It is frequently remarked (by which I mean occasionally, and only in the sorts of media a politics junkie like me reads) that the cost to the taxpayer of answering each Parliamentary question asked by an MP is some astronomical sum (usually quoted as about four hundred quid). That seems pretty surprising, given that most such questions are pretty asinine (and many that aren't are repeats of previous questions), and that four hundred quid is quite a lot of money, even by government standards.
More worryingly, this alleged cost is occasionally advanced as a reason that MPs should not trouble the government with taxing questions, since they are so costly to answer. No sensible person would give credence to such a complaint, but unfortunately there is evidence that the electorate and the newsrooms of the media are full of senseless people, so this is a real problem. What, you might therefore wonder, is the source for this factlet? (To be fair, probably none of my half-dozen readers have wondered this, but do play along anyway.)
It turns out that there is an official source for these figures (though the numbers have been inflated in the retelling): estimates prepared by HM Treasury, themselves supplied as answers to Parliamentary questions, like this one:
Stephen Timms MP: As at April 2004, the average costs of answering an oral parliamentary question and a written parliamentary question were £345 and £148 respectively.
and more data is available on the costs of answering written and oral questions in each of the last few sessions of Parliament. Which all looks very worthy, until you give it a moment's thought. Surely, you might think, whatever bits of the Civil Service are responsible for answering these questions must have some fairly high fixed costs? In particular, the staff and offices must still be paid for, even when there are no questions to answer. And therefore an average cost is not a very useful figure. But that's not how the data look, naively:
(The estimates of £122 and £264 per written and oral question respectively are from linear regression; in both cases the estimate of the fixed costs -- i.e., the intercept of the best-fit line -- does not differ significantly from zero. The government's own estimated average cost is for a single session of Parliament.)
Nevertheless, the government's own estimate for the marginal cost of answering a written question is much smaller than its estimated average cost: £75--
Ruth Kelly MP: [...] The advisory limit [of cost above which an answer to a PQ will be refused] continues to be based on eight times the average marginal cost for written PQs, which is now £75 [...]
or about half the government's quoted ``average cost''.
This can't come from the data which are used to estimate the average cost, since they aren't (see plot above) consistent with the quoted marginal cost and corresponding substantial fixed costs. Perhaps a refinement to the analysis is needed? Most obviously, you might imagine that controlling for the length of each Parliamentary session would make a difference, since session lengths vary quite a bit, and there are only so many questions Ministers can answer in a day, but civil servants must be employed all year round:
-- but in fact this makes no difference: there's still no significant evidence for fixed costs.
So this is all a bit baffling. Using the magic of the Freedom of Information Act, I've asked the Treasury for their methodology and source data for determining the average cost of answering Parliamentary questions; I have no doubt that you, like me, will await their answer with bated breath.
Update: I did receive a useful response to my request, which I have written up in another article.


Comments
Posted by Andy Wood, Wednesday, 7 December 2005 09:54 (link):
Ruth Kelly MP: [...] The advisory limit [of cost above which an answer to a PQ will be refused] continues to be based on eight times the average marginal cost for written PQs, which is now £75 [...]
What does 'average marginal cost' mean?
Average cost is (Total cost)/(No. of units).
Marginal cost is d(Total cost)/d(No. of units).
But average marginal cost? What's it being averaged over?
Posted by Chris Lightfoot, Wednesday, 7 December 2005 14:58 (link):
Dunno. Averaged over departments? Years, maybe? In principle they might know the direct cost of answering each question, and average that over questions? Who knows. With any luck it ought to be possible to figure this out from the response to my FOI request....
Posted by Andy Wood, Wednesday, 7 December 2005 15:46 (link):
In principle they might know the direct cost of answering each question, and average that over questions?
But that would give the average cost, not the marginal cost or 'average marginal cost' whatever that is.
If N questions are asked, then the marginal cost is the cost of the Nth question. The costs of questions 1,...,N-1 don't come into that calculation.
Posted by Chris Lightfoot, Wednesday, 7 December 2005 19:50 (link):
Um. Imagine that the direct cost of a question, x, is well-defined and drawn from some distribution X; there is also some fixed cost F independent of the number of questions asked in unit time. For large numbers N of questions asked, we'd expect the marginal cost `in bulk' to be <X>, which would differ from the average cost <X> + F / N. (Obviously the marginal cost for a particular question is still xi.) So <X> is certainly an average, and it's an estimate of the marginal cost; possibly it's not an `average marginal cost', though.
Of course, this almost certainly isn't relevant, since I don't imagine that the direct cost of answering a question is well-defined, or that this is how the Treasury actually got their figure.
Posted by dsquared, Wednesday, 7 December 2005 22:44 (link):
Is there a problem here? The marginal cost is £75 and the average (fully allocated) cost is £263 or whatever.
