Recent Bonfires - 89

It's high time we had another bonfire round-up:

Wrong kind of railway management costs us £50m+ "Civil servant failures over the West Coast rail contract will cost taxpayers “at least £50 million”, a report by MPs said today. There was a lack of leadership at the Department for Transport (DfT) and a failure to "get basic processes right" over the West Coast fiasco, the report from the House of Commons Public Accounts Committee said. The department failed to learn from mistakes made in previous projects and senior managers failed to apply common sense during the West Coast bidding process... Bob Crow, leader of the RMT transport union, said: "The stench from the fall-out of the West Coast franchise continues to hang over Britain's transport industry as it becomes clearer with every examination that the ministers responsible for this shambles could not be trusted to run a whelk stall let alone multi-billion Government contracts." (Independent 26-2-13)

Wrong kind of cop shop costs us £21m "A state-of-the-art police station is to cost taxpayers a total of £21 million over the next 30 years, even though it is closed to the public. The front desk at the station, which opened 11 years ago in a 30-year private finance deal, is shut to save costs, and has been replaced by a mobile police van in the car park for eight-hours-a-week. But police are still committed to handing over £700,000-a-year for the station at Ammanford, Carmarthenshire, South Wales. The total cost will be £21m - almost 10 times the cost of building the station. Acting Chief Constable Jackie Roberts admitted the station is 'too costly' and 'does not provide the public with value for money'. (D Mail 27-2-13)

Wrong kind of military kit costs us £6.6bn "The Ministry of Defence is squandering billions of pounds on kit and supplies it does not need while trying to save money by getting rid of troops... MPs on the Commons’ Public Accounts Committee found at least £6.6 billion of stock was either unused or over-ordered... [There are] enough spare parts for the Nimrod MR2 maritime patrol aircraft to last 54 years: the spy plane was scrapped in 2009." (D Mail 28-2-13)

Wrong kind of EU rules cost us £850k "Taxpayers in Britain are paying hundreds of thousands of pounds a year for Polish pregnant women to return to their home country and give birth, new figures reveal. Under EU law anyone living and working in Britain is entitled to free treatment in any other member state. Around 500 Poles returned to the Eastern European nation to have their babies in 2012, with the NHS footing the bill. Each birth costs the NHS £1,631, meaning the births of babies to Polish mothers cost Britain around £850,000 last year. The regulations were originally set up to ensure emergency healthcare was available between member states across the EU." (D Telegraph 25-2-13)

Wrong kind of taxman costs us £33m "The cost of hanging on the phone to the tax office was a collective £33m last year, with many frustrated callers paying more than £1 a call. Figures released by the National Audit Office (NAO) showed that nearly a quarter of calls to the Revenue went unanswered while 6.5m people in the first six months of this financial year were left waiting for more than 10 minutes for someone to help them. Customers who call HMRC from their mobile phone face the steepest charges, paying up to 41p a minute to phone an 0845 number or 40p a minute for an 0345 number. Even those calling from their landlines will pay up to 10.5p a minute, depending on the time of day." (D Telegraph 18-12-12)


This week's bonfire total: £6,704,850,000

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Spotted By BOM Correspondents

BOM correspondents have spotted the following, including news of some real old favourites:

1. NHS Supercomputer still haemorrhaging cash

Were you by any chance under the impression that our new broom government had scrapped Blair's wildly expensive and wildly useless NHS Supercomputer (see many previous blogs)? Er, no. All they've actually done is attempt to renegotiate the contracts with the IT suppliers.

AMB highlights an interesting post on the latest position by Tony Collins, the former Editor of Computer Weekly and a man who did much to expose the lunacy in the first place. He tells us that the Department of Health are signing a new agreement with one of the main suppliers (CSC) to deploy a system (Lorenzo) that the hospitals themselves don't want and may never use. Collins writes:

"The deal will commit CSC to deploying the Lorenzo system to NHS trusts that have no intention of deploying it; and the deal commits the DoH to paying CSC for a minimum number of Lorenzo deployments even if NHS trusts don't actually deploy the system.

