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The Guardian - UK
The Guardian - UK
Rowena Mason Whitehall editor

UK wasting ‘tens of billions’ on crumbling infrastructure and badly run projects

HS2 construction at Curzon Street in Birmingham
HS2 construction at Curzon Street in Birmingham. The NAO said Whitehall has a ‘governance problem’, exemplified by the costs of the high-speed rail project and new hospitals programme. Photograph: Christopher Furlong/Getty Images

Britain is wasting tens of billions of pounds on badly run projects, cold war-era IT systems and crumbling, poorly maintained infrastructure, parliament’s spending watchdog will say on Tuesday.

Gareth Davies, the head of the National Audit Office (NAO), will argue the government could save vast sums if it addresses maintenance backlogs and replaces out-of-date IT.

In his annual speech, Davies will call for a new approach to large projects such as HS2 and the new hospitals building programme to prevent costs soaring.

The Conservatives and Labour are looking for cost savings and ways of reforming Whitehall before the next election, with little headroom available within tight, self-imposed fiscal rules.

Davies, the NAO auditor general, will say the next government faces “a tough challenge” as he outlines the difficulties facing public services.

But he will claim “smarter” government can still provide people with better public services despite the fiscal backdrop.

“Parts of our national infrastructure are crumbling. Maintenance backlogs persist across the public estate, impeding service delivery and costing more over time,” Davies will say.

“Out-of-date IT slows the modernisation of many public services, [interfering] with efficient government and increasing the risks of successful cyber-attacks. Higher inflation has increased costs, particularly for large infrastructure projects.”

He will single out the “governance problem” in Whitehall when it comes to HS2 and the new hospitals programme, deeming them “mega-projects too large for risks to be managed by the relevant departments and arm’s-length bodies”.

Davies also highlights the archaic computer systems in two Whitehall departments, saying: “The Department for Environment, Food and Rural Affairs (Defra) spends more than three-quarters of its digital budget maintaining ageing systems. The Ministry of Defence in part relies on kit dating back to the cold war.”

The NAO chief will say the government can make savings in five major areas: big infrastructure, managing buildings and other assets, buying, IT systems, and reducing fraud and error.

He will say projects like HS2 and new hospitals could be improved with a cross-government oversight board, increasing the chance of making better decisions on whether to proceed and more effectively holding it to account.

On public assets, he says maintenance is as important as getting value for money in building infrastructure, and will call for more discipline in managing public buildings.

“The NAO’s recent work has highlighted the false economy of allowing maintenance backlogs to build up,” he will say.

“Our report on school buildings found more than a third are beyond their design life, leading to higher running costs and in some cases expensive emergency repairs …

“The same issues are significantly affecting patient care – and costs – at many NHS hospitals.”

Thirdly, he will call for much better management of procurement, saying of the £100bn of contracts awarded by big departments in 2021-22, a third were not subject to competition.

“Performance remains patchy, with an over-reliance on expensive temporary contracts and misaligned commercial incentives.”

Davies will say the overhaul of IT is another place where cost savings can be found, with priorities being “replacing antiquated IT systems; improving the quality and shareability of data; and recruiting and retaining scarce, in-demand skills”.

However, he will say savings will only be found if the government makes improving Whitehall efficiency a high priority.

Darren Jones MP, the shadow chief secretary to the Treasury, said taxpayers would be “furious to learn that the Tories are wasting billions of pounds every month”.

“And what for? Broken public services, a failure to build anything and higher taxes,” he said. “The management of HS2 is the latest, most expensive fiasco. But waste and inefficiency has become normal under the Conservatives.

“Labour will treat taxpayers’ money as if it were our own and get tough on waste by creating a new Office of Value for Money, tackling pandemic-related fraud with a Covid corruption commissioner and by strengthening the Office for Budget Responsibility.”

In advance of the election expected this year, Labour and the Tories are looking for policies that will improve public services in ways designed to be cost-neutral or involve little upfront cost.

Labour is expected to promise to change public services, but will have little money to promise a big spending programme.

The Institute for Public Policy Research thinktank recently warned that public services will not recover from their backlogs until the 2030s even under a Labour government, with a decade needed to clear NHS waiting lists and the buildup of cases in the courts.

The study from the IPPR outlined the challenges facing the next government, with voters impatient for change within a first term.

Some of its ideas for greater efficiency included rolling out AI tools to the public sector to save an estimated £24bn a year, with a “right to retrain” for workers whose jobs are affected.

Harry Quilter-Pinner, the author of the IPPR report, said of Davies’ comments: “The ‘reform fairy’ alone cannot save our broken public services. Over the next parliament the NHS, education, care and police will need more resourcing to solve backlogs and improve outcomes.

“But we must use any additional resource as an opportunity to transform how these services work. This must mean driving better prevention, more personalised services and increasing productivity. The NAO are right to say this will need a long-term, bold, cross-government effort.

“As the IPPR has recently set out, it will take a decade of national renewal to really make progress on this. There are no quick fixes left; it’s going to take hard graft and commitment.”

In response, Laura Trott, a Treasury minister, said: “We’ve done a huge amount since 2010 to increase the efficiency and productivity of public spending, but we want to do even more on cutting admin, safely introducing new technology, and preventing problems before they occur.

“The public sector productivity programme is a key part of this mission and will ensure we deliver a more productive public sector while cutting your taxes.”

The Cabinet Office has been approached for comment.

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