Zia Yusuf returned days after his dramatic resignation, to lead Reform’s DOGE team which aims to look at “wasteful spending” in councils using artificial intelligence, advanced data analysis tools and forensic auditing techniques. The scope of the review includes “contractual arrangements with suppliers and consultants, all capital expenditure, use of framework agreements and direct awards, any off-book or contingent liabilities, use of reserves and financial resilience…”
Financial resilience
Financial resilience is defined as the ability to withstand financial hardship and bounce back from unexpected events that impact income, assets, or overall financial stability. Having the resources and strategies in place to deal with shocks and maintain a secure financial future are paramout. Using any reserves to avoid cuts or for short-term benefit will only provide temporary relief.
The CFA established key areas which advise on using no biased views during audits.
- When looking at the area of savings, auditors must not include any optimism bias in the timing and scale of savings.
- They warn any tendency for unplanned overspends creates the need for greater cuts in subsequent years.
- The CFA draws attention to the risk of ‘ failures to plan ahead’, which are indicative of a lack of strategic thinking and an unwillingness to confront tough decisions’.
They also advise what true strong governance means. This has nothing to do with making a splash in the media or harsh threats to sack those who withhold information, which were some of the strategies used in Reform’s letter to council leaders. They define it as:
“The processes in place to support decisions that have a financial impact now or in the future must be robust and rigorous […]. In reality, this means ensuring that decisions have a sound evidence base, concise and understandable information is presented, time is allowed for adequate scrutiny, and advice or guidance is sought from subject matter experts and put into practice.” (CFA factsheet, p2)
Effective monitoring and openness is vital to success:
“It is important to recognise risks to delivery of the planned budget as early as possible. This requires not only robust reporting and review but a culture of being open about performance and delivery from a financial and service outcome perspective.The earlier these messages are delivered, the greater chance there is of mitigating or responding.” (ibid. p3)
Part of the openness is allowing participants to challenge. Different perspectives feed in important information.
Organisations should also be mindful of any undelivered savings.
Britain could do with a spending review
Some areas to consider outside of local government come to mind.
The cost of MPs salaries for starters – a DOGE style auditor could argue it is inefficient for a country to spend money on the salary of an MP when the person is often absent from important meetings and has several other jobs. MPs should be fully committed to their role, not part-timers.
Reform’s major project
Zia Yusuf argued at a conference last week:
“For too long British taxpayers have watched their money vanish into a black hole”.
Britain can already identify wasteful spending and actionable solutions based on past experience in the last decade where a huge proportion of our treasury resources have vanished into a black hole. This has been utterly detrimental to the country’s finances, impacted millions of lives and produced little in return. That black hole is of course Brexit and this project would be categorised as an anti-thesis vis-a-vis CFA recommendations: in short an auditor’s nightmare.
Reform would be the last party on Earth to admit it, but the facts and figures are there for all to see.
In terms of government efficiency, Reform has failed Britain on a monumental scale.
Brexit is the biggest example of self-imposed government inefficiency ever! It has not delivered the results it promised, such as clawing back £350 million per week for the NHS. This was a definite case of ‘optimism bias’ in terms of the savings we could make. Control of the NHS in this country stems from government. Labour is trying, but what it can do is limited by budget shortfalls caused by Brexit. The NHS also struggles with resourcing problems as many talented EU staff chose to leave Britain.
The red tape of Brexit consumed and continues to consume civil service time and effort. Theresa May set up en entire department for exiting the European Union (Dex EU). This created a large number of new civil service posts for a project which has delivered bad results. Any auditor worth his or her salt would call that out.
Undelivered savingsis a vital point to consider. Brexit did not deliver any savings and it carries on year after year…As this unravells, the full extent shows Britain faces extra costs from this project.
Undoing red-tape costs
Labour has started to roll back some of this damage by negotiating better agreements with Europe. Again, the government and civil service has spent time and effort re-negotiating our deal with the EU after Boris Johnson et al opted for a hard Brexit to satisfy the desires of their Bluekip/Brexit Party/Reform counterparts.
Departure from the Dublin Convention
Former Tory MPs revealed to Sky News that they only realised the impact of leaving the Dublin Convention after the Brexit deal was made. The Dublin Convention allows a country to send back asylum seekers to their first safe country of entry within Europe, should they attempt to claim asylum in another European Union state. At least a third of asylum seekers could be sent back to another country under this policy. Britain lost that right. The UK is the target of more people smuggling gangs thanks to a hard Brexit policy. Labour could seek to rejoin the Dublin Convention, but no doubt there would be cries of betrayal from Reform. EU membership perks paradoxically allowed us to control our borders in ways we cannot at the moment.