For some in the NHS, the deal will mark a new low in the history of the NHS IT programme. It may also show why central government is congenitally ill-suited to signing big IT contracts."

So WTF is Lansley's Health Department doing this?

Well, on the positive side, the new agreement will apparently save around £0.5bn compared to the previous contracts. But it will still leave this bit - that may well not ever be used - costing us £2.7bn. That aside, Collins suggests three other highly plausible explanations for the Department going ahead:

1. Pulling the plug might have led to CSC suing the Department, just as another main contractor (Fujitsu) is already doing
2. It "defers any day of reckoning within Whitehall over what many in the NHS regard as a failed programme"
3. It "relieves the health minister Simon Burns from taking any tough decisions about the future of the NPfIT, at least for the time being".

And the cost to us taxpayers? As always, it's virtually impossible to know. All we can say is that the Supercomputer has already cost us something like £6bn, for which we have got sweet FA in terms of value.

(PS This of course is not the first Labour contract our new government has tried and failed to get out of. The contract for those two new aircraft carriers had been so heavily tilted against taxpayers that it was actually cheaper to carry on rather than pull the plug. Even though we can't now afford the aircraft to go on them, and we will have the first navy ever to sail two carriers with nothing to carry. Nelson must be spinning - see this blog)


2. Student Loans Company still malfunctioning

Peter T highlights the fact that the Student Loans Company (SLC) is still not managing to pay loans on time when they are needed. In other words, despite all their promises to do better in 2010 after the shambles of 2009, the SLC still failed to pay 26% of students by the first day of term this year.

Which meant of course that many students were forced to look for emergency employment so they could eat. Bar-keeping and lap-dancing may well be good experience for later life, but that's not what we pay the SLC £94m pa in administration cost to deliver.


3. British Council still cocking-up

David Blackie reports on the latest cock-up by our old friends at the British Council.

The BC has a marketing arm for British education institutions seeking to sell courses to overseas students - Education UK. It was established a few years ago to provide a Big Government Solution in place of the private marketing operations that had existed previously. And yep, you guessed it - it's a disaster.

In fact, it's so shambolic, and its website is so dysfunctional, that the BC has now been forced to refund subscriptions to participating institutions. David writes:

"...the organisation has used taxpayers’ money and the machinery of government to send students to a site which is so bad that everyone gets their money back. Well, actually not everybody, because there will be no refund to the taxpayer for the extraordinary waste of public money, no refund to the schools and colleges who have lost business as students, parents and agents gave up trying to use a dysfunctional site, and – interest declared – no refund to the businesses compromised by the organisation using taxpayers’ money to divert monies into its own pockets."

As we've blogged many times, the hopeless BC should be abolished. And we're seriously disappointed that Cam has not only allowed it to survive, but reportedly clasped it to his bosom on those recent trips out East.

Gah.

4. International sports bunfights still losing money

Bobby Charlton (hmm... sounds familiar somehow) emailed to point out that South Africa didn't make nearly as much out of the 2010 World Cup as had been billed:

"South Africa made a return of just £323m on the £3bn it spent on building stadiums and infrastructure for this summer's tournament, according to official figures

Mike Schussler, director of consultants Economists.co.za, said: "The country made a bit of money but less than expected. We got a small part of the ticket sales and the foreign visitors' spending, but it's not as much as we expected."

Well, who'd have possibly guessed that?

Thank God we got shafted by that nice Mr Blatter.

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Inferno Continues

It still seems to be alight

BOM correspondents have spotted the following ongoing money pyres:

1. British Council

The good old £0.5bn pa British Council escaped the quango cull (see this blog), and carries on torching our cash as if nothing has happened. David Blackie reports that they have just spent an unknown amount on the “style.uz” fashion week in Tashkent. As David comments:

"If the British Council sponsors a “fashion show” anywhere you might wonder whether in this age of austerity it was an appropriate use of taxpayers money. If the organisation sponsors a fashion show to demonstrate support for such a deeply oppressive regime, you know bloody well that it should do no such thing."

2. Unfunded unprivatised pensions

Nick L highlights last week's court ruling on pension guarantees for the employees of privatised state companies.

