Ben Chu Profile picture
11 Mar, 16 tweets, 5 min read
Is Test and Trace really the most wasteful public spending programme ever?

A thread…🧵
The @CommonsPAC report on the value for money and effectiveness of the £37bn Test and Trace programme is pretty damning.

& former top Treasury civil servant @nickmacpherson2 says it “wins the prize for the most wasteful and inept public spending programme of all time”...2/
But is this verdict justified?

Or have there, in fact, been more egregious squanderings of taxpayers’ money in the past?

What could possibly compete?

Well, here’s some contenders...3/
The NHS IT system

- Commissioned by the Blair government in 2002.

- Supposed to deliver full digital integration by 2005.

- Massive cost overruns and technical problems.

- Scrapped in 2011, with total cost estimates of £20bn. £24bn in today’s money...4/
Public service pension reform

– Coalition in 2010 made public sector pensions less generous, but let workers less than a decade from retirement stay on old system

- Was ruled age discrimination in court in 2018.

- Estimated cost to taxpayer of rectifying: £17bn...5/
Millennium Dome

– Inherited, but greatly expanded by Blair government after 1997.

- Given away to property developers in 2001 after sale attempts fell through.

- Total construction cost of £780m, or £1.3bn today....6/

– Anglo-French supersonic jet project forged in 1962 under Harold Macmillan.

- Not a single aircraft ever commercially sold - had to be foisted onto BA and Air France by ministers

- More than £1.2bn spent on development by UK and France, around £10bn today...7/
Gas-cooled nuclear reactors

– Technology commissioned by Harold Wilson government in 1960s

- Massive delays & none sold for export.

- Total construction costs some £95bn today.

- Plus tens of billions of pounds of decommissioning costs still on public balance sheet...8/
In truth it’s not easy to rank failed public-sector projects in terms of wastefulness, given the costs are accumulated over many different time periods and (some) have offsetting benefits...9/
Nevertheless, test and trace may be close to the top of the league table if its performance really is as weak as the @CommonsPAC suggests...10/
More important than ranking is learning lessons.

What unites all these failed projects is that they were very large scale, when, in many cases, more modest plans would have been appropriate for achieving the goals....11/
Government ministers have tended to prefer the big and headline-grabbing shiny new project over the incremental improvement.

Think of the "world-beating test and trace" boasts...
Many were also started from scratch, rather than building on what was already available - and also centralised.

Echo of this with Test and Trace, which set up entirely new call centres, rather than utilising local government public health teams....13/
Another common theme is that ministers and civil servants often ploughed on despite rising costs & mounting problems, sometimes refusing to even hear warnings.

They doubled down rather than cutting losses...14/
Something to think about in light of the apparent ditching of the “strategy” part of industrial policy by this government…15/
More here for @Independent (including some very spicy judgements on past fiascos from @ProfJohnKay and @PJTheEconomist )👇


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More from @BenChu_

10 Mar
Why is the government killing off its ‘Industrial Strategy’ and why should we care?

A thread...🧵
On the face of it this is something of a puzzle.

Some have suggested this is about “neoliberal” or Thatcherite ideology at work – an aversion to government intervention in the market....2/
Yet this is not a government averse to intervening in the private sector economy, to put it mildly.

There’s the furlough of millions of jobs and billions in state-guaranteed loans...3/
Read 12 tweets
8 Mar
When the Bank of England (one day) starts tightening monetary policy will it start by:

a) raising interest rates?

b) or reversing QE?...

A short thread🧵
Before Covid the Bank said it wouldn't start reversing QE until Bank rate was up to around 1.5%.

But Andrew Bailey wrote last June that it *could* start reversing QE first...2/
"In my opinion it may be better to consider adjusting the level of reserves first without waiting to raise interest rates on a sustained basis."...3/…
Read 10 tweets
6 Mar
We’re told that inflation is “Rishi’s nightmare”.

But should it be ours too? #Budget2021

A thread…📈🧵1/
UK inflation is just 0.7%.

But the argument is that it could shoot up fast as the economy reopens – partly because people spend all their lockdown savings at once & partly because of spillovers from the US where Biden is pushing through a 9% of US GDP fiscal stimulus...2/
The Spectator piece suggest this “could crush Britain’s economic recovery and follow the pandemic with a financial crisis”.

And fast rising US and UK government bond yields are cited as evidence that traders are betting on resurgent inflation...3/…
Read 15 tweets
4 Mar
*How* exactly is Rishi Sunak bringing austerity back to public services?


A thread…🧵1/
“There's absolutely no way in which anyone can say that's austerity, we're spending more money on public services than we were," Sunak said last November...2/…
But this week a chorus of public finance experts said austerity is indeed returning to the public realm.

So who’s right? And what’s going on?...3/
Read 16 tweets
4 Mar
If an industrial strategy council can't make it to three years, what chance of an industrial strategy lasting any longer?...
Note that the terms of reference document for the Industrial Strategy Council from 2018 refers to maximum six year terms for council members.

This clearly wasn't envisaged as a short-term project…
....Here's the letter from Business Secretary Kwasi Kwarteng to Industrial Strategy Council chair, Andy Haldane, saying the council will end on 1 April 2021 (which some might note is All Fools day)...
Read 4 tweets
4 Mar
Richard Hughes of OBR seemed concerned about the share of GDP projected to be raised by higher corporation tax yesterday:

"Highest level since the Lawson boom in the late 1980s and one seldom sustained for very long in the post-war period"...…
...but this from IFS shows that raising 3% of GDP from corporation tax is by no means out of line with other OECD countries... with looking at the total projected tax rate as a share of GDP (highest sustained level since the 2WW) looking at international context just as important, perhaps more, than UK history
Read 4 tweets

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