And it starkly confirms what we've blogged before- there's no way taxpayers' should payroll parties. Unsurprisingly, it seems 77% of voters agree.

We don't want yet another "debate"about this. We don't want yet another commission. We've already decided: we just ain't paying.

What we must all do now is watch those double-dealing politicos like hawks. You may be assured they're already hatching some scheme to access our wallets by stealth.

Monday, April 24, 2006

Your Debts- Even More Horror


Taxpayers need to worry not just about today's taxes, but also tomorrow's. Which is why we keep a very close eye on government debt- the real total, not the much smaller Enroned figure Gordon Brown prefers.

When we blogged about it just after the Budget, we estimated the overall total at £1.3 trillion, or £55,000 per household. Bad enough, but it turned out we were too optimistic. Since then we've had updated estimates of unfunded public pensions liabilities (now increased to £960bn) and nuclear decommissioning costs (now put at £160bn). So the overall total moved up to £1.7 trillion, or £70,000 per household (see here).

Now, guess what. Yup- the figure just increased again.

This time it's a pensions liability not for those who are currently employed by the public sector, but for those who work for old nationalised industries now in the private sector. It now transpires that when these industries were privatised, somebody forgot to examine the smallprint. Shockingly, government officials don't seem to be sure what guarantees were agreed, but it seems obvious we taxpayers somehow got stuffed guaranteeing another huge swathe of pensions.

And the numbers are big. In the case of BT, this "Crown guarantee" attaches to around £28bn of its pension liabilities. But that's only what's surfaced so far. The same guarantee also reportedly applies to the pension liabilities of around 20 other privatised companies, including the £15bn Railways Pension Scheme, the £10bn British Coal Staff Superannuation Scheme, and the £13bn Mineworkers’ Pension Scheme.

Yes, of course we're told these are only "contingent guarantees", only redeemable in the event the companies go bust. But you wouldn't want to depend on that, particularly since officials are still scurrying around trying to discover precisely what the score is. Anyway the last two schemes mentioned no longer have an industry, let alone a sponsoring employer.

Sounds like another £50-100bn to add to that government debt mountain.

PS All the above debt figures of course exclude our liability for unfunded state pensions. As regular readers will know, based on the Turner Report's projections, we now estimate that at a neural flashover £7 trillion (see here).

PFI Through The Nose

Is the taxpayer getting a good deal from the Private Finance Initiative? The question gets more pressing as the number of such projects mushrooms. According to Treasury figures, since the scheme began in 1987, there have been 747 signed deals with a total value of £47.6bn. And by far the bulk of these- £44bn's worth- have been signed just in the last nine years since Labour came to power.

In principle the Private Finance Initiative could be a good deal for taxpayers. Instead of trying to build and maintain hospitals and schools itself, the government gets private sector specialists to compete for the job. Not only should the price be lower, but the risks of things like project overspend are transferred to specialist operators who are better equipped to manage them. Everybody should win by eliminating waste and inefficiency. Hurrah.

In the real world of course, it hasn't worked out like that. For one thing, this government has used PFI as a tool to borrow off-balance sheet. The best estimate is that PFI debt now amounts to a chunky £60bn, but because of arcane and wholly artificial accounting arrangements, the vast bulk of it does not count towards net public sector debt under Brown's Golden Rules. True, the Office for National Statistics has finally been pressured into reviewing its approach, but no revisions have yet been made, and up until now it's given Brown yet another opportunity for Enron fudge. Which he's taken in size.

Naturally, the pressure to finance new facilities via PFI, rather than through traditional public debt issuance, will have driven through deals which could have been more cheaply funded directly. To much of the public sector it seemed like "free money", which is why so many public bodies are only now realising the full extent of the burden they've taken on. The Queen Elizabeth Hospital NHS Trust in Woolwich has £100m of PFI debt and is now busy slashing jobs to pay for it: their Chief Executive says "In traditional commercial terms we are insolvent. We are relying on temporary cash borrowing to enable us to pay our creditors...it reaches a point where there is no way out."

Even worse, in many cases it seems that the potential efficiency gains from PFI have been dissipated by the shambolic way in which the public sector "partner" has managed the procurement process (see previous post on general public procurement issues). The CBI reported on this last week, spelling out the problem:

"Delays to procurement processes add significant extra costs to the purchases the NHS makes. While the specifications for schemes are being redesigned, or the final arrangements for projects are being reviewed, staff working on the project must be retained, and other fixed costs build up. The NHS recommends that the procurement process for a PFI hospital scheme should take 18 months. But on average it takes 21 months longer than this."

We've just had a classic example of this with Commissar Hewitt's dithering on the Barts PFI deal, which is reckoned to have added £35m to the £1.1 bn cost. Elsewhere, the CBI estimate that NHS bureaucracy and indecision added at least £100m to the cost of the 40 hospital projects they examined.

And then of course, there are all those cases of PFI deals where the private partner has made big gains by refinancing the project post-construction. According to last week's National Audit Office Report, total refinancing gains so far amount to £400m, of which only £137m have been shared with the taxpayer.

In principle, such gains are a reward for the successful management of delivery risk. Once the risk of construction overspend has gone, the future stream of income from the public sector user (say a hospital trust) is relatively low risk. So it's more valuable to investors.

But in practice, much of these gains has come about because the public sector partner, as so often, simply agreed to pay far too much for the facilities in the first place.

