Empowering the Freelance Economy

PAC chair warns of “cycle of broken promises and wasted cash in perpetuity”

Dame Meg Hillier, MP and PAC Chair
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Given that the self-employed have been low-hanging fruit for tax grabs, voters must voice their concerns now about government misspending before history repeats itself

No matter how the votes sway come the next General Election, Dame Meg Hillier MP and Chair of the Public Accounts Committee, fears government misspending could continue.

She warns any incoming Government must learn from failures made in recent years and have people “within their ranks” who have “experience of what works and what doesn’t.” “Without this,” says Hillier, “my successors as chair of the PAC will be doomed to a cycle of broken promises and wasted cash in perpetuity.”

The MP says in her latest annual report that for at least once a week for the past thirteen years, she has “scrutinised power.”

“Mostly the power in Whitehall in the person of senior civil servants—the officials who are directly accountable to Parliament for spending taxpayers’ money,” she recounts. “On occasion, I have seen our witnesses give compelling and authentic expositions of how they met with great success, delivering their projects on time and bringing value for the public’s cash. More of the time, however, I have heard about projects gone awry, deadlines shifted, and money wasted.”

Dame Hillier says that all too often, she has witnessed “money misdirected or squandered,” but not because of corruption, but because of “group-think, intransigence, inertia, and cultures which discourage whistle-blowing.”

On occasion, she says the scale of failure has been “seismic”, giving examples of HS2 or Horizon in the Post Office, or the procurement of PPE during Covid. Other times, she says there has been a “systemic failure to be agile and adaptable as events unfolded.”

Bad planning and outdated systems waste taxpayer money

One example of misspending by reportedly poor long-term planning and investment includes The Palace of Westminster’s Restoration and Renewal programme. In her report, Dame Hillier says Parliament spends up to £2 million a week simply on patching up the Palace carrying out works for health and safety reasons which will be redone under the Restoration and Renewal programme.

The government also faces significant challenges with its aging IT systems, with approximately 30% of DEFRA’s applications being outdated and unsupported by their supplier. DEFRA alone uses around 1,962 different systems, many of which were designed for specific purposes, leading to inefficiencies and poor service quality.

The Ministry of Defence (MoD) also experiences difficulties, with routine tasks such as ordering boots being complicated due to outdated systems. These legacy systems are costly to maintain, modernise, and are vulnerable to failure and cyber-attacks.

The MP says the MoD estimated a need for £11.7 billion to update its legacy systems in 2019, but subsequent replacement programmes have struggled, with two labelled as ‘unachievable.’ The government is urged to prioritise upgrading its legacy systems through a realistic and achievable programme.

Then, there’s HMRC’s Making Tax Digital programme that spending watchdog, the NAO, has reportedly branded as “out of control, with costs now five times the original forecast, rising from £226m in 2016 to £1.3bn in 2023.”

Gareth Davies, Comptroller and Auditor General, found a big problem in the calculations for the project, which was the omission of upfront cost totalling £1.5 billion that taxpayers will have to shoulder over the next five years. If they had included this cost, it would have shown that the project will actually cost the government and taxpayers more money than any extra tax revenue it brings in. In simpler terms, this project won’t make any extra money, it will actually cost money.

So, here in lies the problem, the politicians need to justify misspending but at the same time claw back money lost just like any other organisation. However, if systems were in place to avoid misspending in the first place, the self-employed would more than likely be better off financially and so would the Treasury’s coffers.

Why is government misspending happening in the first place?

According to Hillier there are areas where “eye-watering sums of the public’s money are being spent, but which cannot be openly scrutinised.”

As a former Home Office minister, she recognises the “need to maintain security and do nothing to aid the UK’s enemies.”

Yet there is still an imperative to ask the right questions, she says, and investigate all areas of the public accounts, “even if sensitive and secret.”

“We need to work with the Government and within Parliament to identify a practical solution to enable effective scrutiny across sensitive areas of spending and delivery,” she says.

She suggests “pre-project scrutiny” or a “public airing” of plans for any major programme should be carried out so a spotlight could be shone on the potential benefits and pitfalls before large sums of money are spent.

However, her suggestions have been met with reluctance: “I have offered this to departments, but government has not been keen to adopt this voluntarily.”

Why more people could turn to side hustles this year

The latest figures on income poverty in 2022–23 show little change, but it hides a bigger problem: prices going up are hitting some groups harder. More people can’t afford basics like heating their homes properly. Between 2019–20 and 2022–23, the rate of material deprivation went up from 15% to 19%, meaning 2.8 million more people struggle to afford essential things. The number of people who can’t get enough food rose from 8% to 11%, and those who can’t heat their homes properly increased from 4% to 11%. This affects all ages, housing situations, work status, and regions, hitting owners and pensioners especially hard. The rise in prices for important things like energy and food makes this situation worse.

These problems make it tough for any government to improve living standards. The pandemic and high living costs have made it harder for households to afford what they need. Even though the situation might improve a bit, forecasts show that by the next election, people might still have less money than before. This would be the first time in many years that people’s average income has dropped during a parliament.

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