Those wasteful civil servants

Perhaps because I started my working life in the Treasury, I take a rather puritanical view about the way civil servants should spend the public’s money.

So I am with Tim in being outraged by this report that DTI officials apparently used public money to pay for expensive hotels, BMW hire cars, and cocktails. (I say ‘apparently’ because I know that these press reports rarely turn out to be completely accurate). 

In my view, civil servants should never charge alcohol to expenses, should use the cheapest hotels in which they can efficiently stay and work, and should, where possible, travel by public transport rather than taxi or hire cars.

I have had to travel quite a bit at the taxpayers’ expense, and in my experience, government departments have strict rules. For example, civil servants are not allowed to use Air Miles earned on official journeys for private travel; and we had to stay at pre-determined hotels selected for their value for money.

Sometimes appearances can be deceptive. For example, my department negotiated a sweetheart deal with a particular airline, using bulk buying power to get business class flights at economy rates – which may have given the impression to an outsider that the travellers were lording it at public expense when the deal was in fact rather good for the taxpayer (as well as benefiting the civil servants).  And civil servants often stay in well known business hotel chains at government rates which mean that the room rates they pay are no more expensive than a mid-priced hotel which would be less convenient and provides fewer facilities. 

So I don’t know if the DTI officials are guilty as charged, but if they are, I hope they will be properly reprimanded. The fact that this is in the newspapers confirms that it is the exception rather than the rule for British public servants to behave this way, and I hope it stays that way.

If there is one thing that annoys me as much as public servants spending my money wastefully, it is private firms spending my money wastefully. All those expensive hotels and business class sections on planes were not built for people spending their own money, you know.  They were built for business travellers spending your money. It all comes out of your pocket in the form of higher prices, lower returns on your investments, or lower wages.  And the waste of your money by private sector firms is, in total, much higher than the waste of your money by your government.

Right wing trolls across the nation are reaching for their keyboards with their free hand to remind me that the difference is that you have a choice about which private company you buy from, invest in or work for, but government extracts its money from you by force.   But the difference in choice is not in fact very great.  For a start, you do not have that much choice about private sector firms to buy from or invest in – it is in practice very hard to find one that does not overpay its executives or allow them to waste your money on expensive flights and hotels. Second, you do have a choice about government – if you don’t like the one you have got, you can vote to choose another.  The difference in choice, to the extent there is one, is one of degree.  And much, much more of your money goes on private sector waste than it does on public sector waste.

That is not intended to justify abuses of taxpayers’ money by public servants or anyone else.  But as the only member of the Senior Civil Service with a blog (as far as I know), when Tim expresses scepticism that all civil servants are "Simply selfless devotees of the common good", I feel compelled to say that I am similarly unconvinced that those to whom we hand our money in a free market are any less inclined to waste it.

15 thoughts on “Those wasteful civil servants”

  1. It all comes out of your pocket in the form of higher prices, lower returns on your investments, or lower wages.

    See also under ‘advertising’ (cf. ‘publicity’, ‘media relations’, ‘communications’…).

  2. Long ago I worked for a firm where senior people could travel First Class by train, and the rest of us Second Class except when accompanying someone entitled to travel First Class. We wore out our seniors, dragging them all round the country with us.
    “Your presence is quite essential, Geoff.” Heh.

  3. Dearime

    Sadly, such perverse incentives still exist in the civil service. If you are travelling as a group, you may travel at the class to which the most senior among you is entitled.

    I once travelled on a commercial flight to Brussels with the then Chancellor of the Exchquer. Like his officials, he was not entitled to travel business class on flights within Europe, so we were booked in economy. He and I, and a very senior Treasury official, duly took our seats at the back of the plane. But the press secretary had not realised that we would be travelling cattle class, and had booked a seat at the front of the plane. He was mortified to find himself sitting in a comfy leather seat in business class, while the Chancellor ate a curled cheese sandwich with his knees pressed against his ears at the back of the plane.

    Oh, how we laughed …

  4. A left wing troll responds….

    For a start, you do not have that much choice about private sector firms to buy from or invest in – it is in practice very hard to find one that does not overpay its executives or allow them to waste your money on expensive flights and hotels.

    If it’s hard to find a firm that can’t undercut competitors, then surely the executives are receiving the market wage?

