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Cheshire East councillors get a free ride on taxpayers’ money

Dec 20th, 2011
by Tom Welsh.
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Cheshire East Council, which last week revealed it had a serious budget deficit, has rejected an amendment that would have reduced its mileage allowance for councillors to HMRC recommended levels. Council Leader Wesley Fitzgerald has claimed that the agreed cut from 65p to 52.2p a mile is a victory for spending restraint, but in reality councillors and council staff are still getting a free ride on taxpayers’ money and incurring unnecessary costs for the Council.

Mileage allowances are payments by employers to employees who have to use their car for work. The allowance is meant to compensate for the cost of petrol, vehicle depreciation and repairs. George Osborne increased the recommended allowance to 45p-a-mile in the Budget back in March, acknowledging the high cost of motoring and the pressure this puts on drivers who need their car for work.

TaxPayers’ Alliance research, however, has revealed that many council employees receive far in excess of the HMRC approved rate. In 2009-10, Cheshire East was one of the worst performing in the country, paying out a massive £4,045,601 in allowances to councillors and council employees. The research also revealed that the council increased allowances from 60.10p to 65p-per-mile between 2009-10 and 2010-11, a time when politicians and executives knew that necessary spending reductions would have to be made. While Council Leader Fitzgerald might claim that the agreed reduction is evidence of Cheshire East’s willingness to cut back on employees’ benefits, it’s more like a reversal of a disgraceful previous increase.

Another Cheshire East Councillor, Sam Corcoran, was more critical in November, and rightly so. He said that any payment above the HMRC recommended rate ‘not only wastes money but also adds to bureaucracy’. He also proposed the amendment that the council should only pay 45p-per-mile. Councillor Corcoran should be praised for acknowledging that any payment above HMRC recommendations involves extra administration for the Council alongside the excessive cost. The rest of the council would do well to take his recommendation on board.

Most importantly, however, the failure to reduce the allowance to 45p-per-mile is evidence that councillors are not making enough effort to find efficiency and waste savings before making reductions elsewhere. The reduction to 52.2p-per-mile for councillors will save £20,000 but the total cost of mileage allowances for council employees and councillors in Cheshire East was over £4 million in 2009-10. Council tax has almost doubled over the last decade and it is unacceptable that taxpayers’ money is being used to fund excessive benefits for council staff.

Cheshire East councillors get a free ride on taxpayers’ money

Dec 20th, 2011
by Tom Welsh.
Comments are off for this post

Cheshire East Council, which last week revealed it had a serious budget deficit, has rejected an amendment that would have reduced its mileage allowance for councillors to HMRC recommended levels. Council Leader Wesley Fitzgerald has claimed that the agreed cut from 65p to 52.2p a mile is a victory for spending restraint, but in reality councillors and council staff are still getting a free ride on taxpayers’ money and incurring unnecessary costs for the Council.

Mileage allowances are payments by employers to employees who have to use their car for work. The allowance is meant to compensate for the cost of petrol, vehicle depreciation and repairs. George Osborne increased the recommended allowance to 45p-a-mile in the Budget back in March, acknowledging the high cost of motoring and the pressure this puts on drivers who need their car for work.

TaxPayers’ Alliance research, however, has revealed that many council employees receive far in excess of the HMRC approved rate. In 2009-10, Cheshire East was one of the worst performing in the country, paying out a massive £4,045,601 in allowances to councillors and council employees. The research also revealed that the council increased allowances from 60.10p to 65p-per-mile between 2009-10 and 2010-11, a time when politicians and executives knew that necessary spending reductions would have to be made. While Council Leader Fitzgerald might claim that the agreed reduction is evidence of Cheshire East’s willingness to cut back on employees’ benefits, it’s more like a reversal of a disgraceful previous increase.

Another Cheshire East Councillor, Sam Corcoran, was more critical in November, and rightly so. He said that any payment above the HMRC recommended rate ‘not only wastes money but also adds to bureaucracy’. He also proposed the amendment that the council should only pay 45p-per-mile. Councillor Corcoran should be praised for acknowledging that any payment above HMRC recommendations involves extra administration for the Council alongside the excessive cost. The rest of the council would do well to take his recommendation on board.

