A central feature of the divide between right and left is the role of public spending. But is it necessarily a left/right issue? Is all public spending inherently “good” or “bad”? And should we take the structure of central government spending as a given? Why, for instance, does the UK need a Department for Culture, Media and Sport (or Department for Culture, Media, Olympics and Sport to give it its full title)?
We managed perfectly well without such a department until 20 years ago. Its various current responsibilities were spread around a variety of Whitehall departments, including the Home Office, Environment, Education, Business and the Privy Council. So a seminar on February 8th, organized by the free-market think-tank, the Institute of Economic Affairs, asked the direct question: should we abolish the DCMS?
Quickly dubbed the Ministry of Fun, the Department of National Heritage was created by John Major in April 1992, two days after he won that year’s general election. One motive was ostensibly to give the promised National Lottery a distinct Whitehall base. Others saw the creation of this new cabinet post as a political reward for David Mellor, who, as Minister of State at the Home Office, had helped steer through the Broadcasting Act of 1990, with its controversial auctioning of the ITV franchises.
Unfortunately for Mellor, the fun only lasted five months, at which point various press revelations forced his resignation: as The Sun so elegantly put it: “from toe job to no job”. His successors included Peter Brooke, Stephen Dorrell and Virginia Bottomley, before Tony Blair’s victory in 1997 saw the department expanded and re-defined as that for Culture, Media and Sport. Martin Le Jeune, one of the IEA seminar speakers, and once a civil servant in the Office of Arts and Libraries, noted that this was the first time any British government had had the courage to use the word “culture” in the title of a Secretary of State.
Both Chris Smith and Tessa Jowell enjoyed lengthy stints in that enlarged role: James Purnell, Andy Burnham and Ben Bradshaw much shorter ones. Although the job is quite high profile, heavyweight politicians see it as too marginal to be a base for building a career. Both Purnell and Burnham were in and out within a year.
The fact is that the DCMS is by far the smallest spending department in Whitehall. In normal times it is responsible for just £1.6 billion of the state’s £700 billion of annual expenditure: less than a third the amount that just one of its clients – the BBC – spends every year. Last year, this year and next year, that £1.6 billion is inflated by spending over £1 billion a year on the Olympics.
The theory behind the DCMS was to bring together a collection of seemingly connected responsibilities that had previously been spread around Whitehall. It is not obvious, however, why gambling and alcohol licensing (surely better run from the Home Office) need to be aligned with broadband rollout (surely better run from the Business Department). There also seems to be a strange mis-match between the Department’s responsibilities (broadcasting, libraries, museums, sport and tourism) and its stated strategic priorities: children and young people, communities, delivery, economy and the Olympic Games and their legacy.
In the Conservative preparation for the election, and in the DCMS strategic plan, two subjects loomed large: launching local TV and cutting back on the media regulator, Ofcom. Indeed, Jeremy Hunt who shadowed DCMS before his appointment as Secretary of State in 2010, had long been on record as regarding local TV as the biggest gap in our broadcasting landscape. Local TV is being pursued energetically, but the tiny role it is likely to play in the rich media mix the UK enjoys seems somewhat disproportionate to the amount of effort and money being expended to launch it. Likewise, there is little sign as yet of restricting Ofcom’s activities: indeed, Hunt’s number two, Ed Vaizey, went on record last month as saying that Ofcom was an exemplary regulator.
So how much do we need the DCMS? Hunt has already partly answered the question himself: he is cutting his staff and his administration costs in half. Oddly enough, the DCMS has also quietly chopped down the stated value of the creative industries in the UK – for which it has policy responsibility – from £59 billion a year to £36 billion. Apparently, this was a statistical correction, occasioned by removing consulting and software programming from the definition of creative industries.
But there is a serious point to the question. It goes without saying that all the functions carried out by the DCMS could either be dropped or re-distributed around Whitehall, broadly along the pre-1992 lines. But would that undermine an attempt to deliver what used to be called joined-up thinking within government? Or could these functions usefully be joined up with similar functions in other departments? For instance, there is already joint responsibility for Ofcom, shared with the Department for Business, Innovation and Skills (BIS). Indeed, but for Vince Cable’s foolish utterances about Rupert Murdoch, responsibility for the proposed News Corp/BSkyB merger – Hunt’s most visible public role in the first half of 2011 – would have remained with BIS, where it logically belongs.
More importantly, the DCMS lacks clout. A tiny department is poorly placed to attract high-flying civil servants. It is no secret that clients of the DCMS, and top mandarins in the larger departments of state, regard the quality of staff there as low. Culling half of them will be no great loss, in the eyes of those with that opinion. But the biggest drawback of lacking clout is that even those you are designed to serve end up being short-changed.
In 1999, Gavyn Davies – before he became the BBC’s chairman – wrote an extensive report on the future funding of the BBC. He concluded that a digital licence fee was necessary to fund any further extension of BBC services. The BBC – a little reluctantly – concurred. Chris Smith, the Secretary of State, agreed. And then ITV and BSkyB joined forces to lobby against a digital licence fee, arguing that it might damage their own ventures in digital pay-TV. They didn’t bother with Chris Smith, or even with Gavyn Davies’ friend, Gordon Brown. They went straight to Tony Blair. The digital licence fee was dumped.
