Reeves vows ‘no repeat’ of HS2 fiasco as she announces clampdown on government waste

Rachel Reeves has today vowed to wage a war on government waste as part of her commitment to spend taxpayers’ money responsibly and avoid another HS2 fiasco. 

Speaking at the Labour Party’s annual conference in Liverpool, Reeves accused the Conservative Party of raising taxes twenty-five times “while allowing the wealthy to avoid taxes, keeping loopholes open and letting government waste spiral.”

In response to the Conservatives’ chaotic handling of HS2, she pledged that an incoming Labour government would grip the speed and cost of major infrastructure projects by setting up a new, central cross-departmental infrastructure acceleration unit. 

The unit would be responsible for ensuring crucial national infrastructure projects are delivered on time and on budget - and report directly to the Prime Minister and the Chancellor. 

Reeves also announced that she had tasked Labour’s Shadow Chief Secretary to the Treasury, Darren Jones, with conducting a review of how a future Labour government can deliver major projects more effectively, on time and on budget.

“I will not tolerate taxpayers’ money being treated with the disrespect we have seen over recent years. I will not turn a blind eye to dither, delay and incompetence. I will hold those responsible to account. And I will demand action when they are not delivering value for money,” she said.

Clampdown on Tory waste

In her speech, the Shadow Chancellor announced an estimated £4 billion clampdown on government waste, by:

• Reinstating sign-off procedures on procuring consultants, with a target to reduce spending by half – or £1.4 billion – over the next parliament, retaining valuable external expertise where it is needed and getting departments to plan ahead for what skills will be needed over the next decade.

• Stopping taxpayers’ money being wasted on unnecessary ministerial private jets by instructing officials to enforce the ministerial code’s rules around when it is appropriate to take a non-scheduled flight.

• Appointing a ‘Covid Corruption Commissioner’ to examine COVID contracts line-by-line, with powers to bring together and, drawing on existing budgets, instruct agencies to pursue and recover money lost to fraud, waste and non-delivery during the pandemic. Estimates suggest that up to £2.6 billion of taxpayer money lost to fraud could still be recovered.

Rachel Reeves, Labour’s Shadow Chancellor, said:

“I didn’t come into politics to raise taxes on working people. Indeed, I want them to be lower.

“But the Tories have piled twenty-five tax rises on the shoulders of working people and businesses, while allowing the wealthiest to avoid taxes, keeping loopholes open, and letting government waste spiral.

“Taxpayers’ money should be spent with the same care with which we spend our own money. I remember my mum would sit at the kitchen table, checking her receipts against her bank statements. We weren’t badly off, but we didn’t have money to spare. With my mum every penny mattered.

“I learned that same lesson at the Bank of England responsibility must always come first. But for too long, Tory governments have allowed money to be wasted and taxpayers defrauded.”

“So Labour will wage a war against fraud, waste and inefficiency.”

On the cancelling of HS2, she said:

“Just look at the fate of HS2. A major transport project lost, another promise broken because the government could not keep costs under control.

“By the time the government even recognised they had a problem, the project was already £30 billion over budget. The question must be: How was it ever allowed to get to that point?

“If I were in the Treasury, I would have been on the phone to the Chief Executive of HS2 non-stop. Demanding answers – and solutions – on behalf of taxpayers, businesses, and commuters.

She added:

“It is incumbent on government to make sure major projects are delivered on time and on budget. I will not tolerate taxpayers’ money being treated with the disrespect we have seen over recent years. I will not turn a blind eye to dither, delay and incompetence. I will hold those responsible to account. And I will demand action when they are not delivering value for money.”

Ends

Notes

Cross-departmental infrastructure acceleration unit

Labour would grip the speed and the cost of major infrastructure projects by setting up a new, central cross-departmental infrastructure acceleration unit, reporting to the Prime Minister and the Chancellor. Currently no department or directorate is responsible for tracking implementation or speed and consistency of decisions, and national planning policy is largely written by departments responsible for that specific sector. The unit will monitor nationally significant infrastructure projects and have joint responsibility for authoring and updating National Policy Statements, ensuring they support economic growth and energy security. 

Tackling Covid fraud, corruption and waste

The Conservative government has lost billions of taxpayers’ money to dodgy contracts, waste and fraud. 

The government suspended its usual procurement processes during the pandemic and relied heavily on a highly secretive ‘VIP fast lane’ for procurement of goods such as PPE which has subsequently been found to be unlawful by the High Court. Department of Health annual report reveals an estimated £8.7 billion of public money has been wasted on unsatisfactory, unusable or overpriced PPE. (Source: Covid-19: Government writes off £8.7bn of pandemic PPE - BBC News).