Posted by Chris Lightfoot, Wednesday, 7 December 2005 23:43 (link):
Would you not then expect the gradient of the cost/number of questions curve to be £75, since it shows no evidence for a fixed cost?
Posted by dsquared, Thursday, 8 December 2005 08:24 (link):
Not really. The problem of "fully allocated costs" is a genuine and most likely insoluble issue in accountancy, and it's unsurprising that the government posts figures on a confusing basis. The "average marginal" cost is the average direct cost of answering the question, whereas the "average cost" is the average "fully allocated" cost, allocating a percentage of the fixed cost element to each question as if it were a marginal cost - so the idea is that the fixed cost is fixed, but the proportion of it that is allocated out to questions moves up and down. They're all defensible ways of doing your accounting.
It's a big issue in a lot of business contexts, because when there are shared head office costs, obviously every division wants to push them onto the other guy's cost line. Furthermore, economic theory tells you to set marginal cost equal to marginal revenue, but on the other hand head office salaries do need to be paid. So you get "bastard marginal" concepts tricked up like fully allocated costs, and everyone hopes that the inconsistencies aren't going to make a big difference to important decisions. My mate Sebastian Nokes made one of his many careers out of understanding FACs and they are effing difficult. I don't think I'm being very clear here ...
Posted by Andy Wood, Thursday, 8 December 2005 09:43 (link):
So does that mean that "average marginal cost" might appear in an accountancy textbook, but be omitted from an economics one?
Posted by Chris Lightfoot, Friday, 9 December 2005 00:29 (link):
Posted by dsquared, Monday, 12 December 2005 16:55 (link):
I dunno. Post 2000, I would surmise that they get lumped with a new chunk of Scottish and Welsh devolved costs and pre 2000 they're not so massively volatile. I find myself also surmising that there is some weird parliamentary versus calendar year thing going on here as 2000 and 1996 are both years before a general election and both have low fixed cost elements. I'm guessing that what happened here is that the costs continued to be incurred, but couldn't be allocated to Parliament while it was dissolved (and then got allocated to the wrong year for some arcane reason). I bet that if I was a budget analyst at the H of P (which if various butterflies had flapped their wings differently I suppose I might have been) I could make these figures make sense.
Posted by mATT, Thursday, 8 December 2005 21:05 (link):
Do we know what costs are included? The civil service time, for sure, but how about the Ministerial time in answering it? On a cost basis if civil servants who answer it cost £50,000 a year, and work 250 days, that's £200 a day. So if it takes then 1/4 of a day (2 hours) that would be £50.
Posted by Chris Lightfoot, Friday, 9 December 2005 12:59 (link):
Posted by Chris Lightfoot, Monday, 2 January 2006 23:20 (link):
The answer to this one is that only the civil service costs are included:
-- from the 1991 survey I received in answer to my FoI request.Posted by nunobensen, Friday, 9 December 2005 15:28 (link):
Chris, I can't complain about your maths but I think you miss a point. You say "whatever bits of the Civil Service are responsible for answering these questions must have some fairly high fixed costs? In particular, the staff and offices must still be paid for, even when there are no questions to answer." which assumes that I have nothing else to do when not answering PQs. I do, PQs are part of the job but not all of it.
The problem comes in that I have to answer a PQ by a certain date, sometimes as soon as the next day, even when I have something else that is, arguably, more important to do. In my personal opinion, PQs are of course an important and valuable part of the democratic process. However, when you find yourself having to spend an afternoon drafting a response to whether or not Morris dancing will be integral to the opening ceremony of the 2012 Olympic Games, true story, you tend to take a slightly dimmer view of the system.
Posted by Chris Lightfoot, Friday, 9 December 2005 20:02 (link):
OK, that's a fair point.If time can be allocated between answering PQs and other tasks with perfect efficiency (and there is a perfectly elastic supply of other tasks) then you wouldn't expect to see any fixed costs. But those seem a bit of a leap....
Posted by Katherine, Friday, 9 December 2005 22:54 (link):
You missed a trick, by not also requesting the basis of the 2005-6 costings for oral and written questions -- assuming, of course, that the accompanying ruffling of paper wouldn't exceed the current £600 FOIA cost limit. The costing for oral replies gives away the exponential increase in cost per question, as we'd expect, and presumably not corrected for in the pretty '#qns vs. total cost' plot above...
Incidentally, FOIA request costs and costings, anyone? Just for a rainy day.
Posted by Martin Keegan, Monday, 19 December 2005 20:15 (link):
Almost on topic, I have been trying to ascertain whether it is permitted for MPs to ask the Government what democratic mandate they have for a particular piece of legislation. The Table Office is proving very elusive indeed on this point. The European Parliament has extremely lax standards on the wording of questions, and questions about democratic mandate may be asked (but of course you don't get anything approaching a reasonable answer)
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