The accepted wisdom is that the “luvvies” and the media enjoy having their very own ministry. Capture is not very difficult, and one has only to read the weekly email from Ed Vaizey’s office to understand that this is the most touchy-feely of departments. Whom did Ed meet last week? The children’s laureate, Julia Donaldson; Susie Hargreaves of the Internet Watch Foundation; David Way of the National Apprenticeship Service; Stephen Moore of MediaCinema; Anthony Jones of the Wedgwood Trust; and Michael Gove, Education Secretary, whom you would have thought he might anyway have bumped into in the House of Commons. I’m sure we feel better knowing all that.
All government departments experience the problem of both representing and policing the special interests within their remit. Is putting yet more lottery funding and tax breaks into the British film industry good news or bad news? Good for the industry? Arguably. Good for the taxpayers and the mugs who cannot work out that the lottery is the worst value bet you could make? Arguably not. Conversely, when Vaizey and Hunt abruptly wound up the UK Film Council, there were cheers from those who complained that under Labour, the DCMS had been thoroughly luvvied-up, with a dozen or more film and telly peers in the House of Lords.
Yet it turned out that the department had no idea how it would replace the Film Council, or its functions, and the spatch-cocked outcome shows no signs of making any savings. Indeed, the National Audit Office concluded: “The Department’s decision in 2010 to close and merge a number of arm’s length bodies was not informed by a financial analysis of the costs and benefits of the decision. The Department did not obtain sufficient financial data about the bodies and based its decisions on estimates that did not take account of the full costs of closure such as lease cancellation, redundancy and pension crystallisation costs. The decision was also not informed by an estimation of future savings or what the pay-back period would be.”
We have yet to see whether the change of government will end the weak financial management that has characterised the department. The most recent NAO verdict was scathing. “The Department has a history of over-committing its budget allocations across its arm’s-length bodies. In April 2009, initial forecasts for 2009/10 showed capital budgets had been over-committed by £95 million, and in 2010/11 by £110 million. The Department had to negotiate with HM Treasury for access to an additional £120 million of budgetary cover and find £72 million of reductions in planned expenditure.”
Given that the DCMS capital budget in 2010/11, excluding the Olympics, was just £200 million, an over-commitment of £110 million seems pretty extraordinary.
And yet, and yet. If we look at the DCMS budget for this year, of the total non-capital spend of £1.656 billion, £540 million goes on museums and galleries, £388 million on the Arts Council, £228 million on media (including £90m on the Welsh language channel S4C), £176 million on sports bodies like Sport England and UK Sport, and £166 million on heritage. Of course, one could argue – as some speakers did at the seminar – that the amount spent on sport (for instance) was disproportionate, or even wholly unnecessary; but departmental administration costs are just £51 million.
Unless some of these activities are to be abandoned then closing the DCMS will simply move them elsewhere in Whitehall. Of course, they may be better managed there, but a decision to reduce their cost would be independent of whether the DCMS survives or not. Even the administration costs might not be entirely eliminated, if some are inevitably attached to managing the arm’s length bodies rather than the department itself.
As it happens, S4C (reluctantly created 30 years ago by Mrs Thatcher, in response to a hunger strike by a Welsh Nationalist MP, Gwynfor Evans) is in the process of being transferred to the licence fee: and as the licence fee has been frozen, this will be a real cash saving. The BBC may even work out that distributing Welsh language programmes by DVD and broadband is a lot cheaper than running a broadcast channel. That apart, at best we might save £1 a year per household by eliminating the DCMS’ central cost.
So the real issue is almost certainly not cash, but effectiveness. Was the bringing together of the DCMS portfolio helpful, and if so to whom? Conversely, would re-distributing the portfolio be harmful and, again, if so to whom? Even if you take the view that a small department, with sub-optimal scale, tends to do citizens and clients few favours, it can scarcely be denied that larger departments, even if they attract a better class of mandarin, will make their own characteristic mistakes, but bigger ones, and cost the taxpayer even more in the process: witness the Ministry of Defence. On that calculation, re-distribution could turn out to be a false economy.
On balance, I would re-distribute, on the basis that this would subject the Arts Council budget to more direct scrutiny by the Treasury, would expose the unnecessary spending on central “strategic” sports bodies, and would give us all a chance to make the case for winding up the National Lottery – a scheme for ripping off (primarily working-class) punters in order to fund so-called good causes over which they exercise neither choice nor accountability (both safely in middle-class hands).
Predictably, most of the IEA seminar speakers were abolitionists, either in the interests of smaller government generally, or so as to reduce the opportunity for central government to distort economic and social activity with inappropriate interventions. Perhaps David Cameron will resolve the issue for entirely extraneous reasons. Hunt is widely tipped for promotion to a bigger job (Health is most often mentioned, where Andrew Lansley is under siege). That might be the moment for subsuming the DCMS – or most of its functions – within BIS, as part of a general reconstruction of Whitehall responsibilities.
I invite other OK contributors to run the rule over other government departments. The argument should not be over whether public spending is “good” or “bad”, but over the accountability and effectiveness of the actual detail of public spending. Democracy is primarily a debate, not about numbers, but about control.