Most importantly, however, the failure to reduce the allowance to 45p-per-mile is evidence that councillors are not making enough effort to find efficiency and waste savings before making reductions elsewhere. The reduction to 52.2p-per-mile for councillors will save £20,000 but the total cost of mileage allowances for council employees and councillors in Cheshire East was over £4 million in 2009-10. Council tax has almost doubled over the last decade and it is unacceptable that taxpayers’ money is being used to fund excessive benefits for council staff.

Who watches the watchmen? Government credit card agency in its own waste scandal

Dec 5th, 2011
by Tom Welsh.
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Who watches the watchmen? Taxpayers will be demanding answers after it was revealed that the very agency charged with delivering ‘significant sustainable cost reductions’ in public sector procurement has splurged £1.7million of taxpayers’ money in nightclubs, five star hotels and on trips to New York.

The Government Procurement Service (GPS) manages a vast scheme of government procurement cards (GPCs), some 133,000 of which have been issued since 1997. Civil servants in departments, agencies and quangos can use these cards to make purchases on behalf of government. In theory, it is a ‘fast and efficient way of purchasing different types of goods and services’, speeding up transactions and ensuring prompt payment to the businesses that supply these services.  Spending on credit cards has got way out of hand.  We need more transparency and accountability and fewer civil servants running up extravagant bills and leaving them to taxpayers. Civil servants have legitimate expenses, but there is no excuse for some of the lavish spending that has been uncovered .

The TaxPayers’ Alliance has attacked wasteful GPC spending many times before:

  • In November this year we revealed the £185,000 credit-card spend at the Sustainable Development Commission between April 2009 and March 2011 – including £10,000 on air travel, and £14,000 in 4-star hotels.
  • In August, we exposed the £20,000 put on government credit cards by the Equality and Human Rights Commission in payments to political parties.
  • In June, we condemned the £25m spent by 18 Whitehall departments, including £60,000 dining at exclusive restaurants.

Today’s news is a stark reminder of how deeply a culture of profligacy can take root. Taxpayers must have trust that there are controls in place to prevent unauthorised and wasteful spending. So when those who should be strict financial guardians indulge their personal fantasies at Newz nightclub in Liverpool (popular with Cheryl Cole) or spend £6,000 in New York hotels, it’s clear that the problem is systemic and won’t be solved by shuffling around personnel.

It’s good news that the Government has begun publishing all spending on GPCs over £500. But £500 is an arbitrary figure and taxpayers clearly can’t trust government watchdogs to be stringent and critical on sums beneath this level. Government should publish GPC and credit card statements in full (personal details redacted, of course) so taxpayers can judge for themselves what is necessary and what is wasteful.

Tip of the iceberg: Councils are not doing enough to tackle fraud

Nov 11th, 2011
by Tom Welsh.
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Yesterday the Audit Commission (AC) released its annual report into fraud against local authorities, with a chilling warning that councils had detected ‘just the tip of a very large iceberg.’ Out of an estimated £2.1 billion lost in fraud from council budgets, just £185 million was detected – the profits of 121,000 cases of criminal abuse of council tenancies, council tax discounts, housing benefits, personalised social care budgets, and procurement contracts. It was an improvement on last year, but local authorities are still not doing enough to tackle this considerable strain on local government finances. Their failure leaves taxpayers out of pocket, and prevents genuine claimants from accessing services.

Most reporters have focused their write-up on eye-catching cons like the local government officials tricked into paying £7m into false bank accounts. But of far greater significance are the everyday, bread-and-butter frauds that make up the vast majority of the stolen money. Of the £185 million detected, £110 million was lost in illegal claims for council tax and housing benefits, and £22 million in false claims for student and single person council tax discounts. The value of the 1,800 homes recovered from social-housing fraud stood at £266 million.

But these are just the amounts detected. It’s welcome news that detection is up 37 per cent, but from such a low starting point the rise is minuscule. £185 million is still less than 10 per cent of the total estimated local government fraud.