Are we getting value for money? Remember what the Public Accounts Committee concluded:
  • Departments need to get better at procuring and managing contracts
  • To justify PFI departments have relied too heavily on public sector comparators. These have often been used incorrectly as a pass or fail test; have been given a spurious precision which is not justified by the uncertainties involved in their calculation; or have been manipulated to get the desired result
  • The taxpayer is not always getting the best deal from PFI contracts because good procurement practice is not being followed. We have seen examples where competitive tension is not maintained; where there is only one bidder for the contract; or where the contractor raises the price after becoming the preferred bidder
  • Departments are too willing to bail out PFI contractors who get into trouble. The taxpayer must not be expected to pick up the tab whenever a deal goes wrong

All of which says one thing: the answer is no. The bottom line is that while the idea has much to commend it in theory, in practice the public sector's lack of commercial skills make it highly likely the taxpayer gets ripped off.

As we've argued before, we taxpayers would get a much better deal if we had control of our own purchasing decisions, rather than having our inept and costly public sector intermediating itself all the time.

Sunday, April 23, 2006

Recent Bonfires- 13

In the news this week:

NHS pay and transport blunders cost £635m- "The Department of Health has admitted that it miscalculated the cost of new contracts for nurses by £220 million and for consultants by £90 million, in addition to the £300 million overpayment on salaries for GPs. It can also be revealed how £25 million of taxpayers' money is being spent by hospitals on taxis to ferry patients around - a figure that has trebled over the last five years. In some areas, cabs are used for round-trips of more than 100 miles, costing trusts hundreds of pounds. David Hobbs, an Essex taxi driver, said he was "making a mint" driving NHS patients. "They waste so much money it's unbelievable." (Sunday Telegraph 23.4.06)

£20,000 on Blunkett country retreat- "DAVID BLUNKETT has disclosed he is living at taxpayers’ expense on one of Britain’s grandest landed estates, even though he has a home just 15 miles away in Sheffield. Blunkett, who also has a mortgaged home in London and until earlier this year enjoyed the use of a grace-and-favour property in the capital, has claimed more than £20,000 for a country retreat on the 35,000-acre Chatsworth estate in the Peak District." (Sunday Times 23.4.06)

£3m pa for prison dentist- "A SOUTH coast dentist is receiving up to £3m a year from the NHS — and channelling payments to an offshore firm. Richard Marques, who runs two dental surgeries with his two brothers, is paid by the NHS for looking after his patients in Weymouth and for dental care in prisons. NHS income for the Weymouth practice is sent to a company which documents suggest is based in the British Virgin Islands. “These dentists have hit a goldmine,” said one source with knowledge of the practice. Marques’s brother confirmed the prison service work was worth about £2m a year." (Sunday Times 23.4.06)

The ambassador blows another £294m- "A GRANDIOSE mansion in Moscow and a 16-bedroom residence in Washington have become the showpieces of a “stealth” European Union diplomatic service. The houses are part of a growing property portfolio housing a cadre of “ambassadors”, who include Tim Clarke, the brother of the home secretary, and John Bruton, the former Irish prime minister. As Britain and other nations sell prime sites and slim down their diplomatic presence, so Brussels has almost doubled its spending. Its diplomatic budget rose from £168m in 2001 to £294m in 2005. The grandest residence is in Washington. Built for a steel and railway tycoon, it has 16 bedrooms, a grand dining room, and a hall of polished marble. At the back lies an Italianate garden, complete with palisade and classical statues in bronze. In late April, with summer approaching, blossom from the ambassador’s cherry trees drifts across the uncovered surface of the swimming pool....Most of those who sit down to dinner, cooked by the ambassador’s Belgian chef, are trade officials and lobbyists." (Sunday Times 23.4.06)

This week's total- £932,020,000

Saturday, April 22, 2006

Limbering Up For Olympics

Sport England fitness facilitators in Man U home strip

It should surprise nobody that Sport England think it's quite OK to give £30 grand of taxpayers' money to Man U for a staff gym. SE are the self-same clowns who secretly hatched that crackpot scheme to spend £770m on developing a cadre of British Olympic super-athletes (see previous post). Which nonsense they then tried to cover-up when grilled by the Public Accounts Committee.

But we ain't seen nothing yet. These sporting desk jockeys are merely limbering up for the climactic wastathon in 2012.

The state has no business subsidising leisure activites, be it sport or opera. Sport England and its parent department DCMS should be wound up. The £3bn pa saved would pay for all of the extra prison places we so desperately need.

Friday, April 21, 2006

Cost Effective Justice Again


To us peasants it just seems so obvious. We may disagree about bringing back the rope, but we all agree bad guys should be locked up for a very long time- like for ever.

So wtf do we still keep getting all those outrageous cases where highly dangerous offenders get let out early to prey on our families? And wtf doesn't life mean life?

Charles Clarke reckons he can keep us safe by introducing the super-ASBO. He probably knows as well as we do that's cobblers: what we still want to know is why can't we just keep them inside?

Once again, the tired old cost argument is being wheeled out. So let's just remind ourselves of the facts.

The Prison Service is costing us £2.5bn this year, to incacerate 77,000 convicts and remand prisoners. That's £32,500 pa each. As previously blogged, to cut crime by 50% we need to bang up another 80,000 persistent offenders. Cost: an extra £2.6bn pa (actually less than the rough figure I estimated last time).

