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MPs warn of risks to quango reform savings

By Richard Johnstone | 24 April 2012

The Public Accounts Committee has raised ‘substantial concerns’ that the government will not be able to save the £2.6bn it has claimed can be found by reducing the number of quangos and other public bodies.

The MPs said today that they believe the government’s savings target is based on incomplete and imprecise estimates of the costs incurred in axing at least 262 bodies.

The committee says the Public Bodies Reform Programme, the largest restructuring of public bodies for many decades, will have a substantial and lasting impact on how public money is spent.

The programme, which is intended to make spending more accountable to ministers, is being run by the Cabinet Office. Permanent secretary Ian Watmore told the committee that it is on track to make £2.6bn of administrative savings.

However, the committee’s Reorganising central government bodies report has highlighted ‘substantial reservations’ about whether this is achievable.

MPs say that the estimates of redundancy and pension costs being used are incomplete, and also warned the savings figure does not fully account for the costs of functions transferred back to central government.

They also warn that some departments may include savings from cuts to services in their total, alongside ‘genuine efficiencies’ from public bodies being abolished or substantially reformed.

However, the committee found that, in implementing the plan so far, the Cabinet Office had made good initial progress – in particular by reviewing over 900 bodies to decide which need to be reorganised.

It now needs to focus on managing the programme effectively to ensure the intended outcomes are achieved. This requires a reassessment of the savings estimates to take account of concerns.

Committee chair Margaret Hodge said that without more reliable information, ‘the question must be asked how we or the Cabinet Office will be able to judge [the programme’s] overall effectiveness’.

She added: ‘The estimated costs of closing bodies, including payments for redundancies and pensions, are incomplete. And not enough account has been taken of the continuing additional costs to other parts of government of taking on functions previously carried out by the abolished bodies.

‘We welcome therefore the Cabinet Office’s undertaking to provide us this month with a revised administrative savings figure.’

A Cabinet Office spokeswoman said that the government was ‘delivering the largest overhaul of public bodies in a generation’.

She added: ‘We have closed 72 quangos since May 2010, and have passed a law allowing us to close more and so to reduce the number of public bodies by a third.

‘Departments expect that our reforms will save taxpayers £2.6bn from the administrative cost of public bodies within the scope of the programme and their savings are net of the cost of closing or reforming the quangos. As discussed at the PAC hearing in February, these figures represent departments' best estimates of the impact of reform, and we will continue to report improved figures to Parliament.’




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