The figures also reveal sharp contrasts across the country, with some councils performing much worse than others in their counter-fraud efforts. The Audit Commission estimates that 1 per cent of social housing is occupied by illegal subletters and other fraudulent tenants, but the North East councils recovered only 3 properties – less than 0.002 per cent of their total housing stock. The picture isn’t good anywhere. Even if London councils did proportionally better – they clawed back 0.306 per cent of their housing stock – the Audit Commission estimates housing fraud is also more of a problem in London, with fraud accounting for 2.5 per cent of the housing stock. Some experts put the figure as high as 5 per cent.

So what can be done? Councils have responded to the report by complaining about staff and budget cuts. This ignores the highly successful measures taken by some local authorities at very low cost. Ashfield Council spent £10,000 on a whistleblowing and investigation campaign and recovered 8 council houses which would’ve cost £1.2 million to replace. Havering Council spent £40,000 investigating single-person discounts for council tax and saved £300,000. Effective anti-fraud measures can save councils money.

The Audit Commission has provided a long list of excellent measures councils can easily take to tackle fraud. They range from pooling resources to improved risk assessment. There are more general, but no less important recommendations like highlighting vulnerable spending and a ‘zero tolerance culture towards fraud’.

But these huge lost sums suggest a deeper problem with the benefits system itself. Labyrinthine layers of tax discounts and benefit hand-outs create opportunities for fraudsters and administrative difficulties for local authorities. A simpler tax and benefits system would close those opportunities, and increase the ability of local authorities to detect abuse.

It’s in taxpayers’ interest that fraud is attacked at both ends – restricting the ability of criminals to play the system, and ensuring that authorities notice fraud and consistently prosecute against it. Local government fraud forces up council tax, hinders legitimate claimants, and limits the money that can be spent on services residents want most. With the extra £50 million detected this year local councils could pay off debt, fund 700 libraries, or 11,000 care workers, for example.

Spending £4,000 celebrating saving money is missing the point

Nov 3rd, 2011
by Tom Welsh.
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Sir Richard Leese, Leader of Manchester City Council, has splurged £4,000 on a back-slapping dinner for a new member of staff, Lib Dem councillors have claimed. According to Cllr Paul Shannon, Sir Richard issued 270 invitations to wine and dine Manchester’s ‘cultural elite’, with ‘supper amongst Ford Madox Brown’s Great Hall Murals’ to toast the appointment of a new head of the Council’s art gallery. Diners included former MP Lord Bradley, City councillors, the Lord Mayor and his wife, and council chief executive Sir Howard Bernstein. Taxpayers will be shocked that town halls still feel able to indulge in extravagant dinners at a time of supposed budget restraint.

For those familiar with the TPA’s research into council spending on award ceremonies, Sir Richard’s justification was typically self-congratulatory. This dinner on the taxpayer was ‘to celebrate the beginning of the innovative new partnership’ between the City and the University of Manchester. Sir Richard had negotiated a money-saving deal for both institutions’ art galleries to share a director, a practical response to the need to cut costs. But local government savings don’t need to be toasted with champagne.

This dinner is even more astonishing given Manchester is cutting £109 million from the budget this year.  Sir Richard Leese has called the cuts ‘unpalatable’ and entirely blames the Government for the ‘financial position in which we have been placed’. Sir Richard has shirked responsibility for taking appropriate and necessary action to cut spending while wasting Manchester taxpayers’ money on an unnecessary dinner. He said he had no option but to cut 2,000 council jobs, but ending taxpayer-funded dinners would be a start.

We shouldn’t be surprised that Sir Richard Leese is out of touch. When asked whether his chief executive, Sir Howard Bernstein, would take a pay-cut (his 2009-10 remuneration was £232,326), he called it a ‘red herring’, a distraction. By his reckoning, it would hurt morale to cut pay for the council’s top brass, even while 2,000 council workers are being made redundant. Perhaps this was his rationale for putting on a lavish reception for Manchester’s cultural elite – he didn’t want to hurt their morale.