In the overall scheme of government spending, that's absolute chickenfeed- less than one-half per cent. And we could raise £1bn of it straight away by abolishing the ineffective Probation Service. Cutting police budgets by 10%- because with fewer criminals on the loose we'd need fewer coppers- would raise the other £1.5bn. And all those redundant coppers and probation officers would be emminently redeployable as prison staff.

No. Even against the background of Gordo's upcoming public expenditure freeze, the cost argument is a non-starter.

The real reason we're not been protected against dangerous reoffenders is of course that our criminal justice system has for so long been in the grip of our Panglossian liberal establishment. From Lord Wolf to Baroness Scotland to Martin Narey to Sir Ian Blair to all those top judges living in leafy streets well away from high crime areas etc etc. We currently have no democratic control over them, and there can be dire consequences for Home Secretaries who try: witness the demonisation of Michael Howard by the BBC and the rest of the lib media.

No wonder Clarke prefers blathering platitudes about how this time- for the first time ever- his souped up probation supervison system will work.

Something must be done to make these people directly answerable to us. Elected sheriffs would at least be a start.

Thursday, April 20, 2006

Billions More Squandered


As we've blogged previously, the Department for Work and Pensions is a basket case in terms of financial management. Its accounts have been qualified for each of the last fifteen years, and on its own admission it loses £3bn pa to fraud.

Today we get some gruesome details on DWP overpayments- ie their own incompetence in calculating entitlements:

"Last year the total overpaid in income support - an income-related benefit paid to low earners aged between 16 and 60 - was £200 million, up from £140 million two years before. The total income support overpayment since Tony Blair entered Downing Street is now £1.17 billion.

The total overpayment for the jobseekers allowance...since 1997 is £910 million.

These figures are in addition to tax credit overpayments of £1.9 billion last year and pension credit overpayment which has more than trebled since 2001/02 to £130 million last year."

Of course, it's unfair to blame it all on DWP incompetence: the fiendish complexity of Brown's credit and benefit system would defeat even the best of Britain's brains. And they most assuredly do not work at the DWP.

But whoever should be blamed, totting everything up, DWP's annual losses to fraud and overpayment are equivalent to about 1p on our standard rate of income tax.

It is truly appalling.

Three Lessons From NHS Crisis


As we fume and fret about the mounting NHS crisis, it's important for taxpayers to learn three key lessons. Lessons that must be committed to memory for the next time some plausible political fantasist tells us if we give him our wallets he can fix our public services.

First, loads more money doesn't work. Spending on the NHS has virtually doubled since 1999-2000 yet, from treatment rationing to hospital superbugs, the problems remain exactly the same. The simplistic socialist solution of more public money has not only failed but, by pumping up cost inflation, has plunged the whole bloated system into financial crisis. And it will all get much worse when the public spending boom hits the buffers in 2008 (see the excellent Reform for more).

Second, top-down public service reform doesn't work. From the disastrously expensive new doctors' contracts, to the catastrophic NHS supercomputer, politicians and bureaucrats are seeking to impose yet more of their their one-size-fits-all systems. It's all they know, and it keeps the reins of power in their hands. But what looks good on a Whitehall drawing board rarely bears much relationship to the diversity and general messiness of behaviour on the ground. As was pointed out long, long ago, human beings are not chess pieces.

Third, administered consumer choice doesn't work. Bureaucratic brainwaves such as the "pick and mix" hospital booking system are never more than pale heavily circumscribed imitations of real markets. What's more, their costly and convoluted administrative infrastructures are notoriously fragile and prone to collapse, as we're already seeing with "pick and mix". Real markets cut through all that by putting the cash directly in the hands of consumers not politicians.

Three lessons. Have we all memorised them? I'll be asking questions later.

PS As those well intentioned perestoikans discovered twenty years ago, tinkering with dysfunctional Soviet industries is very apt to accelerate their collapse. What we urgently need in health is the new approach based on real customer choice among competing providers. The European social insurance model offers an attractive way forward (see Reform for more details).

Wednesday, April 19, 2006

Gravy Trains (And Limos)

Yesterday's post on government procurement unaccountably omitted legal services and the BBC.

The legal aid bill alone is currently running at £2.5bn pa (see this post). And today we get news of lawyers who are doing extraordinarily well out of miners compensation cases:

"Beresfords, based in Doncaster, has been paid £73 million by the Government for handling industrial disease claims by tens of thousands of colliery workers. This has helped Jim Beresford, the senior partner, and Doug Smith to become multimillionaires. Mr Beresford, 55, and his wife, Linda, 54, invested £1.8 million last year on a private jet and have spent heavily on improvements to their home in Linton, near Wetherby.

Fortune has also smiled on their two daughters. Esta, 27, a solicitor, is one of the three partners at Beresfords. She and her husband, Aaron Rae, 29, are among the directors and shareholders of two family-owned companies. In 2002 they bought a house at Ingmanthorpe Hall, near Wetherby, for £470,000. Mr Rae owns a racehorse, and a few weeks ago he joined the board of Doncaster Rovers FC at the same time as his father-in-law became its vice-chairman.

The other daughter, Chloe, 24, also has shares in the family companies, Quaypoint Ltd and Keypoint Investment Mis-Selling Services Ltd. She lives in a £1.1 million home in Sutton Coldfield with her husband, Matt Murray, the Wolverhampton Wanderers goalkeeper. Her father and Mr Smith, 49, who lives at the £840,000, Grade II listed Noblethorpe Hall, love expensive cars. In recent years their garages have housed three Aston Martins, a Bentley and a Ferrari."

Nice work if you can get it. And if you supply services to government, you can.

