The Cost of Quangos - Reality

Recently a small discussion has occurred about the cost of quangos to the UK taxpayer and how abolishing them would lead largely to the scrapping of income tax. This is LPUK policy, although is it very vague as to the measures that would be used to lessen government spending and what areas. It's also two years out of date and ignores the huge hole we are now in.

However, quangos are highlighted. The numbers here are listed as £64 billion in 2006/7. In turn, the media have attempted to highlight this issue as costing £90 billion. This number is backed by the Taxpayers Alliance that states current spending is £64 billion. The small problem here is that the government numbers state that it was £34.5 billion, because they see certain key services that a techinically defined as quangos as being, well, key services.

All in all however, scrapping it would not make that much of a dent in the income tax receipts. Here you can find a list of all taxes received by HMRC as of December 2009, currently income tax measures £134.4 billion, a drop from above £147 billion in the years before and is about 38% of all taxes collected.

The expenditure on quangos, £34.5 billion, is equal to the tax raised through, roughly, corporation tax. Even at the £64 billion level that is still about two thirds of all national insurance receipts.

I don't agree with many quangos, but many do serve a purpose. On the Taxpayers Alliance list, bodies such as the Driving Standards Agency, OFSTED, the OFT, the Civil Aviation Authority, The Passport Service, the Office of Rail Regulation, and the UK Atomic Energy Authority are listed. Although these may be classified as quangos, and I don't for a minute doubt the waste caused, they do serve a purpose.

Indeed, many quangos are fundamental. The Police Complaints Commission may well have a serious problem controlling its budget, but its purpose is valid. It used to be that the police would investigate themselves, now they don't. To reverse that system would not in reality save any money at all, as the systems in place at the IPCC would simply have to be transferred in house.

The same goes with the Legal Services Authority, the provider of legal aid. It has seen it's spending lowered and its efficiencies increased, but again I don't doubt it could do better. But its purpose is incredibly important, that is the upholding a fundamental principal of English law and something that our entire culture is based upon - the right to legal representation in order to defend yourself from accusations.

Here's a spreadsheet of every quango in the country as classifed by the Alliance. Everything that comes under Law and the Courts is a quango it states. That includes the Land Registry, the Court Service, the Law Commission.

All the museums are listed, at a cost of £308 million, access to which is pretty central to many people. However, Education by itself takes up about £19 billion of the total.

Many quangos are totally pointless and are there for political reasons, such as equality, but at the same time they each take a relatively small amount of money. They should be scrapped, but the savings are minimal. Some, such as Education, the Scottish Executive, and Art could be largely gotten rid of. The Defence quangos add up to a near £9 billion, many of which could surely be merged or lost.

In fact, if you lost many of them, perhaps half the £65 billion would be saved, which is where the government figure comes from. After that you start going into territory where you are scrapping bodies that have been made independent for a reason, such impartiality or independence from government. They are classified as quangos, but in reality are services that any government would have to provide.

So, people are correct to rile against quangos, but the savings offered by getting rid of those that really aren't needed or wanted doesn't go anywhere near paying for the scrapping of income tax. In fact you would be looking at a short fall of about £70 billion. Put it this way, we're spending close to £30 billion a year just in interest payments.

Here I am not defending quangos. I think that many are a total waste of time and should be cut, many are grossly inefficient in the way they spend their money. However, reality needs to kick in when discussing a term like QUANGO, not just what it means, but what is classified as one. Many are classified as quangos simply because of the structure they have been given, but even if that were changed they would not be abolished because of the service they provide.