2021 Jan 17 - Government Waste

They say that "money talks" but when it comes to the government, all that ever says is good-bye as civil servants keep frittering it away like they're embarrassed to be seen with. And here you and I are watching it all from the sidelines, though I once met someone who says that the trick is to stop thinking of it as ‘your’ money.

Anyway, sit back as I count down some of the worse examples of UK government largesse

10) Nationalised industries
I thought I'd start of a prologue of sorts to show perhaps how bad things used to be. In the years after the 2nd world war, the government was in charge of a lot things but unlike someone playing the boardgames Monopoly, they didn't want to stop with just running the trains and all the utility companies. They went on to run travel companies, British Airways who made the planes for them, Rolls Royce who supplied the engines for the airplanes and BP who made the fuel. All run with balance sheets redder than Rudolph the Reindeers nose. The government also decided to get into the car game. A lot of people decide to buy a little 2-seater sports car when they're in their 60s but for the government in the 60s no less would do then buying up all the Jaguars and the MG factory as well plus Austin, Morris, Rover, the list goes on. British Leyland went on to lose roughly £100m per year, all in an pre-inflation era when a pint of beer was only 35p. Eventually almost everything was sold off and in 2002 Stephen Byers told people that Network Rail was officially a "not for profit" organisation as if anyone was under any illusions otherwise. Nowadays of course, the government has even started weaning itself off of bank ownership and the post office is free to lose money on behalf of investors rather than taxpayers. That last major injection of government cash was probably when David Cameron decided to spend millions posting a Brexit leaflet to everyone in the country and in the process convinced people who didn't like him to vote Leave in order to spite him. Evidently if Dave thought that god was looking down on him it was because he was plotting his revenge.

9) F35s
The harrier jump jet helped win the falklands war in 1982, the same year as the musical Cats opened on broadway, and both things lasted a very long time indeed. Nonetheless the sea harriers were in many respects also like another 1982 thing, namely the album Thriller by Michael Jackson who was universally applauded in the 80s then but was viewed as slightly tarnished by the turn of the millennium. Just like the Michael Jackson, the Harrier went through many cosmetic upgrades over the years before being discontinued as part of a defence review which led to the infamous F35 project, probably the most expensive project to come out of America that hasn't involved going to war, largely because decades on those F35 fighters are no closer to going to war than than the very pretend and very 2 dimensional thing that I'm drawing onto a piece of paper right now. Nonetheless, the cost to the UK taxpayer is somewhat shy of £10bn for a hundred or so aircraft, all of which will face numerous farcical problems on delivery like outdated software based on Windows XP and electrical issues that mean they have to stay 25 miles from thunderstorms. Sure you have to remember that the plane was being designed when the only conceivable use for them was flying over a never ending war on terror but the RAF do have a tendency to test these things in Scotland where a lot of the stories begin with the lines "it was a dark and stormy night" Many of the design problems haven't been helped by internal arguments between the navy or air force, or by changing government priorities, both in terms of spending money and whether or not to spend money in Gordon Brown's old constituency where the aircraft carriers were being fitted for the sea version. It is worth noting again that the Harrier was a 40year old design and woefully underprepared for a modern war. But at the same time it was probably better prepared than an empty runway or a telephone with which to dial someone else and beg for help if anything goes wrong in the meantime. The US are still using theirs until the new planes arrive. Although that's possibly like my doctors' surgery having a fax machine because they're still waiting on a new computer system to arrive, more on that later.

8) Gordon Brown’s gold sale
That sounds like a terrible gameshow on ITV 3 but it couldn't be a list like this without including this one. A lot of comedy is timing and as such you have to give credit to Tony Blair who generously allowed Gordon Brown to begin the premiership just in time for the biggest financial collapse in a generation. The political equivalent of a pie in the face, if John Prescott hadn't likely eaten all the pies first. Let's go with a different slapstick analogy perhaps. Gordon Brown spent 20 years crafting an image of himself as a clever financial whiz who boasted about "an end to boom and bust" before presiding over the largest boom and bust since the 1920s before seeing the whole thing blow up in his face like Wile E Coyote in one of the old Road Runner cartoons. Over the previous decade, Brown had carefully sold off huge quantities of pounds of gold at bargain basement prices, only to see that gold suddenly become the most sought after an expensive commodity in the world. It makes you wonder if when he gets home he has a cabinet full of Beanie Babies or whether his wife trusts him to visit the garden center in case he tries to get it back by remortgaging the house and buying up all the Dutch Tulips. There's a certain schadenfreude about Brown having presided over it, given that he was Shadow Chancellor during the ERM debacle 15 years earlier and spent 2 decades carping on about how only he could be trusted not to mess things up, but unfortunately it was not just his reputation he bet on that trade as the taxpayer ultimately lost around £5bn thanks to his negligence.

