Bonfire of the Quangos savings 'based on incomplete and imprecise estimates'

Today the Public Accounts Committee has voiced "substantial concerns" about the Government's claim to be able to save £2.6 billion by reorganising its arm's length bodies - a move dubbed the 'bonfire of the Quangos' by Cabinet Minister Francis Maude.

Committee Chair Margaret Hodge said that "this figure is based on incomplete and imprecise estimates from departments on the savings made and costs incurred."

As Full Fact pointed out when it first looked into the predicted savings from the closing of over 200 devolved public bodies last year, there has long been some doubt about the origin and scope of these figures.

Following a back-and-forth between the Public Administration Select Committee and the Cabinet Office last year (during which the former said the latter's proposed 'bonfire' would  "cost more than it will save") we took a closer look at the claims.

The figures published by Cabinet Office Minister Francis Maude claimed to show the financial gain of the Quango shake-up, leading him to announce that cumulatively £30 billion "will no longer be spent through public bodies" over the current parliament.

This is broken down into:

• £2.6 billion from administrative savings in public bodies;
• Reductions in programmes and capital spend through public bodies will be reduced by at least £11 billion per year by 2014-15.

But as Full Fact found, the written ministerial statement which accompanied the figures stated that these savings "do not include spending simply transferred elsewhere."

In fact, some of the Quangos earmarked for closure had their functions transferred to other bodies rather than being abolished altogether. In these cases the closure may only have diverted expenditure between budgets, rather than clawing them back entirely.

Today's report from the Public Accounts Committee explains that of the £2.6 billion administrative savings, £1 billion is planned to come from abolitions which transfer functions to departments, local government or other public bodies.

While £600 million of the claimed savings have been appropriately adjusted to the costs of transferring functions from abolished Quangos to other government bodies, £400 million has not.

It seems therefore that we were right to question what the Government meant by "no longer spent through public bodies" over a year ago, and we're pleased to see that the Cabinet Office has agreed to revise its estimates in the light of these findings. You read it here first.