Analysis shows that £3.5 billion of pandemic related contracts were awarded to businesses who are directly linked to the Conservative Party or have donated to them. (Source: Covid: Government's PPE 'VIP lane' unlawful, court rules - BBC News).

A Labour government will pursue every pound of public money that has been inappropriately lost from pandemic related contacts, fraud and waste. We will create a powerful Covid Corruption Commissioner to help tackle the waste, fraud and dodgy contacts signed off by the government during the pandemic. The Commissioner will examine contracts line by line and be given powers to bring together agencies and, drawing on existing budgets, direct efforts to recover fraudulently lost public funds and ensure justice for taxpayers.

Analysis provided by the House of Commons’ Library reveals the range of estimated fraud. Labour believes action to reduce the scale of COVID fraud could save taxpayers £2.6 billion, or potentially up to £6.2 billion. This estimate is based on House of Commons Library figures drawing annual reports from BEIS and HMRC and is calculated as the difference the central estimate and lower estimate of covid fraud and error.

Halving management consultancy spend

Spending by central government on management consultants has quadrupled over the last six years, to £2.8 billion in 2022. (Source: The Times (2023) Ministries accused of waste over £2.8bn bill for management consultants).

While some spending on consultancy services to bring in external expertise is essential, National Audit Office research has found that expert skills cost around twice as much when brought in from outside compared to in-house. This means that in many cases the government could deliver the same outcomes at a lower cost within the civil service. (Source: National Audit Office (2016) Use of consultants and temporary staff).

The increase in consultancy spending has been driven by Brexit and then the pandemic but has been enabled by the gradual loosening of controls and sign-off procedures on consultancy spending. Previously, contracts with consultancy firms that exceeded more than £20,000 or lasted more than nine months required central authorisation. (Source: The Guardian (2023) Ministers quietly scrap limits on Whitehall spending on consultants).

A National Audit Office investigation found that the rules that have now been scrapped encouraged departments to “assess their proposals more rigorously,”, with evidence from departments suggesting that the rules did act to reduce spend on consultancy and temporary staff. (Source: National Audit Office (2016) Use of consultants and temporary staff).

Labour will aim to halve spending on consultants over the parliament, saving £1.4 billion in consultancy costs that could be used to build capacity within government. We will do this in two ways: 

• First, by reinstating sign-off controls that were removed earlier in 2023. However, unlike the heavy-handed approach of the past, we will include sensible exceptions for smaller procurements in priority areas and in departments that can demonstrate they are in control of consultancy spending. We would work in Government to set sensible thresholds work in curtailing unnecessary use of consultants without it being burdensome and delaying important decisions unduly.

• Second, we would require departments making a submission to assess whether the skills they are bringing in from outside might be needed frequently over the next 3-5 years. To inform long-term staffing strategy, departments will be asked to carry out a longer, ten-year assessment of what skills might be required over the next decade. This will help departments identify those skills that will be needed but are not available in-house.

Reducing ministerial travel spending

More and more trips taken by ministers are being completed at extortionate cost using non-scheduled flights:

• In 2009/10, under the last Labour government, almost two thirds of the Foreign Secretary’s flights were made using scheduled flights. (Source: Cabinet Office (2010) Overseas Travel by Ministers 1 April 2009 – 31 March 2010 (counting trips that combine scheduled and non-scheduled in both categories)

• In 2022/23, just 13 per cent were scheduled. (Foreign and Commonwealth Office (2021) FCO ministerial gifts, hospitality, travel and meetings)

• In 2022/23, the total cost of non-scheduled flights for all secretaries of state and the three prime ministers was almost £5m (£4.7m). (Source: Calculated using ministerial travel data including Cabinet Office (2023) Cabinet Office: ministers' transparency publications) 

A Labour government would commit to enforce the ministerial code around air travel for ministers.

The ministerial code states that “non-scheduled flights may be authorised when a scheduled service is not available, or when it is essential to travel by air, but the requirements of official or Parliamentary business or security considerations preclude the journey being made by a scheduled service”.

Labour will instruct the Cabinet Secretary and other officials to enforce this more vigorously, including giving Accounting Officers signoff on non-scheduled flights. This would not prevent ministers who need to from travelling on non-scheduled flights, but it would stop the worst practices, where scheduled flights are available but are turned down by ministers.

Capital investment review

Darren Jones, Labour’s Shadow Chief Secretary to the Treasury, will conduct a review to look at ways we can improve delivery of major capital projects covering energy, defence and IT.

The review will speak to experts with experience of delivering major projects, including experts in project management, finance, procurement, planning and engineering.

The review will be ongoing and will inform Labour’s policy development in opposition, as well as supporting an incoming government to make quick improvements to project delivery to secure the maximum benefits from important major projects that are currently live.