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QUANGOs: Effect on Business, Advantages and Disadvantages of QUANGOS Essay

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Updated: Sep 15th, 2021

Introduction

QUANGOs are organizations that can affect policies and policymaking. The word QUANGO stands for Quasi Governmental Organizations. According to the Economic Research Council, QUANGOs are comprised of around eight hundred and eight three bodies and they usually assist those people who constitute the bureaucratic classes. (Armstrong, 2001) Quangos are believed to consume around one hundred and sixty-seven billion pounds every year. (Janssen, 2001) The money comes from the people.

A section of the money is taken from the fees charged on business; this is actually paid by the consumers. Approximately one hundred and twenty-seven billion pounds is taken from peoples’ pockets as a form of taxation. (Isabel, 1995) QUANGOs constitute organizations such as the ‘School Food Trust’ ‘Milk development Council’ as well as ‘Thames Gateway Development Trust and other organizations of this nature. Many people have suggested that they should be removed. The existence of QUANGOS has been highly and strongly criticized by the people. They are believed to strain people’s finances and affect the economy. (Neilstrong, 2003)

Quangos and Policy Makers

Quangos are more popular with the government. This is because they assist the government in increasing the level of taxes being collected. The government believes that Quangos ensures that the money is absorbed by the economy. (Glazrsky, 2002)Quangos are usually part of the government’s policy meant to improve the revenue collection to avoid outside dependence. It is claimed that if the amount of taxation is reduced it would be tantamount to taking away the money from the government. As a result, it has made the government set aside large sums of money to spend it. The government has made use of quangos so as to meet the budget of half of the population who cannot make the ends meet due to their low incomes. (Armstrong, 2001)

Effect of Quangos on Business

Most businessmen have come out strongly to criticize quangos. This is because it does not have a positive effect on their businesses. It is believed that a large sum of money is subtracted from their income and this interferes with the business operations. (Isabel, 1995)The central government puts the business operators on their toes to ensure that money or some fee is deducted from their income. This scheme has made some businesses close down so as to avoid deductions. (David, 2004)

This has also caused some businesses to reduce services. Most businesses have described quangos as money-making machines only meant to fund government policies. Business-wise it has made it impossible for young businesses to expand since most of their resources are directed to revenue collection for the government which seems not to have many benefits for the consumers. (David, 2004)

According to a number of businessmen, quangos claim that they also give education regarding the services offered by them but as reported by most businessmen, it is just a sham, since the businessmen know everything that they claim to teach, for instance, ‘Milk Development Trust which alleges to create some awareness on the milk but business operators claim they just want to divert attention from the people. (Neilstrong, 2003)

Advantages and Disadvantages of QUANGOS

Quangos have a number of advantages as well as disadvantages. However, it appears that disadvantages are more than the advantages. (Janssen, 2001) This is perhaps because they are more popular with the government and policymakers and not with ordinary citizens. One of the advantages is that they stabilize the economy by pooling the resources together. They increase the level of taxes collected and therefore they are able to fund government projects without relying on domestic borrowing. (Stuart, 2005) It also avoids outside borrowing. Quangos ensure that every person pays taxes regularly and fairly.

It ensures that no one pays taxes at the expense of the other person, and hence equality. Quangos also provide influential and objective information to the ministers and policymakers. The ministers concerned are able to follow up on the government spending and give required advice when need be. They also assist in advertising the government’s crucial bills and policies to be put in place. As such they assist the government to meet their political and economic needs by popularizing themselves to the people. (Glazrsky, 2002)

Despite all the advantages, there seem to be corresponding disadvantages. For example, government spending on the advertisement has been highly condemned by the existing business institutions. It is believed to be a wastage of resources. This spending has slowed growth in other sectors that have to do with economic growth. This affects the consumers negatively given the fact that they are the ones who pay the highest percentage of the taxes.