As regular BOM readers will know, when companies like BT were privatised back in the 80s, it wasn't done cleanly - HMG issued a Crown Guarantee covering the companies' accrued pension liabilities. In effect, the problem was kicked off into the long grass by ministers and civil servants who have long since retired on their own index-linked pensions. Unfortunately, what with everyone now living to 120, and the dismal performance of the stock market, those guarantees are coming home to roost big time.

The High Court has now ruled in favour of the BT pension fund trustees, saying that taxpayers are on the line for liabilities of up to £23bn. And that opens the door for a slew of other pension funds to make the same claim. Industry insiders reckon Railway Pensions, UK Coal and Trinity House, would all have strong cases. But British Gas and National Grid could also be included.

The final bill could be... what shall we say... £50 - 100bn? All because privatisation was cocked up.



3. BBC

Long-time BOM correspondent Keith M points out that the much-bewailed cut to the BBC's funding may be more apparent than real.

Yes, the BBC has lost its funding for the World Service, but if they look well about them they could recoup that - and quite possibly a great deal more - by opening the World Service to adverts.

He also points out that although the BBC is being made responsible for funding rural broadband and SC4, a large chunk of those costs are already being carried within the existing arrangements. For example, £804m  (c£134m pa) in the last settlement was earmarked for supposed digital switchover costs. And now that most people have switched, that cash is effectively available to fund the BBC's new responsibilities.

Finally, he reminds us that a 6 year freeze in the licence fee is not the same thing as a revenue freeze. The BBC will still benefit from the growth in the number of licence holders.

Roll on privatisation.


Conclusion...

What all three of these pyres highlight is that even after George's cuts, the incineration problem has most certainly not gone away.

But on the positive side, when the BBC keeps asking "what's your Plan B?", it's clear that there's still plenty of scope to cut spending further. And that includes spending on the BBC.

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Latest On Three Old Favourites

Another of the Major's money saving ideas

1. Public Sector Rich List

When the BBC puts on an entire show about public sector fat cats, and even compiles its own Rich List, you know the landscape is changing (see here).

Last night's Panorama told us that a staggering 9000 public sector employees are earning more than the Prime Minister. And despite the irritating background music, and despite Panorama's inexplicable failure to credit the TPA as originators of the Public Sector Rich List, and despite letting the top-paying BBC off the hook*, the programme is a landmark. Worth a watch (watch again here).


2. No Wonder Work Doesn't Pay

Mr Brillo draws our attention to the case of a benefit cheat recently convicted of falsely claiming £84 grand in income support and housing benefit.

Let's set aside the fact that she hasn't been sent to prison (defending counsel successfully pleaded that "she has a low IQ and her offences were not complex"), and let's set aside the fact that she got this money by reason of having five kids (aka kids as a career option). What really leaps out is the sheer amount of cash she wangled.

The precise figure was £84,130 obtained over 5 years. Which works out at nearly £17 grand pa. Had she gone out to work, she'd have needed to earn well over £21 grand pa to net the same income.

As we've blogged many times, the welfare safety net is simply too high. We will never make work pay if someone like this can get the equivalent of £21 grand pa on welfare - even if she'd been telling the truth.

And talking of kids as a career option, we note the case of Keith Macdonald, who has fathered 10 kids by 10 separate women. All are supported by the taxpayer, at an estimated total cost to age 16 of £1.5m. Needless to say, MacDonald himself is also entirely tax-funded, and spends his days... well, I think we can see how he spends his days:

"Macdonald, who first had sex at the age of ten, refuses to wear a condom and boasts that he has since slept with more than 40 women.

He met many of the mothers of his children at bus stops and bus stations, and says it is ‘easy’ to find women this way."

On one level you have to admire the guy's hit rate. But WTF should I pay for it?

(The Sun offered to pay for him to have his testicles trimmed, but he declined. Or as the Sun put it, "Slob snip snub". The Major has developed a range of even cheaper options, except of course they wouldn't be optional - see pic).