Another current example: BBC Radio 2's "DJs". As we know, the state broadcaster is tax funded to the tune of £3bn pa, and ladles out huge helpings of public cash to its own charmed circle of "stars". Today we learn:

"Terry Wogan was shown to be the highest paid radio presenter, earning £800,000 a year. However, at an hourly rate, he was eclipsed by Jonathan Ross who is paid £530,000 a year for a weekly three-hour show — a fee of almost £57 per minute. Other high earners, according to the leak, include Chris Moyles on £630,000, Chris Evans on £540,000, Steve Wright on £440,000 and Jo Whiley on £250,000."

And it's not like they're simply paying the market rate: the BBC so dominates UK broadcasting, they are the market. As David McConnell, of the Commercial Radios and Companies Association, says: “The BBC is able to offer packages which make it difficult for commercial radio to compete.”

Now I don't know the right rate for Tel etc, but the point is that the BBC doesn't either. When public sector contracts dominate a market, be it for radio jocks or prescription drugs, prices get distorted and can easily be driven far beyond their right level. So while the vastly witty Major Frobisher would be delighted to take over from Tel for £20 a day plus travelling expenses- and has penned numerous letters to suggest it- he's never even been given the chance to audition.

No proper market, ill-informed and naive government purchasers, final users forced to accept what they're given...no wonder gravy trains are such a common feature of public procurement.

Tuesday, April 18, 2006

City Academies Costing Plenty

What with the police pursuing their enquiries, and the teaching unions squawking for the whole sorry mess to be scrapped, it's easy to lose sight of the actual money. So I've tried to tot up what Blair's troublesome City Academies are costing us- the taxpayers- and whether we're getting value for all those peerages.

So far, 27 academies have opened, and their capital costs have ranged from £16m up to £38.5m (Bexley). The average cost is £26m, which means a total capital spend so far of £0.7bn, with a plan to build an eventual 200 at a combined cost of £5bn: so it's not chickenfeed (see list of first 100 here).

But we taxpayers needn't worry too much because of course those aspirant peers are paying a lot of it, right?

Ah. Well, sadly their contribution is not really that much: the DfES says "the sponsor provides around £2 million with the government meeting the balance".

OK. Only £2m out of an average £26m a pop. But even two mill is something, right?

Hmm. Well, that's £2m gross of tax. And since academies are charities, for your average plutocrat the net contribution to the Exchequer is only £1.2m. We taxpayers have to stump up the other £800,000.

Oh. But every little £1.2m helps, surely.

Ah. Well, you see, it turns out quite a lot of them haven't coughed anything like £2m (gross). Take Barry Townsley, who not only sponsored Stockley academy, but also donated £1m to the Labour Party and had his peerage blocked by the Lords Appointments Commission. He's apparently only come up with £400 grand of sponsorship so far.

Or take the sponsors of Harefield Academy. They're described as David Meller and other "businessmen and Businesses who first became involved in the development of The Academy through their association with Watford Football Club". They seem to have forgotten to include Elton, which perhaps explains why they've only come up with £42 grand.

In fact, for the 23 academies listed by Schools Minister Jacqui Smith, sponsors had only come up with an average of £1.2m gross, or a mere £700 grand net of tax. Not bad for your own school, let alone the peerage.

The City Academies saga has always had an air of unreality. We all know bog standard comps are failing- particularly in rough areas- but why on earth should we think some enthusiastic amateur would do better? Even assuming he's not doing it to get a peerage or to indoctrinate kids with his own fundamentalist superstitions, why should we trust him to run an expensive state funded school? And with results at a third of these academies failing even to match the sink comps they replaced, it's clearly another disastrous flop.

Real customer choice is the only long-term solution in education, as with all our public services. Meanwhile Blair's seedy academy scam is letting down its customers and costing us taxpayers plenty.

Magic Beans


Well, they did it again. They swapped the cow for a few more of those magic beans.

This time it's GP contracts, with your average GP now as rich as Lord Levy while we patients must learn not to get sick at the weekend. All "negotiated" by those best-when-we're-boldest spinners of fairy tales up at the palace. As Niall Dickson of the King's Fund says:

"For the average person going to their GP the very idea that their doctor might be earning between £200,000 and £250,000 would be really astonishing. And by international standards that would put them way up at the top of the league even among developed countries."

The general consensus is that the BMA saw our naive ill-informed government ambling towards them with the cash cow, and slipped them the beans. And why on earth shouldn't they? After all, that's the job of any trade union. But as we've blogged before, following the normal cyclical pattern in public sector pay, the Docs should enjoy it while they can- the next seven years will be very lean indeed. Which means of course, their morale will slump further (for details see the excellent Doc Crippen) , and we taxpayers will have the worst of both worlds- GPs who are expensive, but demotivated at the same time.

Brilliant. We taxpayers would have done a whole lot better had the government never intermediated itself between us and our GPs. Had we been the ones setting GPs pay directly, via the operation of the marketplace. Just like we do with our beans from Tescos or Sainsburys.

Which neatly illustrates a much broader point about government spending.

GPs are generally not employed directly by the public sector: they are private contractors whose services are "procured" on our behalf by government. It is government that negotiates the contract, and we taxpayers just have to live with the result. And overall, such procurement spending accounts for no less than one-third of all government expenditure. This is the government not as underperforming producer, but as naive ill-informed customer.

