Will the 'bonfire of the Quangos' save taxpayers £30 billion over the current parliament?

17 March 2011

The impact of the Government's 'bonfire of the quangos' on the public purse has been hotly contested in recent months.

In January the Public Administration Select Committee suggested that in the short term, the proposed cull might "cost more than it will save." Yet earlier this week the Daily Mail suggested the savings could reach £20 billion, a sum that grew again yesterday, with the Sun reporting: "Quango cull saves £30 billion"

These projected savings were announced by Francis Maude MP in the Sun yesterday. The data has been released by the Cabinet Office as part of the Government's response to the Public Administration Select Committee Report 'Smaller Government: Shrinking the Quango State'.

This report, whilst finding that the reforms may eventually save around £1 billion, concluded that "the extent to which quangos reform would yield significant savings was probably exaggerated. This created a false expectation that the review would deliver greater savings than it has been able to realise. Consequently, the Government appears unsure about the extent to which the reform will result in significant savings for the taxpayer." (Paragraph 83)

The apparent savings now being reported mark a huge discrepancy with previous estimates, and so we wanted to unpack where the projected spending cuts are to be made.

According to the Cabinet Office:

•                £2.6 billion savings will come 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.

•                Cumulatively £30 billion "will no longer be spent through public bodies".

But what does the Government mean by "no longer spent through public bodies"; is this expenditure just being moved elsewhere? The Cabinet Office does state that: "Under the reforms, approximately 200 organisations will cease to be public bodies and their functions will either be brought back into government, devolved to local government, moved out of government or abolished altogether." However, the written ministerial statement which accompanies the document does state that reported savings do "not include spending simply transferred elsewhere."

From the current information we have, it does seem that the government's new projected savings from the reform to quangos will amount to £30 billion in spending cuts. However this is certainly a reform to keep a factchecking eye on, as we do not yet have the statistical breakdown of where these savings will accrue, and because this is an issue that has seen so much variation and disagreement on projected savings.

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