    Second, you do have a choice about government – if you don’t like the one you have got, you can vote to choose another.

    Can I? Really? How many decimal places does it take for a probability to become zero?

    I do think we have a choice about government, but it’s nonsense to say that the choice stems from being able to vote for an alternative. Complete nonsense. We do have the ability to opt out, however, if we want. The fact that emigration is so costly underlines that it is far easier to express your preferences in a market than in a political context.

  5. Anthony

    Your point may sound right in theory; but in practice we collectively waste a huge amount of money on business class travel, expensive hotels, executive pay and (as Phil pointed out) marketing and advertising. The source of gravy for that train is not the public sector, it is the private sector. Most of us would not choose that our money be spent that way if we had a choice. Indeed, when our own money is at stake, we don’t generally choose it for ourselves. So you may want to believe that we have a choice about whether our money is wasted in this way, but clearly we don’t, or it wouldn’t be.

    Owen

  6. So you agree that it sounds right in theory, but not in practice.

    Well if you think that marketing and advertising is a type of waste, then you don’t understand the theory. They’re information, and decided upon in a pretty competitive market. A monopoly would have no need for advertisement, surely?

    You seem to be claiming that firms are operating a type of cartel at the expense of the consumer, but if they were a cartel they wouldn’t compete. As I’ve said before, I think neoclassical theory is wrong. Either defend it, or be willing to consider the juicy alternatives.

    So apart from having no basis to say what counts as waste (as I’ve said, information isn’t waste), you also think that it’s a waste of resources if people we give money to spend it in a way we otherwise wouldn’t. But as long as you voluntarily engaged with that firm, you benefited from the exchange. Not only are you being made better off for having done so, I dare say that the asymmetry of preferences (you for cheap things, and the businessmen for more expensive things) is the crucial motivation behind exchange.

    The whole point of making a trade, is giving our resources to someone else with an alternative use in mind. It may well be their desire for expensed lunches, but the only criticism of that is an ethical judgement, laced with envy.

    Owen replies: Anthony – you are deluded if you think that advertising is “information”. Advertising is a conspiracy to extract rent from consumers by segmenting markets through differentiation. The information content of advertising and marketing is close to nil. Firms do not compete in the way that you imply – and advertising is a large part of firms’ effort to ensure that they don’t. (I am generalising wildly, of course).

    I accept that I benefit from voluntary exchange. But it does not follow that the wasteful behaviour by firms is not costly to me – I could benefit even more if firms did not waste my money, and could thereby charge me less.

  7. I’ve heard that argument applied to branding, but advertising as a whole? Come off it…

    The reason you think that is because in your static, Scientific, closed model of neoclassical economics there’s no false trading, no entrepreneurship, and no non-equilibrium prices. (Right?)

    Hence any advertising pretty unaccountable.

    In a world that changes (which is surely a world we all want to be in, and all feel we exist in), prices aren’t given. And they’re not dictated by power either. They’re the spontaneous outcome of discovary, and yes, advertising is therefore a means to arbitrage.

    Which companies are you thinking of, who’s wasteful behaviour is costly to you? The cost to you is the price that you pay – and you accept that it’s a fair price. You could benefit even more if firms only produced products that you personally wish to buy, but that’s a very odd view of how an economy operates.

    Different companies have different policies regarding expenses. There’s no way that we can say “company X is spending to much” or “company Y is spending too little” (you accept that there’s an optimal level somewhere). It’s left to the market, to weed out those that waste their profits.

    My point is that it’s far more evident that wasteful firms are weeded out, than wasteful government.

    Owen replies: Anthony – this thread is now a bit off-topic – so I’ve put up a post at The Sharpener explaining my view in more detail.

  8. That trip would have been with Ken Clarke then?

    “For a start, you do not have that much choice about private sector firms to buy from or invest in – it is in practice very hard to find one that does not overpay its executives or allow them to waste your money on expensive flights and hotels.”

    WalMart is famous for exactly such things. Even the Chief Exec doubles up in a hotel room when on the road. The private sector does, very much, offer us choice.

    Owen replies That’s a novel view: the existence of Walmart offers us more choice …

  9. Having lived in a country with a State Monopoly of food distribution yes, I’d think so actually.

    Owen replies: That sort of argument is beneath you, Tim. There are options in between Walmart and Gosplan.