7) Foreign aid
One of the legacies of the British Empire was the large network of countries abroad that retain ties, both diplomatically and economically to the UK. Westminster is the mother of parliaments and countries like Australia, India and Kenya are Britain's children. At the same time though, I'm a parent and there's nothing I've learned from being a parent that I couldn't just as easily have figured out from setting fire to all my money. The UK spends roughly £15bn on foreign aid every year although the number is very difficult to pin down because so much of what is going on is classified as loans, export credit guarantees and the sort of financial dealings that made the government so keen to acquire the Royal Bank of Scotland and read it's training manual. There are of course some very worthy things that this money goes to but at the same time there the long list of ludicrous examples too such as continuing to write cheques to India who are supposedly so poor that they have active space program. The list of spurious uses of the foreign aid budget could itself be a separate top-10s video though it is important to note that the US spends $50bn on their equivalent budget, not including the line item simply marked as "Ukraine - don't ask questions" Much of what is going on is an international game of quid-pro-quo where payments to tinpot dictators have, over the years, resulted in business deals or mineral rights being pledged in return. David Cameron of course decided to frame the whole setup as an ethical one and made an equivalence of the government giving foreign aid to a normal person having a series of direct debits set up to mainstream highstreet charities. The sort of charities where they're run by one of Dave's friends on a 6-figure salary. I'm inclined to remember the expression that big charities are largely designed to transferring wealth from poor people in rich countries to rich people in poor countries.

6) The EU
Let's stick the foreign aid theme with the European Union, Britain may be out now but that was quite an expensive 47 years. The EU famously went for the naming style of using the word "union" in the same way that the Soviets did, or how many countries today use the term "Democratic" in their name. So here we go: there's an old saying that you can count your money, you don't have a billion dollars. Well true to form the EU does have billions of Euros had has at the same time been repeatedly criticised for decades for being unable to produce accounts explaining any of it is hidden or what they've been spending it on. In many ways that fact alone was the cornerstone of how every aspect of the European project is reliant on backhanders, greasing the wheels of politics, money going purposefully missing in order to buy support against a public who saw their money being frittered away on vanity projects. All while the political aims were mainly failures, whether it being preventing the war in Yugoslavia, providing a unified approach to Covid19, fixing systemic financial problems in Southern Europe or producing a Eurovision Song Contest winner that anyone actually remembers. And note that the EU came into being with the Maastricht Treaty so ABBA doesn't count. There were lots of reasons for the 2016 Brexit vote, both social and economic but the vote would never have even come close to happening without decades of press-reported, almost weekly examples of taxpayer money being squandered. Comic books promoting the EU as a federal country, museums of EU nationhood, José Barroso once spent €28k on a four-night stay at New York's Peninsula Hotel. At the time of the vote, 214 senior eurocrats were being paid more than David Cameron. It was actually a strategy at the time of Cameron's: to force the EU to accept modernising and reform, and put its house in order and regain the public trust. None of that happened of course. In response the council failed to produce accounts, voted itself a bigger budget and told Britain that they'd have to pay regardless thanks to majority voting. And that it was David Cameron's responsibility to accept it or risk being the PM that took Britain out of the project. Which in retrospect is like threatening to give someone the keys to your car.

5 ID Cards and that IT system
In 2005, the government wanted to institute a biometric passport system that would require people to get new IDs and it would also require the government to get a shiny new computer system. The government estimated the cost of the IDs to be approximately £93 per person and the cost of the equipment to be about £5.8bn in total and even Alan Sugar in his 1980s heyday couldn't get you that many computer for that price. The true costs turned out to be about 3 times that at £300 per person and between £12bn and £18bn for the equipment, which presumably doesn't include the ongoing costs of the time spent by the civil service on the customer service hotline at £1.50/minute. The government recently upgraded the passport system in a £265 million contract with IBM which could only be justified on the basis that IBM sponsors Wimbledon so some of the money found its way to grass-roots tennis. A year or so ago The Independent investigated Labour’s 10 most well-known IT mistakes (I'm surprised they could narrow it down to 10) and they calculated a cumulative total of £26bn in wasted funds. The biggest waste was a £12.7bn plan for the NHS to start using new electronic records. Fewer than 200 out of 9,000 health organizations are using the technology despite the fact that the money was spent on it faster than a drunk sailor on shore leave.

4 Iraq
Looking back on things it's remarkable to believe that Tony Blair was once very popular and trustworthy, so much so that he convinced the UK to back an illegal invasion of Iraq. The strangest part was that he'd just spent years concluding the Good Friday Agreement and brought peace to Northern Ireland and he would probably have a moderately respectable reputation these days if he hadn't tried to boost his poll ratings by feigning a mid-Atlantic accent and getting involved in a war. The financial cost of Iraq & Afghanistan is quite a complicated mess. Officially it was around £8bn although that is a ludicrous under-costing and doesn't include, for instance, equipment that had already long been depreciated off the MOD balance sheet. Some forms of accounting place the number at more like £20bn, though again that still doesn't account for the long term health care of wounded troops which will linger for decades, or the cost of the resulting retaliatory attacks like 7/7, or the the rise of ISIS or when oil went to over $100/barrel and come to think of it I heard that a few people died, I actually have a friend who killed over 30 people in Iraq: going to be honest, he's probably by far the worse mechanic the RAF ever hired but the long and short of it is that the whole region in in just as bad a way as it ever was. Tony Blair, having learnt not a lot from the whole debacle still defends his decision to invade the place with other peoples money and lives, and these days continues to mull around in that part of the world as a "consultant" although given his propensity to cash in on things, I imagine the only reason he signed up to get involved in the West Bank, was because he thought he'd be on the board of directors at a bank.

