Only £23bn over budget

Every year we spend £23bn on government project cock ups. That is £900 per household! This cost simply comes from the extra costs added to projects because the government runs over budget - it doesn't take in to account the fact the most of these projects are either completely pointless or should have been commissioned using public money in the first place. Of the 300 schemes that were analysed by The Tax Payers' Alliance, over half were running over budget. Here are some examples:

  • The NHS computer upgrade - estimated at £2.3bn, now looking more like £12.4bn!!
  • The Olympics - estimated at £2.4bn, now looking more like £9.3bn!
  • Sherwood Forest Hospitals project - estimated at £66m, now looking like £326m.
  • The Astute Class Submarines - estimated at £2.6bn , now looking like £3.6bn

Amazingly, the report says 14 major public sector projects racked up cost overruns bigger than the Millennium Dome, which went £204 million over budget. Andrew Allum, the chairman of the Taxpayers' Alliance, said "Having had first-hand experience of public sector capital projects, it's clear that the politicians and civil servants in charge lack the management experience and subject knowledge to run them effectively." PL's philosophy exactly. The government has the worst project planners and economists on planet earth, I am sure of that. It's not just the fact that these projects don't get delivered on time and more often than not are not quite what we hoped they'd be, but we are spending so much money - significant amounts - on this incompetence.



Technical point: that's £23bn over the last two years, not per annum. £11.5bn p.a. is still a shed-load of money to waste, but we shouldn't give government apologists opportunities to cavil.

I'd take a subtly different slant on the competence issue, as well. There will be good and bad in the civil service as much as in any other organisation. But however skilled and intelligent the civil service were, they would still fail badly. Because they have bad information, the wrong incentives, and impossible objectives. Public-sector projects run over budget because of the nature of contracting with government, not just (or mainly) because of incompetent management by politicians and civil servants. It's not about the people, but the system, although the people are at fault to the extent that they believe in the system.

It's important to maintain this perspective, or there is a temptation to believe the promises of the opposition snake-oil salesmen that they will be able to manage things better, or of incumbents that they will be able to bring in the necessary expertise, through recruitment, sub-contracting and outsourcing. They never have, and they never will.

The only way to make government manageable is to cut it down to a manageable size, limited to a manageable number of activities and responsibilities, with a manageable budget. What's manageable is a hell of a lot less than what we've got.

The link for the TPA article is here, by the way.