Quango bonfire 'set to cost £830m'

David CameronMinisters have underestimated the cost of implementing their "bonfire of the quangos", the Whitehall spending watchdog has warned.

The Government said it would save the taxpayer £2.6 billion by 2014/15 by axing 262 public bodies in the biggest Whitehall restructuring for decades.

However, the National Audit Office (NAO) said the transition costs would be at least £830 million - almost double the £425 million ministers estimated when they launched the plan in October 2010. As a result, the Government will now have to find total savings of £3.5 billion if they are to meet the 2014/15 target.

The NAO said there was still "insufficient grasp" in departments of the continuing costs of the functions which were being transferred from bodies which had been abolished to other parts of government.

Savings will have to be found elsewhere in Whitehall in order to meet the costs of these newly acquired functions, the NAO said.

The NAO also questioned whether it would improve accountability, as the Government claimed. Of the £64 billion spent on public bodies in the programme, it said more than £43 billion was still going to arms-length organisations not directly answerable to ministers.

The head of the NAO, Amyas Morse, said: "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."

A Cabinet Office spokesman said: "Reform of the quango state has been a huge task and when our reforms are complete we will have reduced the number of public bodies by almost a third.

"As we have always acknowledged, there will be one-off costs of the transition, which will be around £600 to £900 million. Our savings are net of these costs and will continue into the future as a lasting legacy to the taxpayer."

Matthew Sinclair, director of the TaxPayers' Alliance lobby group, said: "It is quite right that the Government have cut back on the number of quangos spending huge amounts of money and making critical decisions with little or no accountability to taxpayers, but very disappointing that the financial management appears to have been poor."

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