To get public sector procurement into perspective, consider this. Tesco, Britain's biggest retailer, spends about £30bn pa on procurement among its suppliers. Which makes it Britain's biggest private sector customer, and taken very seriously indeed by Norfolk turkey kings and Chinese jeans manufacturers alike.

But Tesco is nothing compared to the public sector. This year the public sector will spend on your behalf some £170bn among its chosen suppliers. Or around £7,000 for every household in Britain.

Where does it all go? Who gets it? How do they get picked? And how often are we swapping cash cows for magic beans?

Over the next few months we'll be trying to answer these questions, and assessing how much we're paying over the odds. It won't be easy, because the government doesn't provide us with the info we need in one easily accessible place...almost like they don't want us to know.

But some of the big ticket supply industries we do know about are:

So do we think the government spends our money with these suppliers any better than it did with the GPs? Don't get your hopes up.

PS Commissar Hewitt was interviewed about the GPs this am on R4 Today. Mr Naughty was at his waffly innumerate worst, and she was able to brush him aside quite easily. As so often, instead of pursuing the hard financial questions, he fell back on the BBC store of all-purpose leftie Victorian literary images- suffering orphan children denied medical care and cast out into the winter snows etc etc. Still she didn't upset him half as much as that guy from the BNP yesterday, who accused him of being a liberal: "you have no idea what my political views are" was his ludicrous riposte.

Monday, April 17, 2006

Spare Those Nurses!


Politicians are forever telling us we can't have lower taxes because we'd have to sack thousands of nurses and teachers, or watch OAPs freeze to death. We all know it's self-serving rubbish of course, but the facts aren't always readily to hand. So as a special Easter treat, here are a few of them to commit to memory.

This year the government plans to spend £559bn of our money- no less than 43.7% of our incomes (Budget Report, chapter C, tables C4 and C5).

How much of that actually goes on nurses? According to the Department of Health, the NHS employs approximately 400,000 nurses of all kinds, and Gordo says their average salary is going up this year to £28,400. Obviously that will be wildly spun exaggeration, but even taken at face value, it implies a pay bill of only £11bn pa. A mere 2% of total public spending.

Teachers? According to the ONS there are about 500,000 teachers in UK state schools, each earning about £30,000 pa. Which implies an annual salary bill of about £15bn...3% of total public spending.

So even if we took all our nurses and all our teachers off the table, that would still leave 95% of public spending open for cuts.

Ah you say, what about those freezing OAPs? The Turner Commission reckoned that including everything from the basic state pension to all those Gordo means tested credits, we're currently spending about £75bn on OAP incomes. Clearly a bigger ticket item, but still only some 13% of total public spending.

The truth is that, when you actually go through the numbers, even if you add together all the headline items politicians always wave around to explain why we can't have lower taxes, they still don't come to anything like the whole of public spending. Maybe a third at most.

So if it's not nurses, teachers, or OAPs, what's in the other two-thirds? And how can we cut it?

Tomorrow we'll look at the one-third of spending the government splashes around among its chosen commercial suppliers.

Sunday, April 16, 2006

Recent Bonfires- 12

In the news this week:

Another £5bn pensions bill- "BT admitted yesterday that a "significant proportion" of its near-£5bn pension liabilities are underwritten by the taxpayer, although it refused to give details. BT said it was "no secret" that it has a crown guarantee for part of the pension liabilities of its defined benefit scheme, which closed to new members on April 1 2001. It said the guarantee covered liabilities in relation to pensioners and members of the scheme at privatisation in 1984." (Guardian 15.4.06)

£127,000 for Cherie's curtains- "Last year almost £30,000 was spent on furnishings for 10 Downing Street...with a total bill since 1999 of £127,314. A Downing Street spokesman was reluctant to say exactly how many tablecloths or lampshades the money had bought. "The bill includes carpeting, curtains, lamps and tablecloths. There is no more information that that," he said." (Independent 16.4.06)

£30m for Blair Force One- "Tony Blair is to announce within weeks that he will push ahead with the purchase of a £30m long-haul business jet. [It] will be fitted to carry around 40 passengers in luxurious comfort. Standard VIP layouts include at least one bedroom, an entertainment suite and a full-sized conference table." (Independent 16.4.06)

£15-30bn NHS computer crashes- "At the Nuffield Orthopaedic Centre...the screens had suddenly frozen. Medical staff looked on in disbelief as they tried to retrieve lost records. “We had only been running the system for a couple of days when it went down,” said one manager. “You would try to get a patient’s records which you knew were there and it just locked you out.” Although the system was functioning again the next day, some patient files seemed to have disappeared completely. The trust was so alarmed that it sent a report to the National Patient Safety Agency, warning that it had posed a potential risk to patients. Even [the Department of Health] admitted this weekend that the cost of the scheme, now not due to be completed until 2010, could reach £15 billion. Outside experts suggest that £30 billion is more realistic. “In the system they are building, errors can get spread and copied across the network and nobody can do anything about it,” said Ross Anderson, professor of security engineering at Cambridge University. “What they are proposing is a recipe for chaos and disaster.” " (Sunday Times 16.4.06)

Total for the week- £35,030,127,000

Saturday, April 15, 2006

Blood Boiling Roads

Friend of the Major's

We know that 90% of public sector projects overspend their budgets (see here). So it's no surprise that the Newbury by-pass and the M11 extension should have done so too.

But according to today's gleeful BBC report, this time the reason was not public sector incompetence, but the splendid public spirited actions of our noble eco-warriors:

"Figures obtained under the Freedom of Information Act show that the campaign against the M11 extension contributed to a 100% increase in costs. The Newbury bypass - the scene of Britain's most notorious road protest - was 50% over budget."

