Waldegrave targets quangos for more cuts

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Political Correspondent

The Government launched a drive yesterday to cut the number and running costs of quangos in the wake of "Draconian" cuts in civil service bureaucracy announced in the Budget.

William Waldegrave, Chief Secretary to the Treasury, said that quangos were his next target. In Tuesday's Budget, the Chancellor, Kenneth Clarke, announced a 5 per cent cut over the next three years in Whitehall's pounds 15bn running costs, amounting to a 12 per cent cut taking into account inflation.

Mr Waldegrave said: "There is a huge fringe of non-departmental public bodies surrounding government, some of which have managed to escape from similar levels of pressure, because they are self-financed. They don't for example identify their running cost bureaucracies in the way that central government does."

He named one quango in his sights. "There are some very big animals out there - like the Health and Safety Executive."

The HSE has an annual budget of around pounds 230m, of which about pounds 40m is self-financed, partly raised from licence charges. But a source in the HSE said yesterday: "We certainly have not been immune from cost-cutting pressures."

Mr Waldegrave said he wanted to see cuts in the running costs of quangos, which he estimated at pounds 10-12bn a year, to match the 12 per cent real-terms cuts in Whitehall.

He told a Treasury news conference: "The Government has already had considerable success in reducing the number of quangos and improving the efficiency of those that remain. But we intend to make further efforts."

He announced a review of controls of administration costs, of the scope for further cutting the numbers of quangos and of ways to monitor how they achieve their objectives.

The Labour Party accused the Government of sponsoring a huge growth in the number of unaccountable and unelected bodies, such as NHS trusts. Andrew Smith, Labour's Treasury spokesman, said yesterday: "It must not be forgotten that it was the Tories who initiated the proliferation of the quango state, frittering money away on bureaucracy, new logos and keeping their friends in 'nice little earners'. But needless to say these measures do not go far enough."

The initiative follows the three-year cut in Whitehall running costs, condemned as "Draconian and devastating" by civil service unions. The cut followed two years in which the cash spending on administration was frozen. It was this measure which Peter Lilley, Secretary of State for Social Security, said "fills me with despair" in a leaked letter during the spending negotiations.

Mr Lilley, speaking on BBC Radio's Today programme yesterday, said: "We managed to reach a sensible settlement with ring-fenced money going to enhance the work against fraud - that was my main concern."

Mr Waldegrave defended the overall cut in running costs. "These savings will not reduce services. The Citizen's Charter has shown that standards can rise with lower costs.

"We are also trying to abolish bureaucracy wherever we can. There are now 506,000 civil servants - fewer than at any time since the war. The reductions in running costs should help bring the numbers well below 500,000 next year," he said.