How the Tories have spent five years wasting money

Lisa Nandy

Reducing the cost of government has been a mantra from the Coalition. Before the last election Cameron lambasted Labour for being “shockingly casual about public money and how it’s spent” and said “we will expect to be judged on a clear basis: if you’re taking people’s hard-earned money away from them you’d better be able to show that you’re spending it on what people want and that you can get better value for that money than they could.”

But in government they’ve done the opposite. In health, they promised there would be no top down reorganisation then spent £3bn on exactly that. Memorably described by the Kings Fund as “rearranging the deck chairs when we’re about to hit the iceberg”, it included making redundancy payments to nearly 4000 NHS staff who were laid off and then promptly rehired.

Meanwhile over at the Department for Education Michael Gove was spending £240m on free schools in areas where no places were needed in the middle of a school places crisis. He ignored the government’s own guidelines to hand over a grant worth £500,000 to an organisation, the New Schools Network, headed by his former special adviser whose role was to provide impartial advice on setting up free schools. The charity had no track record and the grant wasn’t put out to tender. Gove later fought tooth and nail to block the release of emails deliberately sent from private accounts to the Information Commissioner, spending £13,000 of public money on legal advice.

His colleague Iain Duncan Smith was also finding innovative new ways to spend money over at the DWP, embarking on the introduction of the Universal Credit that was to run significantly over budget and take at least two years longer than planned. The Chair of the Public Accounts Committee said it was “throwing good money after bad by introducing a short-term fix with no adequate plan for delivery, insufficient skills and unclear milestones to measure progress.” She estimated that of the £425million spent as of last year, most of it was likely to be wasted. Meanwhile IDS’s flagship Work Programme ended up costing £5bn yet in many areas of the country it turned out to be literally less effective than doing nothing. Despite a poor track record the contract went to A4E, who ended up under investigation for fraud while its Chief Executive was paid a dividend of £8.6 million.


Over at the Department for Business, Innovation and Skills the Lib Dems were at it too, after promising to scrap tuition fees, before going on to triple them. It turned out this wasn’t just a breach of trust but a waste of money. With soaring numbers of students unable to pay back the cost of their loans the rise in tuition fees has netted the government virtually nothing, and may go on to actually cost the public. Yet it pales into insignificance compared with Royal Mail, sold against the public’s wishes and undervalued to the tune of £1bn according to the BIS Select Committee. The Committee laid the blame with both Government and the private consultants who provide the valuation. Yet one of those firms, Lazard and Co were paid £1.5 million for their work on the sale. Lazard Asset Management also made £8.4million for shareholders who bought and sold their shares in one of our most valued national assets, and £40,000 for themselves.

Supposedly overseeing all of this was the Cabinet Office – the Department responsible for transparency, efficiency and eradicating waste – who had come up with their own novel ways to spend money. After promising to shine a spotlight on the murkiest corners of government they produced a lobbying act that gagged charities and campaigners but barely touched the lobbying industry or politicians. Described as a “dog’s breakfast” by the chair of the Political and Constitutional Reform Select Committee it turned out the lobbyists register would cost £137,000 for the first year but on the registrar’s own estimate, only attract a maximum of 75 lobbying firms to sign up, at a cost to government of nearly £2000 per organisation. They also put money into the Big Society (remember that?), breaking their own rules to fund a series of projects run by a brand new charity called the Big Society Network, chaired by a Tory Party Donor. Almost all of the projects ended in failure, at a cost of several million to the public, while charities across the country struggled with funding cuts and increased demand caused by this government’s choices.

“The level of government waste in our country today is evidence of an out-of-touch political elite who have forgotten whose money it is they’re spending. Ministers who get in their offices and think ‘great, now how can I spend lots of money.” Not my words but David Cameron’s. Five years later, what a sorry record he leaves.

Lisa Nandy is the Shadow Minister for Civil Society

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