Unfortunately they don't report the backing evidence, so here are a few facts on the Newbury costs:
  • Construction costs- Costain contract £73.5m; delivered within budget
  • Security costs- £23.7m, including £19.5m for security guards, and £3.3m for security fencing
  • Additional police costs- believed to be a further £2.5m

Looks like the BBC and their protestors have a point: all that tunnelling and tree camping did inflate costs massively.

And of course we taxpayers had to pick up the tab. And suffer the knock-on effects of right on New Labour abandoning all new roadbuilding for the next 7 years.

When I pointed out all this to Major Frobisher he started spluttering again. Kneading his chest, he asked why the devil we should have to pay all that extra dosh simply to accomodate the tiresome antics of a bunch of hippy social security scroungers? Surely the way to deal with them would have been to arrest them, bang them up for the duration, and take away any future rights to state benefits.

It was then I mentioned that the senior policeman in charge of the security operation at Newbury was none other than our old friend Sir Ian Blair (then Assistant Chief Constable of Thames Valley police). The Major turned a shade of puce I'd only previously seen in Photoshop and emitted a low growling noise. I tried to calm him, but he retrieved his shotgun from under the bed and drove off in his 1954 Land Rover.

Frankly, I'm concerned.

Friday, April 14, 2006

Olympics Watch: Jobs For The Boys (And Girls)


The 2012 public sector jobs bonanza is well underway. This week's Economist invites applications for three more:
  • Director of Olympic Opportunity- £86k
  • Senior Olympic Policy and Programme Manager- £45k
  • Senior Olympic Opportunity Manager- £45k

You can check them out at the LGA's Legacy Now; the site which also ominously implies the London Olympics will last for at least another six years after 2012...or at least, the jobs will.

Finance guru Tossa Jowell has also appointed no less than 12 new directors to the board of the Olympic Delivery Authority. Seven of them are existing placemen- and women- from other quangos, and another is a trade union leader. Nuff said.

The ODA of course has stacks more jobs on offer, including: Head of Internal Risk Assurance- responsible for much "facilitation", "stakeholder interfacing", and general arse covering; Park Interface Manager- responsible for a fair amount of "over-arching" multi-modality; and unquantified- possibly unquantifiable- numbers of HR Managers (check out all the jobs here).

The ODA still says its funding package is £2.375bn. As we all know, that's a wildly misleading figure, already some way behind events.

We stick to our all-in cost estimate of up to £20bn.

Thursday, April 13, 2006

NHS Crisis: Factory Managers Show Trial

Downing Street NHS Summit

As his massive NHS spending spree ends in crisis, the Beloved Leader is feverishly running through the Joe Stalin playbook. The field commanders have already been executed, and now he's personally running the show trials for failing factory managers. The terrified group hauled before him yesterday were left in no doubt production of the T34 must be stepped up by all necessary means:

"We have to hold our nerve and be confident that the changes will deliver a better service. We have a huge ambition. There is no way we are going to do it by the old way of working. It will be a challenging year, there’s no doubt about that at all. But turnaround can be done and has to be done.”

The cameras rolled, and the confessions were blurted out for the newsreels:

"Tom Taylor said he was the fourth chief executive at Shrewsbury and Telford NHS trust in 10 months. He was slashing the deficit by increasing the number of patients treated as day cases and freeing beds by discharging people in the morning. Duncan Newton, the medical director at Bradford foundation trust, said he was saving on costs by making able-bodied patients walk to the operating theatre."

That's it Dunc- at Stalingrad they were herded to the front by armed NKVD officers. Have you considered how that might speed things along?

"Antony Sumara, the chief executive of University Hospital of North Staffordshire, who announced 1,000 job losses at the trust in Stoke-on-Trent last month . He said his staff were "angry and bereaved" because they felt let down by former managers."

"Angry and bereaved". I like that.

It almost captures how we taxpayers feel about this whole disaster.

PS We're told that the government “narrative” remains that the bulk of the NHS is in balance and relatively few trusts are responsible for most of the deficits". Well, the overall final deficit for 2005/06 may have been somehow constrained to the £600-800m they're talking about, and that may be "only 1%" of total NHS spending. But that entirely overlooks the damage caused to services by the need to slam on the financial brakes, sack staff and delay ops.

PPS I've just listened to the excellent Doc Crippen on the R5 Live NHS phone-in. As always he made some telling points. And it was interesting how the "narrative" is shaping up out there in phoneland. There's a widespread understanding that more money has not solved the NHS problems, and a feeling that much of it has been wasted on more administrators, higher salaries, management consultants, agency staff etc etc- all the things we're so familiar with. This is a definite step forward from where we were in the 90s. But there's much less understanding that the longterm solution is more consumer choice. Most people seem to think some kind of "rationing by clinical need" is the way to go. There's still so much to do.

Wednesday, April 12, 2006

Olympics Watch: Multiplex Back For More


Multiplex, the main contractors on the heavily delayed Wembley project, are reportedly in line for a major role in the 2012 Olympics money pit. According to the Australian press:

"The prospect has arisen because of a dispute between co-owners of the project - the billionaire Reubens brothers and Australian shopping centre group Westfield - over construction of the Stratford City development- the site of the athletes' village and press centre for the 2012 Olympics."

