Monday, 1 November 2010

The aircraft carrier scandal and the lessons for state spending

The current UK government decision to spend £5.4bn on aircraft carriers that will have no aircraft to fly from them is a major scandal.  But how did we get ourselves in this position?  The FT has been trying to trace this and the story seems to be this (see Sue Cameron FT 27th October 2010):

  1. the Ministry of Defence signed a contract such that it was more expensive to cancel the carriers than proceed with them.
  2. that contract was signed, (by the last government) against the advice of the civil servants.  Cameron reports further “To further silence Whitehall objections, the decision went to the cabinet committee on defence, chaired by the then Labour Prime Minister Gordon Brown, whose constituency is next to a shipyard. It was waved through and covered by collective responsibility”.
 Note that £5bn+ exceeds the entire science budget by some distance.  Those in the then Cabinet who waved this decision through should be ashamed of themselves.  Those who plea for more government spending to boost the economy should also be thinking twice if this is how it gets spent.  The only small consolation is that economists who point out that maket failure is oftern mirrored by goverment failure have a near-perfect case study.