Amongst all the dramatic events of this week, Gordon Brown has decided to announced a review into the cost of the final salary pension schemes offered to MP’s. Now, here is a man of action, we all know that when Mr Brown wants to grab the headlines with some ‘good’ news, he either announces a review or an inquiry. In the case of the former and, arguably the latter, nothing happens. In other words, say something, do nothing….the unnofficial cry of Gordon Brown and his Labour party.

Over the past 10 years or so, any final salary schemes within the private sector have had to be curtailed or withdrawn. In fact, some pension schemes have even collapsed completely because of the increased costs associated with Mr Brown’s tax attack on private sector and personal pension schemes. This tax grab has contributed in excess of £100bn to Treasury coffers over the past 10 years and ensured that many, many people that have contributed to pensions for most of their life, now have to struggle or rely on state handouts or means tested benefits. A real man of the people our Mr Brown.

Meanwhile, MP’s continued to benefit from what has been described as one of the best pension schemes in the world. Even taking into account that  our MP’s have a gold-plated pension scheme, the total cost is marginal when compared with the actual cost to the taxpayer of funding the generous, final salary schemes offered to public sector workers. The additional cost last year, to the taxpayers of this country, for the pension scheme our members of parliament enjoy was £12m. Quite a lot of money when you consider that this top up is paid out of future tax revenues, rather than an annuity. However, the estimated cost of the public sector final salary scheme is, by contrast, staggering and rising fast! 

Pension schemes for local government officers and MPs are funded but, five million people, including civil servants, teachers, NHS staff and members of the Armed Forces, are enrolled in schemes for which no money has been set aside. In 2006, the Government estimated the cost of these unfunded liabilities was £650bn, it has since been estimated that our public sector pensions deficit is £1,071 billion. Now that IS a big number!

According to the Treasury’s own figures, the annual cost of paying public sector pension schemes is 1.5% of GDP and this is expected to rise to 2% over the next 50 years. Lets put that into perspective, the annual cost to the taxpayer of these unfunded public pension schemes is currently £22bn, or if you prefer, equivalent to a reduction in direct taxation of 4p in the pound, or to put it another way, £900 for every family in the UK. But, over the next 3 decades, it is estimated by the IEA that this will increase to £76bn a year, enough to complete more than two banking bailouts or 250 new hospitals every year.

So, Mr Brown, lets see some action, not reviews. Yes, by all means he should tackle the issue of MP’s final salary pension schemes, but he must also, finally grasp the nettle in relation to public sector final salary schemes. A failure to do so will result in either, a significant increase in taxation or, an inability to honour the existing scheme. Average salaries within the public sector are now higher than those within the private sector, similarly pension schemes are on average, some 15 times more valuable within the public sector. 

Ultimately the taxpayer is expected to fund this financial burden, in addition to an ever increasing headcount within the public sector and it does not take Einstein to work out that it is simply not sustainable, in a booming, let alone a contracting economy. It is high time that public sector pensions were brought in line with the private sector, in terms of the type of benefits and the way they are funded.  It is time to act decisively, no doubt Mr Brown will once again, shy away from anything so commendable. Say something, do nothing

David Cameron has been quoted as saying he would not rule out tax increases because he could not be certain of the public finances in two years time. I accept this in part, but let’s face it; there has been a huge amount of information released in recent years outlining this government’s excesses and waste. Surely, David Cameron is not going to preside over a continued waste of taxpayer’s money.

If Cameron wants to be prime minister, he needs to get a grip, by accepting what any businessman will tell you, there is always money to be saved in terms of fat and excess, without necessarily reducing output, service or standards. This is prime example of what happens when we seek to put inexperienced people into office to run a ‘business’ with revenues in excess of £250bn per year. Cameron is supposed to be the leader of the Conservative party with ambitions to be the leader of this country, isn’t it time we witnessed some of his leadership skills?

Clearly Cameron needs some pointers, so here are a few samples of this government’s waste of taxpayer’s money.

 £20bn on an IT system for the NHS that has had questionable trials, and lacks the support of NHS staff, who have also indicated a limited confidence in the systems capabilities. Another £2bn has been lost in tax credit fraud or errors. Or perhaps Cameron could consider the £2.3bn refurbishing civilian offices of MOD?