Sir Richard has been hoisted by his own petard. According to Lib Dem councillors he has demonstrated that he is free to spend without restraint. This kind of spending, like that in our award ceremonies paper, shows that councils do have some easy choices to make when it comes to making spending cuts. Councils can prioritise the services residents value most if they are willing to sacrifice elsewhere. Not everything can be blamed on the Government.

Cambridgeshire county council vote themselves 25 per cent pay hike

Oct 19th, 2011
by Tom Welsh.
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In the face of angry protests outside Shire Hall, Cambridgeshire County councillors have voted themselves a massive 25 per cent pay rise. According to a review panel, councillors were ‘undervalued’ on their existing allowances and a rise to £9,500 was needed to allow ‘local democracy to prosper’. Council Leader Nick Clarke will be even better off. From £29,246, he will now take home £38,000 a year with his ‘special responsibility allowance.’

Councillors cannot justify these increases, especially at a time of supposed public spending restraint.

The total increase in spending is not small. Conservative-majority Cambridgeshire County Council (CCC) has 69 local representatives, and with extra payments made to Cabinet members, leaders and spokesmen of all parties, the total amount set aside for allowances will rise by £166,000 to £929,000 a year.

Put into context, CCC is trying to make £161 million of necessary spending cuts over the next five years. Politicians will not convince voters of the importance of savings if they cut with one hand and feather their own nest with the other.

Councillors have explained away their pay hike as the recommendation of an independent review panel, a public-spirited attempt to attract candidates of more diverse backgrounds into local politics. Of course, councils should make it attractive for ordinary people to become councillors. But while other council workers are facing redundancy, largesse for elected officials is unjustifiable.

Instead Cambridgeshire councillors should follow the lead of their chief executive, Mark Lloyd, who took a voluntary 5 per cent pay cut in July. Although he still earns an excessive £186,167, he was right to lead from the front.

From a blog he wrote about Mark Lloyd’s voluntary pay cut, Council Leader Nick Clarke knows the weakness of his own position:

‘One of the most important characteristics of a really good leader, I’ve always felt, is the ability to lead by example.

And when residents are finding life tough, and tightening their belts because money is tight, council’s [sic] can’t be out of step with what the people who pay for services are experiencing.’

Given these comments, Nick Clarke will no doubt forego his extra £9,000, and Cambridgeshire councillors will reverse this pay hike at the earliest possible moment.

ADHD Motability scheme exposes serious potential for abuse

Oct 11th, 2011
by Tom Welsh.
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It’s been revealed that parents of children with Attention Deficit Hyperactivity Disorder (ADHD) can qualify for a free car under the £1.5 billion taxpayer-funded Motability scheme. Paid for by the mobility component of the £12 billion-a-year Disability Living Allowance (DLA), Motability is meant to help people with severe walking difficulties, and allows claimants to directly channel their mobility payments into a new car purchase.

So why are ADHD kids eligible? Creative interpretation of the eligibility requirements might mean they need ‘supervision most of the time from another person when walking out of doors in unfamiliar places’. Or perhaps they would ‘be at risk if they tried to walk’? Taxpayers will be outraged that a condition like ADHD, behavioural rather than physical, is being used to justify mobility grants.

But this story illustrates far broader problems with the administration of DLA.

The 3,000 cars that people with various behavioural conditions in the family are eligible for are a tiny percentage of the 575,000 being paid for under the Motability higher-rate mobility scheme. This is 200,000 more vehicles on the road than a decade ago. Why has this figure risen so quickly? There cannot be 200,000 more immobile disabled people than in 2001. The evidence points to a serious lack of oversight by the relevant authorities.

No medical assessment is required to qualify for mobility money. An assessment can be bypassed if the ‘decision-maker’ is happy with the application, and a medical exam ‘may be to check you are receiving the full amount of benefit you are entitled to’, rather than a comprehensive medical examination of the condition itself.

Given that diagnosis of ADHD has been criticised for often resting on parental evidence alone, there is substantial potential for abuse by parents looking to cash in on generous hand-outs.