3. India Tells DfID To Get Lost

We've blogged the lunacy of development aid for space race India many times, but now India itself is saying it doesn't want any more from us (HTP Rob A). According to the excellent AidWatch:

"The External Affairs Ministry has instructed the Finance Ministry to inform London that India will not accept further aid from next April…

“…[I]t would be better if our decision not to avail any further DFID assistance with effect from 1st April 2011 could be conveyed to the British side in an appropriate manner at the earliest,” [Foreign Secretary Nirupama Rao] wrote to Finance Secretary Ashok Chawla.

Ahead of Cameron’s visit, India had considered rejecting DFID offer in view of the “negative publicity of Indian poverty promoted by DFID”.

As we've noted before, UK aid to India is directed at pet projects inside India where Britain is basically saying to the Indians "you may be the world's largest democracy, and you may have one of the world's fastest growing economies, and you may have your own foreign aid programme, and you may have kicked us out 60 years ago, but we think you are doing a shocking job of managing your own internal affairs, so we'll do it for you".

Hardly surprising they want us out.

We should withdraw immediately, saving us a quarter of a billion every year (see this blog).


*Footnote - According to Panorama, the BBC is unusual in the public sector because it is paid for not from taxation, but from the licence fee. Er... yeees... You see, the licence fee is a tax, just as the duty on booze and fags is a tax. Sure, you don't have to pay it if you don't wish to indulge, but for most of us it is an unavoidable tax, payable under penalty of the criminal law. The only unusual feature of the telly tax is that it is ring-fenced (hypothecated) solely for the use of an individual quango. No wonder the BBC can afford to employ so many outsized moggies.

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Old Friends Still Burning Away

You'll be grateful for this soon

No time for a proper blog today, but a few of BOM's old friends are back in the news.

1 Defence procurement

The Gray report has finally been published (see previous blog here).

"The review by Bernard Gray, a former adviser to the Ministry of Defence, highlighted that the defence equipment programme is currently hugely overheated and suffers from perverse incentives that encourage delay and spiralling costs. On average programmes overrun by about five years and costs increase by about £300m. Meanwhile the “frictional costs” to industry and the MoD created by systemic delays add up to between £900m and £2.2bn each year."

Shocking. In fact, things are so dire, Gray recommends outsourcing the entire MOD equipment procurement programme.

But if the government can't even organise the procurement of kit for Her Majesty's armed forces - a core function of the state - HTF does anyone think they are capable of procuring other more complex things? Like education and health services, say.

2. Rural Payments Agency

We've blogged the fiasco at the Rural Payments Agency many times (eg see here). Now the National Audit Office has issued an updated report:

"The agency is in such disarray that it now costs more than £1,700 to process each claim.

Thousands of farmers have been underpaid, leaving many on the edge of collapse, while others face demands for cash to be repaid years later because of overpayments.

The European Union has already fined the agency £75 million and is threatening to withdraw a further £205 million from the UK for failing to administer payments correctly.

Failures in the computer system and extra staff costs to sort out the mess have cost £304 million. Overpayments to farmers that are not recovered will cost at least £43 million. Farmers themselves have lost more than £50 million trying to fill in complicated forms and chase late payments."

As you will doubtless recall, this all came about because the ministerial team at Defra - headed by one Mags Beckett, and including Ben Bradshaw and Jim Knight - ordered the RPA to implement a farm subsidy system of such hideous complexity that nobody else in Europe even attempted it.

Value-added, it ain't.

A point you may wish to remember when Mags gets her peerage.

3. F-freezing to death

As you will have spotted over the weekend, the energy regulator Ofgem reckons we're heading for massive electricity price hikes and blackouts.

Apparently, it's the inevitable result of the government's programme to turn Britain green by closing down our power stations and not building any new ones.

So who asked them to do this?

Well, the bonkers hippies.

Them, yes, and... er... ah, the BBC, of course.

I listened today to a BBC R4 programme called Costing the Earth, which reported approvingly on how the hippies storm those horrid power stations and dissuade power companies from building any new ones.

Apparently, we don't need them.

Bah!

I'm off to bed.

Which is where we'll all be spending our evenings once the blackouts start.

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