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20.01.12

Quango bonfire could cost more than expected - NAO

The National Audit Office (NAO) has questioned the value for money of the Government’s ongoing cut in the number of quangos, and suggested that ministers had underestimated the cost of transferring functions from axed public bodies to other parts of Whitehall.

The NAO estimates the costs to be at least £830m, almost double the £425m originally suggested by Government.

In October 2010, the Government announced that 192 quangos would be scrapped from 2014 and more merged. Whitehall departments will take over the functions of 65 public bodies and another three will be transferred to local government.

The changes could save £2.6bn by 2014/15 but the NAO suggests this target could be in doubt due to the cost of transition.

NAO said that departments “do not have a good enough grasp of the ongoing costs of functions being transferred to other parts of Government, or of the one-off transitional costs of the changes”.

Amyas Morse, head of the NAO, added: “The Cabinet Office and departments will have successfully achieved the largest restructuring of public bodies for many decades, and provided clearer accountability to elected politicians for some spending, if they succeed in carrying through all the changes they plan.

“However, they are not doing enough to secure value for money. I would expect departments to have a better grasp of the costs of reorganising bodies and of carrying on functions that have been transferred.”

But a spokesperson for the Cabinet office said: “We have never claimed that this is the complete picture, which is why our current estimate is in the range of £600m to £900m. This factors in the range of potential costs where departments are not yet in a position to give robust figures.

“It is not true to say that the Government has underestimated the cost of reform and it should be noted that our own estimates overlap with those provided by the NAO.”

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