In addition, quangos have introduced tax credits which can only be described as crazy, and this consumes a lot of money and has a complex form that does not save money and has caused an increase of inefficient computer systems and staff. This increases the cost. (Neilstrong, 2003)

Quangos have also made the government engage in a spending spree due to the extra money that is received from the public. The money usually benefits the ministers and is a preserve of personnel in charge of pensions. (Armstrong, 2001)The poor spending by the government has contributed to the growth of unnecessary public spending and thus reducing the number of services being offered by a number of institutions, hospitals have closed down and many schools have sent children back home due to the inability to meet their educational needs due to the interference of quangos.

The populations supported by the central government are led to believe that the government has their best interests at heart yet it is just a way of wooing them to make sure that they make it back to the government and this cycle has continued to make consumers suffer. (Isabel, 1995)Quangos have also instilled a deep sense of political ambitions among politicians. Actually, some have been reported to be spending approximately five hundred billion pounds of the public funds every year in the name of quangos. As a result, quango has been described as ‘a dangerous snake which must be killed’. It swallows almost all the resources within a country leaving the citizens in poverty. (Stevenson, 2006)

In addition, there have been increased cases of corruption being reported among politicians. They have been involved in money laundering and fraud cases. This is evident from the misappropriation of funds when entrusted with these huge sums of money. As a result, many important government projects formed for the benefit of the people have not kicked off and those which have begun have become stuck due to lack of funds. (Janssen, 2001)

Quangos have also created the false notion that money is of no benefit to people if it remains in their pocket, but can only benefit them if it is absorbed by the government in form of taxes. (Truby, 2000)This has adversely affected the economy since there is a reduction of the money in circulation. This has in turn considerably reduced the price of many commodities and thus cutting down profits.

Conclusion

There are many relevant issues associated with quangos. For example, quangos are being used to benefit the few. (David, 2004)They are used as a tool to demand money from businessmen, for, example, in the taxation juggernaut, the Chancellor of Exchequer has said that reduction of taxation is equivalent to ripping money from the economy. This is outrageous. If this kind of economics will be taught to lawyers today, then, peoples’ rights will be seriously violated.

The amount of income tax is approximately one hundred and forty-seven billion pounds every year. This should not be the case; in fact, the personal allowances should be raised to one hundred thousand pounds every year. From the discussion above it is obvious that quangos are designed for the rich and do not really promote businesses the way they are supposed to. (Peterson, 1999)

References

Armstrong, P. (2001) Unpopularity of Quangos, Palgrave Press, UK.

David, P (2004) Quangos and Their Effect on Our Economy, Pennyslyvia Press, US

Glazrsky, S (2002) Who Are You Quango: You and The Economy, Palgrave Press, UK.

Isabel, S. (1995) Understand Your Citizens’ Needs: The Government’s Response, Saunders, UK.

Janssen, S. (2001) Towards A Better Economy: The Government’s Strategy, Melbourne Publishers, US.

Neilstrong, Z (2003) How Does Quango Affect Taxation, Harvard University Press, US.

Peterson, D. (1999) Research on Development Council: Criticisms on QUANGOS, Palgrave Publishers, UK.

Stevensons, B. (2006) The Influence of Politicians on Quangos: The Consumer and Service Provider, Harvard Press, US.

Stuart, P. (2005) Abolish Regional Quangos: Peoples’ Petition, Harvard University Press, UK.

Truby, B. (2000) Can We Trust QUANGOS: A Deep Insight, American Press, United States.

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IvyPanda. "QUANGOs: Effect on Business, Advantages and Disadvantages of QUANGOS." September 15, 2021. https://ivypanda.com/essays/quangos-effect-on-business-advantages-and-disadvantages-of-quangos/.

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IvyPanda. 2021. "QUANGOs: Effect on Business, Advantages and Disadvantages of QUANGOS." September 15, 2021. https://ivypanda.com/essays/quangos-effect-on-business-advantages-and-disadvantages-of-quangos/.

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IvyPanda. (2021) 'QUANGOs: Effect on Business, Advantages and Disadvantages of QUANGOS'. 15 September.

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