Tory waste watch #1: What are they wasting our money on?
For a government that claims to be all about saving the public finances, the Tories don’t mind wasting taxpayers’ money on pet projects and ideological fixations. This occasional series will track some of their most flagrant wastes of public money. Austerity, what austerity?
Like any long-running disaster, Universal Credit, Iain Duncan Smith’s ‘flagship’ welfare reform, seems to have been around forever. For a government that came to power vowing to avoid the mistakes that bedevilled some of new Labour’s big IT projects, Universal Credit has had it all: stories of miserably low staff moral behind the scenes, changes in key personnel, spiralling costs, expensive computer systems that don’t work, changing project specifications, missed deadlines, and so on.
Under the original plans, all benefit claimants were expected to be on Universal Credit by 2017/2018; now only new claims will be on the system by 2017. The original DWP estimates for the rollout of Universal Credit were £2.2 billion; by September 2014 this had risen to £12.85 billion over its “lifetime”, according to figures from the Major Projects Authority (MPA). It may not even achieve it aim of improving incentives to work. Despite MPs repeatedly criticising the DWP for a lack of transparency and “culture of secrecy” over Universal Credit. IDS has regularly described Universal Credit as a “success.”
Selling ourselves to China
George Osborne has been busy recently flogging-off bits of the UK to China. One deal above all the others highlights the dodgy nature of these deals: Hinkley Point.
The nuclear power station itself is a bad deal. Hinkley Point will be the most expensive power plant in the world, costing at least £24 billion. State-owned China General Nuclear Power has taken a third share of the ownership of Hinkley (also raising security concerns), with the French company EDF owning the rest.
The problem is that Hinkley will need massive subsidies to pay for it, lasting until 2060. And those subsidies will come from us. Households and businesses will have to pay £92.50 per MW hour for Hinkley electricity over 35 years (this will also rise with inflation over the period), compared with a current wholesale price of £40 (at the same time, the Government is slashing support for solar energy by 87%). Of course, even if Hinkley was a good idea, we (via government) could have just borrowed the money cheaply – but that would have challenged the Government’s commitment to the appearance of austerity.
With the Conservative’s re-election victory, the free schools programme rolls on. So far 305 have opened, with 116 more in development. The Government hopes to launch 500 in the course of this Parliament. But according to a damning report last year by the Public Accounts Committee, the Government spent £240 million on free schools in areas with no shortages.
They’re not cheap either. Free schools received 60% more funding per pupil than local authority primaries and secondaries in the latest financial year, according to analysis by the Guardian of Department for Education data. Moreover, some free schools catering for children with behavioural difficulties have received more than £100,000 per pupil in 2013-14 (local authority special schools received only £22,000 per pupil), with the two highest-funded given £430,000 a pupil each (more than 10 times the fees of Britain’s most expensive private boarding schools). Despite this, they also tend to be exclusive; according to the Institute of Education, free schools take fewer poor children than other local schools. The original budget for free schools was £450 million; by 2013 the National Audit Office said the scheme would cost £1.5 billion, with the average cost per school twice what the Government had assumed.
The Government is gung-ho about replacing the Trident missile system (submarines, missiles and warheads). David Cameron recommitted the Tories to it in his conference speech. The Government has put the bill at £15-20 billion. More than £3 billion will be spent in ‘preparations’ for the final decision, nearly £300 million more than predicted by the Ministry of Defence. The real cost, factoring in not only replacing the submarines but also replacement warheads, running costs and decommissioning the current system, is estimated at an astonishing £100 billion (assuming it doesn’t overrun of course).
It’s been noted that this would be enough to fully fund A&E services for 40 years, employ 150,000 new nurses, build 1.5 million affordable homes or 30,000 new primary schools, or cover tuition fees for 4 million students. But those things we apparently can’t afford. Trident is a massively expensive (and dangerous) status symbol. It can’t do anything about the real national security threats we face: terrorism, climate change or cyber warfare. It’s the ‘independent nuclear deterrent’ which is neither independent nor a deterrent.
Selling off public assets on the cheap
In August, George Osborne wasted more than £1 billion of our money selling off the first tranche of shares in the Royal Bank of Scotland, in the face of criticism from politicians and bemusement from City analysts. Around 60% of the shares were bought by hedge funds (it’s pure coincidence of course that hedge funds were major donors to the Tory Party for their election victory). The £2.1 billion of shares were sold at 330p – well below the average 502p that the taxpayer paid for them.
Next up: flogging shares in Lloyds at a discount. This follows the selling off of Royal Mail, again probably wasting £1 billion, along with many other assets that the public invested in for years.
There are plenty of other Tory wastes of money we could mention – stuffing the bloated House of Lords with more Conservative peers, protecting benefits for older Conservative voters, tax cuts for higher earners, the EU referendum…
In a month’s time, George Osborne will announce the results of the Government’s comprehensive spending review. Listen for how many times he boasts that the Tories are making the difficult decisions necessary to restore the public finances.
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