  10. On the wasteful “civil servants” at the DTI, it appears from the press reports of the latest episode that most, if not all, of the civil servants involved are on secondment from the private sector, not career civil servants (see extract below). I don’t say that career civil servants would never cheat on their expenses claims or exploit them for extravagant behaviour, but I do think that the great majority of ‘permanent’ public servants seek to observe that almost indefinable but authentic thing, the public service ethos; and it would be surprising if people seconded from business or the City always and in all cases steer by that particular star.

    The Guardian reported on 20 October:

    This is the second recent collision at the DTI between traditional civil service rules and the more commercial ethos introduced since Whitehall started hiring large numbers of private sector executives. Last week, the Guardian disclosed that another ex-private enterprise official at the DTI, Martin Banfield, an export promoter, had tried to take a Swiss bank payment of $200,000 (£115,000) as a kickback after arranging a machinery export deal.

    Mr Train was appointed to his post at UK Trade and Investment, a joint DTI-Foreign Office group, in 2000 after being seconded to the DTI from the privatised Eastern Electricity company. He saw his role as one of promoting trade missions to the Caribbean, as London had a 20% per cent ethnic minority population.

    Earlier this year, a dispute developed between Mr Train’s operation and another state body, Business Link for London, which provides advice to local firms. Mr Train ended his department’s contract with it this spring.

    Judith Rutherford, the chief executive of Business Link, said yesterday: “Concerns were raised with me under our whistleblowing policy, and I simply passed them on for investigation to Sir Stephen Brown, chief executive of UK Trade and Investment”. Sources at the organisation denied any malice, and said the allegations were unconnected with the ending of the contract. Mr Train was suspended on May 20. The accountants Ernst & Young were called in and conducted a two-week investigation, while UKTI staff were warned to keep the matter quiet.

    Brian
    http://www.barder.com/ephems/

  11. In relation to advertising and all that:

    I accept that I benefit from voluntary exchange. But it does not follow that the wasteful behaviour by firms is not costly to me – I could benefit even more if firms did not waste my money, and could thereby charge me less.

    But I’d be out of a job, and I don’t mind my job (when I get to do it). My job is to present informaton to people (annual reports and suchlike) in a pleasing way. Sure, it costs the client more than simply hacking it together in Word, but just think of all those industries it supports! It supports me, and hundreds of thousands like me, the software industry, the computer industry, the print industry, etc. etc.*

    Yes, product prices would be lower if advertising did not happen, but then there’d be a lot of people out of work too**. More here.

    DK

    * I always take the cheapest travel option, believe me…!

    ** Yes, I know that if advertising had never happened we would have found some other outlet for our talents, but you get the gist.

    Owen replies: Then, Mr Kitchen, that is the last time I take any shit from you about vested interests! 🙂

  12. In relation to advertising and all that:

    I accept that I benefit from voluntary exchange. But it does not follow that the wasteful behaviour by firms is not costly to me – I could benefit even more if firms did not waste my money, and could thereby charge me less.

    But I’d be out of a job, and I don’t mind my job (when I get to do it). My job is to present informaton to people (annual reports and suchlike) in a pleasing way. Sure, it costs the client more than simply hacking it together in Word, but just think of all those industries it supports! It supports me, and hundreds of thousands like me, the software industry, the computer industry, the print industry, etc. etc.*

    Yes, product prices would be lower if advertising did not happen, but then there’d be a lot of people out of work too**. More here.

    DK

    * I always take the cheapest travel option, believe me…!

    ** Yes, I know that if advertising had never happened we would have found some other outlet for our talents, but you get the gist.

    Owen replies: Then, Mr Kitchen, that is the last time I take any shit from you about vested interests! 🙂

  13. As a civil servant I can add a little and maybe a comment that will in the long run get me into trouble. I know that some senior civil servants can get Hotel rooms paid for in which they carry out little “meetings” with junior civil servants.

    This is what some of our taxes are going towards. I know that this as well as the meal before hand goes down as expenses – I thought senior civil servants were supposed to set an example of decorum to the rest of us.

    Owen replies: You must work in a much less austere department than I have. My sense is that at-work relationships in the departments I’ve worked in have been rather less than I hear about from my private sector friends. Perhaps I am just naiive. And I don’t believe that civil servants are hiring rooms on expenses solely for the purpose of liaisons: what would they put on the claim form?

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