Wednesday, April 15, 2009

The Cost Of Long Grass

An official enquiry gets underway

When the going gets tough, government ministers order an enquiry.

And whether it's the Cabinet Secretary ordered to enquire into scumbag etiquette for Special Advisors, or Lord Laming ordered to enquire into the latest horrific failure of child protection, or Lords Butler and Hutton ordered to enquire into the Iraq fiasco, the remit is always the same - take this problem off into the long grass, and lose it.

But there's always a cost. Not just in terms of, ahem, standards in public life, but also in terms of cold hard cash - taxpayers' cash.

Hard information is scarce, but we were told that Laming1 cost £3.8m, and Hutton cost £1.7m. However, those figures largely comprise external legal and other fees - they almost certainly understate the full costs of the internal civil service resources deployed.

The current record - as far as we know - is held by the Bloody Sunday enquiry, which has so far cost us nearly £200m.

Now this morning we hear that the DTI/BERR enquiry into the MG Rover collapse has cost £14.8m. And that's just so far, because although the enquiry has been grinding on for four years, it still isn't finished.

As regular readers may recall (eg see this blog), the MG Rover collapse in 2005 put up in lights just how useless Labour's DTI had become. Because it was the DTI and its ministers who were largely responsible for the company's total wipeout. As we noted:

"If it hadn't been for political interference and DTI's hamfisted meddling, BMW would have sold to Alchemy in 2000. The company would then have been downsized pretty drastically to become a specialist sportscar maker. The downsizing would have been done in a properly planned, orderly manner, paid for by the company itself, not taxpayers. And the creditors would have been paid off. Even the pension fund deficit would have been less problematic because its equity investments were worth so much more in 2000.

And as the specialist producer of MG sportscars, the company would surely have had a much better chance of survival than the clueless fag-end of a defunct volume manufacturer. So a good chunk of the jobs would still be with us today."

Following the 2005 election, Alan Johnson was appointed the new DTI Secretary of State, taking over from our old friend Commissar Hewitt. He immediately made two decisions.

First - sadly - he rescinded Hewitt's wonderful decision to rename DTI the Department of the Penis (see this post).

Second, he tackled the seething anger in the West Midlands at how the infamous Phoenix directors, who had paid just £10 for MGR, had then managed to extract £40m from the company for themselves, even as it was going down the tubes. Hence the enquiry.

And for Johnson, the enquiry was a resounding success. The grass was quite long enough to see him safely out of the DTI. Indeed, it's been so successful, it's also seen out two of his successors (Darling and Hutton).

But for us taxpayers, the upside is rather less apparent. The collapse of MGR has already cost us £250m (see this post), and now we're in for another £15m.

It's way beyond time to sharpen that scythe.

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