Government waste
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Sir Philip Green has completed a report on the vast amount of government waste that is inherent in the UK public sector.
Highlighting the problem of X-inefficiency and huge diseconomies of scale, the black hole that is the public finances is due to the fact that, unlike private enterprise, the profit incentive is not so strong to motivate efficiency drives - after all, its the tax payer (or future tax payers) that pick up the tab. There is a lack of accountability and monitoring, with everything seeming to get lost in the big behemoth that is the public sector (e.g. after a forecast of 10,000 credit cards, it turned out there were 138,000)...
Departments often have no idea what they are spending taxpayers’ money on. A staggering £20 billion a year is spent on property alone, with £10 million going on renting empty offices, including in central London.
Sir Philip said: “The conclusion of this review is clear - credit rating and scale in virtually every department has not been used to make government spending efficient.
He discusses how any other private corporation that would be the size of the UK government, would acquire all sorts of economies of scale using its monopsony power to attain bulk buying discounts, on its purchases.
“Every pound that we can take out of the cost of government is a pound we can protect on the front line. Our over-riding aim is to protect the quality of front-line services and to protect the jobs of dedicated public sector workers.” - highlighting the idea of opportunity cost.
See Sir Philip Green reviewing the report here.
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