A Royal Commission on Overspend

We take it for granted now. Any major project in the UK’s public sector will either overrun or overspend, or, more usually, both. It is part of our way of life, a culturally embedded failing that we greet with a shrug – ‘it was ever thus’. We resemble goldfish in a bowl, swimming in circles and reacting with mild surprise every time we pass through the same little arch – ‘Oh look! There’s another one of those overspends, should we have an inquiry?”

It happens so frequently and to such detrimental financial effect that mere individual inquiries into each instance carry no credibility in exposing the real nature of the problem: a systemic, pervasive failure of forecasting, project management, financial control and contractual management. Here are some examples:

  • NHS Connecting for Health: ‘Originally expected to cost £2.3 billion over three years, in June 2006 the total cost was estimated by the National Audit Office to be £12.4bn over 10 years, and the NAO also noted that “…it was not demonstrated that the financial value of the benefits exceeds the cost of the Programme”. Similarly, the British Computer Society (2006) concluded that “…the central costs incurred by NHS are such that, so far, the value for money from services deployed is poor”. Officials involved in the programme have been quoted in the media estimating the final cost to be as high as £20bn, indicating a cost overrun of 440% to 770%.’ – Wikipedia
  • Crossrail: ‘The project was approved in 2007 and construction began in 2009 on the central section and connections to existing lines that will become part of the route. Estimated to cost £15.4 billion, in December 2018 it was announced that the project would require a £1.4 billion bailout.’ – Wikipedia
  • High Speed 2: costs have risen from an original £30 billion to £55 billion and rising.
  • In 2009 The Taxpayers’ Alliance conducted research and issued a report. Its conclusions were: ‘The total net overrun on 240 projects was more than £19 billion. The figures are from an opportunity sample of Government projects with official costings available. This is equivalent to over £750 per household in Britain. The average cost overrun of the sampled projects, including those that came in under budget, was more than 38 per cent. This is up 4 percentage points from our last survey in 2007. 32 per cent of the projects sampled overran, while 24 per cent came in under budget.’

Royal Commissions are inquiries called into matters of great importance and considerable public concern. There have been no new Royal Commissions called in the UK during the past twenty years. Perhaps overspend constitutes a can of worms that governments and civil servants are reluctant to open. This makes it all the more imperative that the issue be addressed, and addressed in a way that exposes the extent of the problem and investigates appropriate solutions – however embarrassing and unwelcome the findings.

4 thoughts on “A Royal Commission on Overspend

https://www.bbc.co.uk/news/business-49048823 : ‘The chairman of the High Speed 2 rail project has reportedly warned that its cost could rise by £30bn.

‘HS2 chairman Allan Cook has written to the Department for Transport to say the high-speed line cannot be delivered within its £56bn budget, according to the Financial Times.’ : https://www.ft.com/content/27ab2f5c-a976-11e9-984c-fac8325aaa04

So now there is an overspend on the overspend…

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