There’s also no means-testing. The Motability website allows claimants to explore topping-up their £2,500 annual payments with their own cash, with tempting images of BMWs and Audis likely to provoke envy even in the most scrupulous. Taxpayers shouldn’t have to subsidise new cars for wealthy families.

Most seriously, little effort is made to tackle abuse and fraud. Motability released a statement in June telling of the 800 claimants removed from the scheme in 2010/11. But its annual report mentions 7,144 allegations of fraud or abuse, including uninsured driving, unauthorised use, criminal activity, and drink driving. Just 2,139 of these were pursued, with only 829 resulting in punitive action – the figure quoted in the press statement. Given that an estimated 200,000 are regularly used by the disabled person’s friends or relatives, these figures are worrying small.

Motability relies on the public reporting misuse of these cars. A scheme costing £1.5 billion a year ought to have far more rigorous methods of preventing abuse than the odd tip-off from neighbours. Questions should also be raised about the necessary burden of proof – success rates in pursuing allegations are shockingly low. Given how easy it is to get a car, it seems incredibly difficult to take one away.

The Work and Pensions Secretary is right to take action on the ADHD car scheme, but the entire DLA mobility component should be re-examined. Investigating 3,000 cars out of 575,000 will do little to change the fundamental problems that allow uncontrolled spending of taxpayers’ money, with insufficient investigation of whether that spending is working or needed. The disabled must be supported, but the DWP must ensure the money goes to the right people and for the right reasons.

[Update: We have edited the post above to clarify that the figure of 3,000 is an estimation of the number eligible for the cars, rather than those who received them, and that this refers to a broader spectrum of behavioural disorders, in line with this article.  This strengthens the argument in the original post that this is a small part of the overall cost of the scheme.]

 

Fat taxes won’t solve the problem they are designed to

Oct 7th, 2011
by Tom Welsh.
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Does Britain need a fat tax? David Cameron hasn’t ruled it out. In Manchester he called for Britain to ‘wake-up’ to rising obesity levels and, with Denmark now the first country to tax foods high in saturated fat, said a fat tax ‘is something we should look at’.

But is a tax levied on fatty foods the best way to tackle obesity? Certainly, obesity costs the NHS money. In 2001, the National Audit Office conservatively estimated that the NHS would spend £3.6 billion treating obesity and related illnesses by 2010. As people get fatter, ambulance trusts are forking out £90,000 on “bariatric” ambulances with reinforced tail-lifts and inflatable lifting cushions.

Some argue that the obese should contribute towards this expenditure. Smokers pay £9.3 billion annually in cigarette taxes, drinkers pay £8.3 billion, but there is no specific levy on obesity. Sin taxes, however, are about more than raising revenue. They are a means of controlling bad behaviour. Cigarette duty raises far more than the £2.7 billion the NHS spends treating smoking-related diseases annually. Intended as polite nudges, they more often crudely shove us towards healthier lifestyles.

A fat tax along the Danish line wouldn’t just target the obese, but anyone who bought foods high in saturated fats. Butter, milk, cheese, pizza, meat and oil would be affected, and with British food prices already some of the highest in Europe, average taxpayers, struggling to buy household staples, would be penalised for eating the food they enjoy.

Sin taxes also disproportionately hit those on lower incomes – not because what they eat is more fatty, but because they spend a higher proportion of their income on food. A fat tax would be regressive, according to a 2004 report by the Institute of Fiscal Studies. It would burden the poorest households seven times more, as a proportion of income, than the richest households.

Crucially, there’s little evidence a fat tax would even change behaviour. Obesity may be a growing problem, an ever heavier burden on the NHS, but indiscriminate taxation of fatty foods is not its panacea. It would not be an innovative response to an unsolved problem, but more-of-the-same intervention.

The Government must leave people to directly face the consequences of their own unhealthy actions. If someone like Paul Mason, formerly the world’s fattest man, has cost the NHS £1 million over 15 years, he should contribute towards the direct costs of his care. A fat tax would not provide this direct link between action and consequence. It would penalise the poor, increase food prices for ordinary taxpayers and stand as an unacceptable intervention into the eating habits of everyone.

