Quango cull will hurt UK economy, Prospect warns

The Government’s boast that abolishing quangos “will save the taxpayer billions” is a false economy that will do the UK serious damage and is close to a national scandal, Prospect warned today.

The union was responding to Cabinet Office minister Francis Maude’s statement that government departments had shut down 106 public bodies, and enabled more than 150 bodies to be merged into fewer than 70.

Maude claimed the government had saved at least £1.4bn in this parliament and was on target to save at least £2.6bn by 2015.

But Prospect Deputy General Secretary Dai Hudd said: “If ever there was a smoke and mirrors exercise this is it. While more than 106 bodies have been shut down, most staff have had to be transferred to other organisations because the work still has to be done.

“The price of delivering these changes, including redundancy costs, will be up to £900m by the government’s own admission, without counting the cost of the work being done elsewhere, either by central government or replacement organisations.”

The most outrageous example of the government’s false accounting is the abolition of the Regional Development Agencies, said Hudd.

Because of their abolition, £1.2 billion of funding from the European Regional Development Fund is now going begging in the 2007-13 EU funding round. This money has to be matched by UK funding which until now was provided by the RDAs.

Without matching funding, the EU payment will not be made. The Treasury claws back two thirds of any EU underspend so the money will now go into the Treasury’s coffers rather than to promote investment and jobs in the English regions.

These shocking figures were revealed in a report by IPPR North/Universities UK 2012 and highlighted by the Industrial Communities Alliance in November 2011’s EU funding briefing.

The DCLG’s select committee also raised concerns about these issues in July.

“At a time when the whole country is crying out for growth and jobs it is unbelievable that the UK government is turning its back on a prime source of investment simply because of an ideological obsession about quangos,” said Hudd.

Prospect is opposed to the Government’s programme for abolishing quangos because in most cases it results in centralisation of public service functions, which are taken over by civil service departments rather than dedicated bodies who are specialist in their fields.

Most quangos were set up to make specialist functions free from political interference. “Returning them to Whitehall control invariably means a return to political meddling,” Hudd added.

Alongside members in the RDAs, Prospect members at the Audit Commission, are also affected by the quango cull. The Commission is being closed by April 2013 and its work transferred to private sector providers.

Prospect has warned that this will endanger the professional inspection regime, with the private sector less able to remain independent. It has questioned the accuracy of the government claim that it will save £650m over the next five years.