£1.7bn of taxpayer’s money is being spent settling Metronet’s debts following the failed privatisation of London Underground and it worth reminding ourselves that it was Gordon Brown, who forced through the controversial Public Private Partnership of the Tube when he was Chancellor. A further £300m will go to Transport for London to cover its cost in taking on Metronet’s contracts.

Let’s take a look at the Department of Work and Pensions which has wasted £300m on two cancelled IT projects In 5 years the DWP managed to spend £2.14bn on IT projects, both ongoing and cancelled, with over £500m going to consultants alone. Will this type of mismanagement continue with a Cameron lead government?

A further £486m has been wasted on the computer project for the Child Support Agency and £140m on a system designed to streamline payment of benefits which was shelved because it never worked. Or perhaps £77m on an IT system meant to clear the backlog of immigration casework which was shelved because it missed deadlines.  Maybe he should consider the waste in respect of a system that was being introduced to manage the applications of adults applying for independent learning grants which was scrapped after millions was lost in fraudulent applications; the cost of this was another £97m of taxpayer’s money.

Maybe David Cameron could take a closer look at the Ministry of Defence (MOD)? Apart from the £2.3bn alluded to earlier, to make the civil servants comfortable, he could consider the following.

After failing to include a clause ensuring that Chinooks purchased from the USA would meet UK airworthy standards (responsibility of the previous Conservative government), the MOD has spent more than £300m, now forecast to be £500m to upgrade them. Ordered in 1995, after 20 years, the upgrade on these 8 Chinooks has still not been completed. Likely waste is in the region of £500m plus the cost of the Chinooks! The MOD also scrapped a computer inventory scheme before it was introduced at a cost of £118m and a further £77m on a radar system for the Harrier before it was decided to withdraw it from service.

Once again the MOD judgment must be called into question over a similar situation with the Nimrod AEW aircraft that was supposed to replace the RAF Shackletons. Despite the fact that a well proven replacement, The Boeing E3 was available, the Government decided it was better to spend £1.5billion on a radar system that didn’t work. Having wasted this £1.5bn, they went on to spend another £750 million buying the 7 aircraft that the RAF had wanted to begin with!

The MOD also wrote off £118m on a failed inventory IT project (DSMS). In fact, the MOD may end up writing of over £3bn for a programme to upgrade RAF Nimrods, a plane that is built on the 1950’s Comet airframe and almost certainly with a very limited lifespan. David Cameron does not have to look very far to find government departments where good judgment has been demonstrated to be highly questionable.

Maybe Cameron could review The Pathway project, which promised to introduce a benefits payment card in 2000 and was scrapped after four years of expensive development was scrapped at a cost of £1bn Another £400m was spent on a project aimed at ‘cost control’ for the 2012 Olympics. Something else that should be taken into account when considering the use of taxpayers money is the plan to share services for human resources, payroll and finance using a computer system which was originally forecast to cost £55m with savings of £112m. It is now forecasted that costs will reach £120m with savings of just £40m.

This government has presided over a situation where in spite of the fact that nearly £3bn per annum is spent on ‘consultants’, the decisions that have been reached, remain highly questionable. Has anyone taken any responsibility for this complete waste of public money, the expensive consultants, the lofty, highly rewarded civil servants or the inexperienced ministers? I don’t think so! In spite of proving that they are incapable of making the right decisions in respect of Information Technology projects, this government is forecasted to spend another £14bn of taxpayer’s money this year, this is roughly equivalent to a reduction in personal taxation of 7p in the pound, or if you prefer, a reduction in the top rate of tax from 40% to 33%. Has David Cameron provided any indication that this wanton waste of taxpayer’s money will be a priority of his government if he got into power, I don’t think so!

Now this government wants to spend another £5bn on a computer system to manage a new ID card system. Granted, David Cameron has indicated, in one the few policy decisions he has announced, that the Conservative party, in government will scrap the ID card system. If however, no matter how unlikely, the Conservative government do not get into power, how certain can we be that the Labour government have learnt the lessons of the past and that this, highly questionable project, would be brought in on budget. A recent report indicated that 82% of IT projects have either come in over budget or are expected to. That is an appalling record and for Gordon Brown, someone who is often held up as one of the best (and toughest) chancellors of all time, a very poor legacy indeed. In fact, in my personal opinion, I believe in years to come, this government and specifically this chancellor will be seen to have done more long term damage to this country than any previous government or chancellor in history and we shall be paying the price for decades to come.

.

 Loading ...

 Loading ...