Cameron’s quango plans unlikely to result in any cost savings

By Will Straw / @wdjstraw

Politicians are meant to campaign in poetry and govern in prose. Today’s speech by David Cameron on reforming quangos was a discordant harmony. One note was aimed at a populist “slash and burn” audience and outlined the £64 billion cost of Britain’s 790 to 1100 quangos. The other was aimed at a more elite, “Sir Humphrey” audience and outlined that there were principles behind his approach. The problem is that the principles are so woolly and vague that they are unlikely to result in any cost savings at all.

Cameron set out the general implications for quangos under a Conservative government: “no quango will have the power to stray outside the scope of its responsibilities … [and] they must operate wholly within the financial resources allocated to them by Ministers.”

At the launch today I asked the Tory leader to provide specific examples of circumstances in which existing quangos had breached these principles. In his reply, he suggested that the Environment Agency had, by campaigning on the impact of climate change, over-reached the scope of its predecessor body, the National Rivers Authority, which was focused on flood defences. But Article (4)(1) of the Environment Act 1995 states that, “the principal aim of the Agency … [shall be] to protect or enhance the environment, taken as a whole, as to make the contribution towards attaining the objective of achieving sustainable development.” This is clearly consistent with outlining the effects of climate change.

In relation to the second point, Cameron drew attention to the Rural Payments Agency and HM Revenue and Customs as examples of quangos that had mishandled public resources. In 2006, RPA Chief Executive, Johnston McNeill, was fired when the RPA failed to pay out EU subsidies to thousands of farmers on time. In 2005, HMRC overpaid £1.9 billion in tax credits and then attempted to claw back the money from nearly 2 million families. But, disgraceful though these cases are, they are not examples of quangos living outside the “financial resources allocated to them” as Cameron stated in his speech.

David Cameron said, “I have many more examples that I could share with you.” That would be useful. As things stand there is little evidence that his principles for reform will result in any meaningful cost savings. As Andrew Neill uncovered on The Daily Politics today, the Tories have firm plans to create 17 new quangos and to remove just two: a net increase of 15.