Sunak to launch war on waste as public finances are hammered
RISHI SUNAK has threatened to withhold funding for poorly thought-out infrastructure projects as he launches a new Whitehall war on waste, amid mounting concern over the state of public finances.
The Sunday Telegraph can disclose that the Chancellor has moved to bolster the Treasury’s grip over the building of schools, hospitals, rail and roads by handing more power to experts who report directly to it and the Cabinet Office.
Treasury sources warned there would be “much more digging into the detail” of major projects proposed by government departments, with Mr Sunak acutely aware there is growing pessimism over the prospect of a V-shaped economic recovery.
While the Chancellor is fully behind Boris Johnson’s £100billion “Project
Speed” plan, he is also conscious of the need to keep a tight grip on the public finances and deliver value for money.
There is a growing row within the Conservative Party as to whether tax rises, spending cuts, or a combination, are needed, with the Budget fast approaching this autumn.
The new regime will see the Infrastructure and Projects Authority, the Government’s centre of expertise headed up by former executives at
Shell and Thames Water, run the rule over every stage of major projects.
This newspaper can also disclose that the Treasury has cast doubt on a £350million new headquarters for the body set up to replace Public Health England. While Matt Hancock, the Health Secretary, and Duncan Selbie, the outgoing PHE boss, are pushing for the base in Harlow, Essex, senior Treasury figures have savaged the business case and are calling for changes.
It is understood that Steve Barclay, the Chief Secretary to the Treasury, is drawing up a revised proposal before he sits down with Mr Sunak to decide whether to sign off on funding it.
In a letter sent last month, Mr Sunak told senior mandarins all plans must be submitted to the IPA, which will then review and recommend whether the project should go ahead as suggested.
The process will take place at each stage of a project, and will be a requirement rather than a recommendation. The IPA has recently been bolstered by the appointment of a new director of infrastructure, Jon Loveday, a former executive at construction giant Clancy and Thames Water, with more than 30 years’ experience in the sector.
Should departments ignore the IPA’s recommendations, Mr Sunak warned that the Treasury would consider withholding funding until it was
satisfied the recommendations had been properly implemented.
Treasury insiders said it would prevent a repeat of the disastrous handling of HS2 and Crossrail by previous administrations. Both rail projects have been blighted by repeated delays and have seen their budgets spiral.
A government source said last night: “The UK economy has taken a huge hit and it’s fair to say our public finances are now under significant strain.
“So now we really have got to get to grips with how money is being spent and scrutinise in close detail on what.
“The Chancellor is determined to ensure that, in these difficult times, taxpayers’ money is spent efficiently and that government projects deliver good value for money for people.”
Amid concern that poor project management has led to costly delays to government projects in the past, ministers will also have to take part in a new training programme to ensure they are equipped to deliver projects on time and to budget.
In his letter, the Chancellor said: “Maintaining discipline across all parts of major project delivery is vital to delivering on time and to cost, and to delivering for the citizens of the UK.”
A senior government source added: “There will be much more scrutiny of departments. The IPA will have more authority in their recommendations, with the Treasury enforcing them. It will be within our gift to withhold funding. There will be much more digging down into the detail, who is running the projects, whether costs represent value for the taxpayer.” Under the regime, it is likely that HS2 – which has suffered delays and seen its budget spiral from £33billion to more than £106billion before Mr Johnson intervened to cut costs – would have had major alterations made earlier. The IPA has for years raised concerns about its affordability and deadlines.
In his letter, Mr Sunak stated that government departments would need to “make the right choices at the right time”, with the objectives, business case, and full risk management for a project clearly laid out from the outset.
They will also be required to demonstrate they have the right “project leadership capability and capacity”, with Mr Sunak warning that many managers are “stretched too thinly across projects to deliver them effectively.” To get the green light, projects will need to prove that they have a “competent” leader in place, an appointment letter signed, the required training and a delivery plan approved with the IPA.
The letter goes on to state that departments that fail to submit draft proposals, known as “integrated assurance and approvals plans”, for projects will not be recommended to pass through the key review stages required to receive funding.