20 February 2012

The Sunday Telegraph yesterday carried another report of measures being taken in Britain to reduce the cost of government. The Minister for the Cabinet Office has spoken of how the UK Government is creating a much leaner, more effective Whitehall machine, that manages its finances like the best run businesses.

There has been an inevitably reaction from those who see public administration as subject to rorts and incompetence. An example is the payment process of up to 4000 senior officials . They are being investigated because their remuneration may be being paid through companies they have set up for tax advantages. This tax avoidance brings into question the ethics of those officials and their commitment to good government. Ironically one who has been identified is a senior adviser in Treasury’s tax transparency office. Some officials paid through their own private businesses are reported to have deals worth up to £475,000.

There is possibly less opportunity for that practice in New Zealand as well remunerated positions usually involve the exercise of statutory powers. Section s 41 of the State Sector Act limits the delegation of chief executive powers to employees (and chief executives). Nevertheless remuneration practices for contractors and for some appointees to agency boards may not be that different from the British practice. A discretion is built into our processes in the Cabinet Circular (09) 5 which sets out the fees framework for members appointed to Crown bodies. Para 130 indicates that “… Payments made for board membership are generally derived by the member…”

Financial constraints in Britain have resulted in the smallest civil service since the Second World War and the lowest numbers in the armed forces since the Boer War. The Minister for the Cabinet Office has published a plan to reduce what he describes as a shocking 21 billion pound loss each year in public sector fraud.

In response there are critics who refer to the the incompetence of officials – and their costly bungles. A Telegraph article lists the following:

  • GPs’ contract which increased average pay by 40 per cent while decreasing the amount of work GPs are required to do;
  • the billions spent on the NHS computer system which doesn’t work;
  • the procurement of helicopters that turn out not to be airworthy and cost hundreds of millions to make safe; 
  • the£800 million spent on trying to reduce the rate at which students drop out of university, to no effect whatever;
  • the £500 million spent on building eight new call centres for the fire service which will never be used, but will cost several million pounds a month to maintain, empty, for the next 25 years;
  • the £2.2 billion that was paid to the wrong people in the first year tax credits were introduced.

And then there is the level of public confidence reflected in the survey results published in the EU Eurobarometer last week. Based on the 1300 British respondents;

  • 71% think corruption is a major problem in the UK [worst in Greece at 98%; best in Denmark at 19%]
  • 64% of people think corruption is part of the UK’s business culture [worst in Cyprus at 90%; best in Denmark at 28%]
  • 33% of UK citizens think that bribery or abuse of power is widespread among the police [worst in Cyprus at 75%; best in Finland at 7%]
  • 58% of UK citizens think that bribery or abuse of power is widespread among politicians [worst in Slovenia at 83%; best in the Netherlands at 27%]

http://www.telegraph.co.uk/news/politics/9085407/Tackling-the-shocking-level-of-public-sector-fraud-is-our-target-after-cutting-waste.html http://www.telegraph.co.uk/news/politics/9088086/Treasury-tax-review-to-scour-4000-posts.html

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