Government waste
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Thanks for downloading the More or Less podcast from BBC Radio 4. Here's Tim Harford.
Hello and welcome to the last in this series of More or Less, the programme which deals in numbers. This week we'll be interviewing Alex Allen, the Chairman of the Joint Intelligence Committee, about the use of statistics in fighting terrorism and outwitting foreign spies. We'll also be asking whether hosting the Olympics is a good deal for Britain. And we'll work out the chances of this happening.
Introduced to Scrabble when I was 19 at a social event, I drew to go first. Staring at my seven blind-picked letters, I realised they could make a whole word and put down janitor to general consternation.
But first, let's talk about government waste. Wouldn't it be nice if we could have less of it? Here's the Communities and Local Government Minister, Bob Neill, speaking in the House of Commons on Monday.
The estimates are that savings of some 20% could be made on the £50 billion that local authorities spend with third parties. That's about £452 a year. So to that end, the government, as I say, is working with the local government group on behalf of the sector to identify short and longer-term savings through the local productivity programme.
So, useless local authorities are wasting £10 billion a year through poor spending decisions. That's a huge potential saving, almost as much as the government raised by lifting VAT to 20%, and much more than Labour raised by introducing the 50p rate of tax. Or, at least it is, if the claim stacks up. When we asked the Department for Communities and Local Government about the figures, they referred us to a press release they published in June, attributing precisely the numbers the ministers used to a report by a private consultancy firm. Sadly, however, The Guardian columnist and bad science author Ben Goldacre thinks the report is less than impressive.
It's possibly one of the most ridiculous figures I've ever seen quoted in Parliament. The 20% figure comes not from a department of competent statisticians in the civil service with access to all of the local government data. It comes from this incredibly flimsy advertising leaflet from a private management consultancy firm called Touting for Business, a private management consultancy firm which I hope we're sadistically not going to mention by name because they were obviously only doing it for the publicity. And the short story of how they derived this 20% figure is they said, oh, we reckon we can save you 20% on your mobile phone bills. Therefore, we can save you 20% on the entirety of local government expenditure.
Are mobile phones really the most famously complicated and difficult to procure product in history?
Everybody knows that the mobile phone industry kind of makes money out of having really annoyingly complicated tariffs that are so fiddly that it would take you more time to work out. how to get the best deal than it would to earn the money to work around not having the best deal. Now, it's great if somebody says that they want to make sure that everybody in local government has the best deal on their mobile phones, but the problem is that only reflects... £600,000 in their sample of all of the local government expenditure. That's the tiniest, teeniest corner. So what they've done is they've said, we can get you a massive 20% saving in procurement costs on this teeny, tiny corner, the teeniest, tiniest corner of local government procurement expenditure where you are most able to get a good saving.
And then they've extrapolated that they could therefore get you a 20% saving on the entirety of local government procurement costs. To see it being wheeled out in Parliament three months, four months after the figure was shown definitively to be absurd, is it not amazing?
Although I'm amazed by your capacity to continue to be amazed because it just happens. You know I'm not always like this about things. Honestly, genuinely, sincerely. Sir Ben, we did our BBC duty. We asked the minister whether he'd like to come on and talk to us or even better, talk to you.
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