If, as expected, the Reubens buy out Westfield, then they will be contracturally obliged to hire Multiplex, who sold their own original stake to the Reubens. Multiplex say:

"We sold to the Reubens because we would retain those opportunities if we wanted to take them when the time came."

Are you following this?

A couple of points arise. One, there's King Ken's somewhat cool relationship with the bros. As he put it so diplomatically:

"If they're not happy they can always go back (to Iran) and see if they can do better under the ayatollahs."

The R's of course, were born in India, of Iraqi Jewish parents.

Second, given that the 2012 organisers will be seeking fixed price deals with their contractors (see previous post), will that include Multiplex on this development? And if so, given the size of the project and the financial hit they've already taken on Wembley, are Multiplex going to be in any position to deliver a bankable guarantee? And if it isn't bankable, who picks up the tab if we get to January 2012 and they're nowhere near finishing?

See you in court. Oh, and if you're a taxpayer you'd better bring your chequebook.

Whitehall's Worst Department

The soaraway winner

These days the selection of Whitehall's very worst department is a tricky one. The Department for Work and Pensions will be the choice of many, with its 120,000 staff presiding over a shambolic unauditable £125bn morass of incomprehensible state hand-outs.

Then again, there's the Department of Health, that's managed to double spending in five years only to produce a cash crisis and a further collapse of service standards. Not to mention that crackpot £50bn super-computer.

Or maybe it's the Home Office, relentlessly pressing ahead with its multi-billion Big Brother state for law-abiding citizens, while totally failing to grip the violent crime rampaging through our streets.

But despite such stiff competition, one of the old favourites is still very strongly in contention- the Department for Environment Food and Rural Affairs.

Let's start with the their website. That currently has a special feature proclaiming "Defra encourages travellers to reduce their effect on the environment" (nice pic reproduced above). And yet it turns out Commissar Beckett is actually one of Britain's most frequent flyers, presumably accompanied by the usual retinue of Defra bureacrats:

"Mrs Beckett, whose department is responsible for reducing carbon emissions and air travel across government, has cost the taxpayer more than £100,000 on 110 flights in three years. Her department has not offset the carbon emissions from the flights. Other than ministers with an overseas brief and Tony Blair, Mrs Beckett cost the taxpayer more in flights than any other minister.

She has made repeated public statements about the environmental dangers of air travel. In November 2004 she told a conference in Berlin: “I am advised that, by 2030, in the UK alone, emissions from aircraft could represent a quarter of our total contribution to global warming.” That year Mrs Beckett used the RAF’s VIP services to travel to Greece, Sweden, Belgium, Luxembourg and Italy at a cost of more than £51,000."

Then there's Bird Flu. According to Magnus Linklater, if Defra had been doing its job properly we could have tested that illegal immigrant dead swan in hours rather than the scary eternity it actually took:

"There is a device called a Rapid PCR machine to carry out instant diagnosis of diseases such as swine fever, foot-and-mouth and avian flu. It costs about £40,000 per machine, with each individual test costing £3 a time. It can be operated by any trained vet. Professor Roger Breeze, former head of the US Department of Agriculture’s laboratory at Plum Island, looking at the tests carried out in Britain after the discovery of the Cellardyke swan, has calculated that just nine of these devices, located across Scotland, would have cost less than £500,000 and done the job of testing 1,000 suspect birds in a tenth of the time that it took to ship them south to Weybridge."

£500,000. Compare that to Defra's annual budget of £6bn.

Then there's the fiasco at Defra's Rural Payments Agency (see previous post). As we know, Defra's insistence on some ludicrously overcomplicated admin system means that the vast majority of English farmers have not yet received CAP payments for last year. Yes, of course, we're all opposed to CAP payments, but cutting them purely by means of administrative shambles is less than ideal. Not only could the farmers sue, but it now turns out that unless we pay by end-June, the EU will fine us:

"After [30 June], one per cent a day of the outstanding payments has to come from the Treasury [rather than the EU]. After three months, all of it will have to."

And it could be up to £1.5bn.

In a fantasy world of political integrity, Commissar Beckett would have resigned long ago. In the real world of Labour government, there's zero chance that will happen.

And in some extraordinary sense, you end up thinking maybe it's best if she doesn't go. Defra has always been a bureaucratic shambles, a second division department fundamentally conflicted in its responsibilities to both farmers and consumers. Moreover these days, it is actually little more than an executive agency of the EU: a National Audit Office report in the wake of Defra's fridge mountain fiasco found that two-thirds of departmental regulations are actually EU regs, suitably "gold plated" by Defra bureaucrats for infliction on us.

Airtour freebies, plague swans, EU fines, fridge mountains, BSE, foot and mouth...on any basis Defra is a strong candidate for Worst Whitehall Department. And having one of Westminster's least appealing politicos at the helm seems entirely fitting.

Now, if we can just get those pesky voters to draw the obvious conclusions...

Tuesday, April 11, 2006

Latest On NHS Computer Disaster- 2


We've blogged it many times, and this morning 20 IT academics have written to Computer Weekly to call for a public enquiry into the NHS' National Programme for IT (NPfIT). They say:

"Concrete, objective information about NPfIT's progress is not available to external observers. Reliable sources within NPfIT have raised concerns about the technology itself. We propose that the Health Select Committee help resolve uncertainty about NPfIT by asking the government to commission an independent technical assessment with all possible speed."