Ignore the European Commission’s legal threats over welfare payments to EU nationals

Sep 30th, 2011
by Tom Welsh.
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The European Commission has threatened to take legal action against the British Government over the rights of foreigners to claim benefits in Britain. British nationals are automatically considered to have the ‘right to reside’ but people of other EU nationalities are subject to an assessment first.

Discriminatory, says the Commission, which has given Britain a two month deadline to allow foreigners easier access to welfare in Britain, warning:

“Otherwise, the commission may decide to refer the UK to the EU’s Court of Justice.”

Changing the law to meet the demands could cost British taxpayers £2 billion a year as thousands of jobless EU nationals arrive with immediate eligibility for means-tested, residence-based benefits. The Commission is attacking not only the right of every member state to decide who is eligible for its benefits and why, but also the foundations of current welfare reform plans. The Work and Pensions Secretary, Iain Duncan Smith, spoke out against the move:

“This threatens to break the vital link which should exist between taxpayers and their own government. I sense this is part of a wider movement, coming in the same week as the proposals for a financial transactions tax across Europe which threatens to punish UK banks by decreasing their competitiveness abroad.”

Duncan Smith is rightly outraged at a ‘rising tide of judgements’ from European institutions, but taxpayers should be equally furious that a useful policy for preventing fraudulent use of our benefits system is being attacked by the unelected and the unaccountable. If Britain gives in to Brussels’ sabre-rattling the link between contribution and eligibility will be effectively destroyed.

The Government should simply ignore the warning and, if it becomes necessary, challenge the Commission in the EU Court of Justice. If the Commission wins, the Government should consider whether that decision might provide the circumstances for a referendum on Britain’s membership of the EU.

Anything to declare? Passport IT system goes over budget

Sep 29th, 2011
by Tom Welsh.
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The Sunday Telegraph reported this week that the cost of a new Passport Agency computer system had rocketed, rising from an estimated £80-£100 million to a bill of £365 million. In response to a parliamentary question tabled by Eilidh Whiteford MP, Immigration Minister Damian Green insisted that rising costs were down to ‘additional demand for passports, enhancements of the IT infrastructure and business processes to accommodate changes in policy, response to changes in security threats and customer service improvements.’

Eilidh Whiteford was not satisfied, denigrating the ‘absolute scandal’ of the previous Government (who signed the contract with Siemens) and their lack of care with taxpayer’s money. She was right to point out the similarities between this and other IT debacles, including the £2.7 billion wasted on the failed NHS IT project  and huge overruns on the Welsh Government’s £220 million Merlin Programme.

A Commons Public Accounts Committee (PAC)  report, released in August, described the NHS scheme as ‘beyond the capacity of the Department to deliver.’ Systematic failure to consult with those health professionals who would use the new IT system, inability to prevent the Department from ‘clearly overpaying BT [one of the suppliers] to implement systems’, and ‘weak programme management’ led to such substantial overruns in both time and money. Although there were ‘political inconsistencies’, these were overwhelmed by the inability of the Department of Health to cope with managing £11.4 billion of taxpayers’ money.

But Damian Green’s lacklustre response to Eilidh Whiteford suggests many of the lessons in the PAC report have been ignored. Although Francis Maude’s Major Projects Authority is meant to ensure ‘a more systematic approach by departments as well as regular, planned scrutiny to keep projects on track’, the Passport Office overrun suggests that such scrutiny is not being applied consistently. Even worse, the glib explanation that the bill has gone up by at least £265 million due to ‘customer service improvements’ and ‘additional demand for passports’ suggests such scrutiny is not even being taken seriously.

Aside from the data security implications of government holding such vast stores of our private information, and their tendency to lose it, projects like these show that government projects fail when they attempt to do too much. The inability, or unwillingness, to scrutinise and manage contracts with suppliers is just another example of a tendency to play fast and loose with taxpayers’ money.

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