3 Public Private Partnerships
There's an old joke about someone asking their careers advisor about pursuing a career in organised crime and the teacher responds by asking whether they were meaning the government or the private sector. So public private partnerships or PPP were an idea thought up whereby consultancy companies would pay for lots of shiny new schools and hospitals, then slowly sell them back to the government, "slowly" being the key word there. But it would mean that Gordon Brown could officially be seen to be borrowing less money, and debts wouldn't be shown on the balance sheet and the likes of Capita could afford to give everyone a big pay rise. I'm joking of course, it was just the senior management that got the pay rises. As an example, the shiny new St Bartholomew’s Hospital in central London cost $1.4bn to build, but will cost UK taxpayers $9.1bn by the end of the contract, or in the case of the Edinburgh Royal Infirmary, the government will never own it because it's perpetual lease in which the government can only get out of the bad contract by walking away and closing the hospital. Probably the only way the Chancellor could get out of it would be to just let the SNP get their way and have the thing if they want it so badly, like a divorcing couple arguing about which of them in on the hook for the timeshare they signed up to years prior, before Corona meant it was not only expensive but also illegal to visit the place.

2) Nuclear programs
If you don't know the price of nuclear power wait until you see the Cherno bill. I could make point as to whether I'm talking civil or military but the thing is that all the UK nuclear programs are part of the same machine. At least the French are honest enough to admit that they subsidise the nuclear electricity industry so that they can nuclear armed nuclear powered submarines. How does the UK play out? Well back in 2006, the government managed to sell the idea of the Trident Nuclear Missile System by citing a cost of less than £25bn. However, in an accounting manoeuvre presumably stolen from the desk of Robert Maxwell, this cost didn’t take into consideration the long-term costs of maintaining the equipment once it was in place. The real cost for this program ended up at more than three times the initial projections and again, this is before the contracts for the pre-requisite power stations were agreed, roughly £20bn. Each. The real problem here was that the government forged ahead with the plan without actually allowing a debate to take place. More recently a sensible debate was impossible, in part because of Brexit and the involvement with the French. But largely because the opposition party was led by Jeremy Corbyn, a man who on paper passional despised nuclear weapons yet at the same time was unable to decide whether Russia or Iran having them was ok or not. Before he was forced to step down I always wondered if he would discover that the sun is in fact a large thermonuclear reaction, and therefore make it Labour party policy to "open a dialogue" with the sun and ask it to please stop shining. A policy that would no doubt go down well with Owen Jones who thinks the sun shines out of his rear end.

1) HS2
The go-ahead for the High Speed 2 railway to the Midlands (or possibly Scotland) comes in as the biggest public project in peacetime at a cost of anywhere from £32bn to perhaps £100bn depending on the price of land and who you ask and what route they eventually choose. It's egregious enough that it attracts an interesting set of activists from across the political spectrum being forced to act together. One one hand you have traditionalists who object to profligate waste and destruction and the colossal cost. And they're being forced to hold hands with the green activists who like trains, but whom also dislike the concept of long distance travel in general and they hate bulldozing the countryside but they also take delight in it largely carving its way through and spoiling the sorts of places that voted for Boris and for Brexit. HS2 is at this point the definition of sunk cost fallacy, nobody wants to be the person who admits that the fortune so far spent was money wasted that could have gone on better things. There's probably a joke in there about the government wanting to cover their tracks or what there loco-motives are at this stage. Either way it's a ludicrous vanity project that will ultimately save commuters about 20 minutes on the trip between Birmingham and London, and all being planned at a time when businesses are forging plans for people to mostly work from home in the future. Forget the idea of upgrading existing rail lines, or building a genuinely new line like the oft-talked about Stranraer to Northern Ireland sea-tunnel (costed at only about £6bn) And forget about that high speed line going as far as Glasgow or Edinburgh. It is really saying something that the part of the rail link that would link Scotland to London and bring potential financial benefits to Scotland, paid for by London, was ruled out because even the SNP failed to back the dubious financials underwriting the whole project. That's like offering to buy Oliver Reed a drink and him turning it down because he'd had enough.

I guess to sum it up, part of life is living with a government that behaves like Oliver Reed. Occasionally professional, often respected on the world stage, but also incredibly keen to liquidise your assets. When it comes to spending myself though? I guess I'll always remember some advice I was once given which was that it’s worth it to spend money on good speakers. That was some sound advice.
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