Ironically, our savings on the EU membership fees have increased costs in dealing with asylum seekers, an example of an unplanned spend in audit terms.
Security
Britain was a member of Europol, whose priorities include fighting human trafficking/people smuggling, terrorism and drugs. These are all benefits from which Britain could benefit, especially given the latest threats from Putin.
Reform would argue European laws brought with them too much red tape. Yet the agreements we signed up to for the single market and security brought with them a common operational model. Much of the so-called red tape from European laws was beneficial for average citizens in that it protected us and our rights. For example, employment rights, women’s rights, which were also improved via Europe, and data protection laws. Severing our ties with Europe reduced red tape for those fearful of the EU Tax Avoidance Directive and its influence on the bankers’ bonus limits.
The ECHR includes legal provisions which protect the human rights of every citizen and their rights to take a government to court should these rights be violated. Rees Mogg argued on GB News that the ECHR introduces red tape which prevents us from getting rid of refugees. This point was promptly corrected by Michael Heseltine. Rees Mogg forgets to mention the Dublin Convention and how this could be used to our advantage.
UK business inefficiency
Time-wasting on Brexit plagues British industry and commerce. Subject matter experts in business and finance, who argued against the self-harm of Brexit policies and many industry bodies were dismissed as ‘project fear’. Services professionals and creatives, who once used mobility frameworks in the single market to serve European customers, find themselves left with directories full of customers who they can no longer serve.
While the Trade and Co-operation Agreement has limited possibilities to trade with Europe, if any professionals submit a bid for tender for project work, they are quickly rejected owing to lack of clarity and brand damage from an all too hard Brexit deal. Submitting a bid takes a lot of time. Points are awarded to tendering parties according to selection criteria. Agencies likewise decided not to deal with UK freelancers for similar reasons.
I recently hired On You Cycle based near Darlington to repair a European bike. The owner of this firm mentioned he supports professional cycling teams on races in the EU. On each trip, he is obliged to fill out carnets for equipment which takes up extra hours at any ports. Readers will find a plethora of examples in the online documentaion of the Lords UK-EU services inquiry from 2021.
A clear operating model in the form of the single market meant we traded on the same terms. It cancelled out any ambiguity in project tenders and saved time when in transit to another EU country for both humans, equipment and products.
All of this inefficiency not only deprives Britain of financial gains via tax on business revenues, but indirect gains made though skills exchange. Labour’s Youth Mobility scheme seeks to redress this. In recent parliamentary debates, those present arguing in favour of the scheme discussed the advantages of forging relationships in business with European counterparts, especially financial services. The government is now talking about Erasmus.
As a nation, we no longer have such a resilient treasury. Looking at the full picture, it’s not an ideal position to be in from an audit perspective and not resilient enough.
The average Briton has noticed price rises in the supermarket, which Labour now hopes to reduce by their new Brexit deal negotiations. Britons on holiday notice irritating examples of red tape and increased costs. A notable recent example, spectacle frames produced in Europe are a third more expensive in the UK than in an EU country.
Conclusion
A party that is truly serious about addressing wasteful spening in the UK would look at spending on a project that so far has delivered nothing but red tape and financial losses and reverse the damage.
Omitting Brexit-related extra costs from the picture means an auditor would be looking at the problem through ideologically tinted spectacles and not carrying out an impartial audit.
The same goes for diversity and environmental programmes. We are aware of the cost and financial benefit of a council implementing renewable energy projects, as manifested in Durham council’s savings on energy bills of £21,000 per year from investments in solar panels. Banishing net zero projects would prevent the council from saving money in other ways. We are not given the full picture due to ideological bias.
Durham region lost out on money that came to it via the European Social Fund (SF) and European Regional Development Fund, including £3 million which was spent on a campaign to reduce youth unemployment. Local colleges in the North East received EU SF grants for students to take courses in skills shortage areas such as programming, IT, and plumbing.
The cost of having to borrow because of Brexit related losses means too much of our financial resources are left paying for the cost of those debts, a situation which the disastrous budget of Liz Truss made much worse. Labour needs to be braver and slash more red tape. To back this up, a DOGE-style publication on the cost of Brexit in simple terms is required. This should embolden Labour to discuss problems and implement solutions. This is way better than cutting budgets to those who need them without explanation.
The British civil service must operate in a neutral way and serve any elected government. So too should any auditors.
By not talking openly about the costs to us of any Brexit related losses, Reform’s audit team is presenting only half the picture and failing to meet the criteria stipulated by the Chartered Institute of Public Finance & Accountancy. Citizens have a right to know what is going on, without the theatre and publicity campaigns.
