The shameful waste of our money
Last week was a busy one for news hounds, what with an errant prince defying family tradition to fight press enemies in court; the endless pyschodrama of breakfast TV celebrities falling out; the publication of a disgraced former PM’s honours list and his almost immediate resignation to avoid his suspension from parliament.
In all the breathless excitement they can perhaps be forgiven for not picking up on the Seventh Annual Report of the Chair of the Committee of Public Accounts.
Its title was not one to set pulses running, but its contents were profoundly shocking. And although they relate to the government at Westminster rather than Stormont the ramifications will reverberate here too, affecting our finances for years and years to come.
And they paint a picture of a government which is ineptly led and incompetently run which has lost control of its finances and does not have the basic digital skills or technical skills required for the modern age.
The report is couched in that peculiarly understated language that is a characteristic of such reports, which, if anything, makes its conclusions all the more devastating and authoritative.
Amongst its conclusions are:
Much of the money lost through fraud during the Covid-19 crisis is unlikely to be recovered;
The turnover of staff in the civil service is so rapid that those involved in commissioning are rarely there long enough to see projects through to delivery;
The civil service has “a mountain to climb” to procure the digital and project management skills it needs for a digital world;
Whitehall “too often clings to projects which have failed.”
Add that all together and it comes at a price, a very large price indeed, measured in many billions. Collectively, it would appear what would have been enough money to cure some of the social ills we suffer from.
The pity is there’s no longer any left.
A quick run through of the major wastage, fraud, mismanagement and losses illustrates the point.
Fraud and error are at especially high in three departments: Work and Pensions (DWP), HM Revenue and Customs (HMRC), and what was the Department for Business, Energy and Industrial Strategy (BEIS).
To be fair, government allowed a higher risk of this during Covid-19 and some increase in fraud and error was an inevitable short-term consequence of providing support quickly. However in 2020/21 , the DWP oversaw the highest level of benefit fraud and error since records began in 2005. It overpaid an eye-watering £8.6 billion in benefits, £6.5 billion of which was due to fraud.
The report states: “The Committee has challenged the DWP on why benefit fraud remains so high, and on when it will return to pre-pandemic levels.”
Similarly HMRC experienced high levels of fraud over the £97 billion scheme to help the self-employed during the pandemic. The scheme was poorly designed, leaving many self-employed unsupported while there was, in the end, unnecessary support for people who did not need it.
HMRC estimates that total fraud and error across the lifetime of these schemes was £4.5 billion, and forecasts it will recover only a quarter (£1.1 billion) of the losses.
The track record of BEIS which administered the Bounce Back Loan Scheme is just as poor. By December last it had recovered just £10 million out of an estimated £2.2 billion lost to fraud and error, the Government has already announced that it expects to have to write off a further £1 billion.
In the meantime the gap between taxes owed and those paid continues to grow, despite these funds being essential for public services. Between 2020 and 2022 these had dropped by £9 billion compared to the period before the pandemic. But with staff shortages continuing and with no clear targets the report is worried that lost revenues will continue to mount.
Meanwhile the lack of joined-up government puts fundamental national targets at risk.
Per the report: “Whitehall has a connected set of challenges – providing energy security, safeguarding the environment, and delivering net zero by 2050. It needs an integrated and long-term approach to manage the risks associated with these goals, but its approach is too piecemeal. For example, Government does not know how much public money is spent on addressing air quality across departments, which is a barrier to joined-up and cost-effective management of this risk.”
This is unsettling because it suggests that the honest answer to whether we’ll achieve net zero on time is that the government itself does not know because it has no over-arching interdepartmental strategy.
It seems the committee found serious waste and failure everywhere. For example the Home Office plans to replace the way emergency services communicate with each other. This critical scheme is at least six years late and £2 billion over budget.
Then there were the procurement scandals during the pandemic. The report concludes: “Clearly there were different rules during the pandemic emergency, but at such a time it is more important, not less, to keep proper records. Government does not have the licence to act fast and loose with procurement processes because of a crisis.”
It continues: “The Department for Health and Social Care’s (DHSC’s) 2021–22 annual report and accounts, which the Committee has recently examined, sets out the extraordinary cost of wasted expenditure on PPE and related Covid-19 expenditure, which comes to £14.9 billion across the last two years. As Government tries to balance the books, this waste is especially sobering. Whitehall needs to learn about how to procure during a crisis in a way that better protects the taxpayer.”
The ramifications of the government’s “VIP” system for suppliers referred by ministers, gaps in conflict of interest declarations and general lack of scrutiny will doubtless by scrutinised for some time to come.
It doesn’t end there the impression of a government losing its grip and failing to carry out its duties in a timely and effective manner is encapsulated by last year’s passport crisis.
In 2022, hundreds of thousands of people experienced long delays when renewing their passports. Despite the passport office identifying that the easing of lockdown measures would cause a spike in demand, it failed to prevent delays. It is now estimated that 360,000 people experienced waits of longer than 10 weeks between January and September 2022. Customers were not informed about progress, which caused confusion and frustration.
As a result some missed funerals, job opportunities, and all manner of other major life events.
Meanwhile the report says that too many departments are getting by on outdated IT systems.
In 2021 the Cabinet Office estimated almost 50% of Government IT spend is used ‘keeping the lights on’ maintaining old systems.
For example the Ministry of Defence estimates it will need to spend £11.7 billion over ten years to update its systems.
Alongside legacy IT, departments continue to use inefficient paper-based systems. During the summer peak in Passport Office demand for example, the failure of an IT system caused 134,000 applications to be moved to a paper-based system.
At the same time the DWP allowed its data systems to grow so complex that it did not understand the risks that were piling up, as a result many pensioners lost out on money they were owed. And management of government property relies on a 17 year-old database which cannot handle the data. Despite this plans to procure a new £1 million computer system - so it can effectively manage £158 billion worth of property—have been repeatedly delayed.
Across government the sums involved are frightening and the report suggest we do not have either the digital equipment or staff with suitable skills that we desperately need to turn things around.
In the meantime billions has dribbled away from the coffers, money we desperately need.
There is no sign of anyone being held accountable for all the waste. When senior civil servants retire they usually end up in the House of Lords. The price of failure is often an ermine robe.
Many rail at Stormont which rarely functions. There’s far too little attention paid to a crumbling central government which has lost its grip and seems unable to adjust to the modern age.
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