Cambridge University expert Professor Ross Anderson, one of more than 20 signatories of the letter, said it crystallised the "growing concerns felt by many people". Of course, most of the "many people" he has in mind are actually working on the project itself- the largest civilian IT project in history. They're hardly going to go on the record with anything approaching the unvarnished (see recent posts on the contortions at Accenture).

Meanwhile the National Audit Office probe continues. Another signatory, Professor Martyn Thomas, of Oxford University, says about that: “My instinct is that had they had anything good to say about NPfIT it would not have been delayed so long. In this case there has been a lot of pressure and a political timetable set by ministers from outside. There has not been enough scrutiny.”

We think he's being too harsh on the NAO, who have already signalled their report will be a stinker (see this blog).

He added: "the UK Computing Research Committee, an 80-strong expert group, had offered to help, but nobody from NPfIT had been interested in talking to them." To which the only response is 'you don't say'.

How much more of our dosh will be torched before before some semblence of sanity returns? And how much longer can the husky killer survive before being chopped up and thrown to the pack?

Monday, April 10, 2006

Cost Of Crime


Forget the government propaganda: Britain's crime rate is appalling. According to international stats published by the Home Office, your chances of being a crime victim are higher here than in virtually any other developed country. In fact the only country that does worse is the penal colony of Australia.

In 2000, the HO estimated the cost of crime at £60bn. Others reckon it's higher, but let's go with the HO figure, and scale it up to £75bn in today's money. That's about 6% of GDP, or £3,000 pa for every household.

So it's pretty chunky.

But of course, the total cost of crime is even higher. This year we'll be spending well over £30bn on Public Order and Safety, most of it to combat crime. So the overall cost of crime- even on the HO's conservative figures- is running at around £100bn pa.

What can we do?

I've always been a big fan of deterrence. There's plenty of evidence to show it reduces crime, and simple people like me can't understand why we don't just do it. Clearly it needs to be real deterrence, so I'm not just talking about a few more Community Support Officers wandering around Guildford. But neither am I (necessarily) talking about the full-on Major Frobisher plan for cost effective justice. No, as a starter, surely we can all sign up to building a few more prisons.

Yesterday's Sunday Times showed how powerful this can be. Britain records about 10,600 crimes per 100,000 population, but we have only 12 prisoners per 1,000 of those crimes. In Spain, they have four times as many prisoners in relation to the number of crimes, and guess what- their crime rate is less than a quarter of ours. And the same strong relationship can seen right across Europe: the higher the rate of imprisonment relative to the number of crimes, the lower the crime rate.

So how many more prison places do we need? David Green of Civitas reckoned 80,000 might do it. That was based on Home Office estimates that 100,000 persistent offenders carry out about half of all crime and that about 20,000 were in jail at any one time. So if we locked up the other 80,000 we'd cut the crime rate by half.

Since it costs about £40 grand a year to imprison someone, that implies £3.2bn pa extra. Well, that's what the total budget numbers imply, although the detailed establishment costings (see here) suggest some prisons can do it for much less. Jeffrey Archer's alma mater only costs £30 grand, and Jonathan Aitken's a mere £15 grand. Not enough security? Well, the Scrubs comes in at a very reasonable £25 grand. That's not a lot more than Eton.

But even if it is £3.2bn extra, that's chickenfeed against the £100bn pa cost of crime.

What are we waiting for?

Sunday, April 09, 2006

Recent Bonfires- 11

In the news this week:

£500m fiasco at Scottish Enterprise quango- "The £30m "overspend" is a symptom of an accounting system that even the best accountancy and business brains in the country have difficulty understanding. It was described by one source as an "Alice in Wonderland accounting system". There is widely-shared opinion that SE has become bloated and bureaucratic, that too many managers have been there too long and do not impress. "It is difficult to run an enterprise agency with people who are civil servants working towards their pension," said one former employee. "There are people in there who have forgotten what enterprise means." Critics believe it has lost focus, and some struggle to explain exactly what it does - it is time to wind it up and hand over its £500m. One insider said: "I could make your toes curl with the crap." (Scotsman 9.4.06)

£90m for NHS managers cars- 'SENIOR health managers and consultants are being provided with luxury cars including Jaguars, Mercedes and even Porsches at a cost of millions to the National Health Service. As hospitals across Britain face job cuts, new figures show that executives are receiving subsidies of up to £6,600 a year to lease cars that they can subsequently buy at a discount. All maintenance costs are included in the agreements, while some authorities and hospital trusts also cover the costs of insurance premiums. The bill for leasing the 35,000 cars for NHS staff is now close to £90m.' (Sunday Times 9.04.06)

£45,000 Blair expenses unaccounted for- "TONY BLAIR is facing questions over an apparent “black hole” in his parliamentary expenses after claiming more than £15,000 a year for his constituency home in Co Durham. In the past four years, about £45,000 of Blair’s expenses are not publicly accounted for." (Sunday Times 9.04.06)

£300m gift to French arms company- "UK taxpayers put more than £300 million into the development of Sonar 2087, a high-powered system capable of detecting even the quietest of enemy submarines. The device was developed by Thomson Marconi Sonar, a British-based company jointly owned by BAE Systems and the French firm Thales, but BAE sold its share in 2001 and Sonar 2087 became the property of Thales. Since the ownership now rests solely with the French, Thales is free to develop and sell as many sets as it wishes, not just to the French navy but across the world (and, if it wishes, to transfer hundreds of jobs from Britain to France). In other words, the UK taxpayers have made a free gift to Thales of more than £300 million." (Sunday Telegraph 9.04.06)


Total for the week- £890,045,000