Q. When is an agency not an agency?

14 July 2010

A: When like the Environment Agency, it's an executive non-departmental public body.

Welcome to the confused subject of arm’s length government.

At the launch of the Institute last year, Cabinet Secretary Sir Gus O’Donnell singled out the tangled landscape of arm’s length government as a suitable case for ‘IFG treatment’.

One year’s research, seminars and discussions on, we have published Read before Burning, our recommendations for sorting out this confused landscape.

A key recommendation is to untangle the current confused designation of public bodies – and relate form and governance much more closely to function and the freedom the body needs to perform that function.

Although ALBs in total account for about 14% of government spending, the big money is tied up in just a few organisations – and even then 75% of NDPB spending is passed on to third parties.  If we are to get real efficiencies and better governance, we need remove the temptation to treat arm’s length government as a numbers game.

Half ALBs are small advisory bodies with no independent budget or staff. They advise, not execute. We think they should simply be treated as what they are – departmental advisory committees and no longer be regarded as part of arm’s length government.

For the rest, we would get rid of the confusing categories of non-Ministerial departments and executive NDPBs and replace them with three new, distinct categories:

  • Constitutional bodies – answerable to Parliament, not Ministers (like the NAO or Electoral Commission)
  • Independent Public Interest Bodies – regulators, standard setters, watchdogs – which need to be protected against Ministerial interference (think Ofgem, UK Statistics Authority and the new Office for Budget Responsibility)
  • Departmental Sponsored Bodies – with some discretion on what they do, or needing expertise on how to do it  – but operating within departmental strategy (for example, the Arts Council and the Environment Agency)

ALB taxonomy

The Government could make the change either as a big bang or over time as bodies were reviewed. But is the hassle worth it?

On paper this looks like a prime piece of bureaucratic tidymindedness – and potentially an excuse to waste public money on new logos and letterheads for no real change.

But our research suggests that a big part of the ALB problem is:

  • a lack of clarity on roles and responsibilities
  • a lack of transparency with the public
  • an inconsistent approach to managing ALBs across government – which leads to tension, duplication and real inefficiency.

So there are potential real gains for Ministers, civil servants, people working in ALBs and, most importantly, the public, from a clear and common understanding of the relationship to government of different types of body.

So, as the axe falls, we need to use the opportunity to put what remains on a solid basis for the future.
Share this post:

Comments (4)

  1. Jill Rutter on 16 July 2010 at 10:02 am

    Just received an email from someone who has pointed out that the NZ Crown Entities Act in 2004 took a big bang approach to reorganising the status of their ALBs. A slightly different categorisation but same general principles. To see more check out
    http://www.mch.govt.nz/agency/boards/documents/crowngovernance/Crown-Entities-Act-2004-Overview.pdf

  2. Wendy Matthews on 24 July 2010 at 2:57 pm

    I think this is very interesting report – but perhaps more could have been made of the performance management issues. If there is to be better integration of policy and delivery across bodies/departments you could argue there need to be shared performance management frameworks across clusters of bodies – so that where they are all relevant to specific outcomes they can pull together rather than be pulled apart by conflicting institutional targets – the PSA framework started to do this, but did not carry through to institutional management arrangements. Frameworks linked to departments reinforce silos. Shared performance management frameworks could also be supported by shared knowledge management strategies – to increase a more effective use of the collective evidence base and institutional/performance data to improve delivery. The forthcoming UKCES review on integrated employment and skills is looking at some of these issues in that part of the landscape. Also – I think the accountability issues have been underplayed in some cases – many NDPBs would argue they have very onerous accountability arrangements which generated a heavy administrative burden. For example the Regional Development Agencies had to report on delivery against the PSA framework, delivery against a departmental tasking framework, had independent audit and inspection from the NAO, and was also scrutinised by the Regional Assembly and latterly Regional Select Committees – the NAO acknowledged these issues in their review of RDA accountability.

  3. Jill Rutter on 26 July 2010 at 12:55 pm

    Wendy — thanks. Good points.

    We do see the need for a much more coherent and consistent approach to performance management – one of the things that we would look to the Centre of Excellence/ expertise to do – and the new taxonomy should allow similar performance management frameworks for the same sort of bodies — but also fit for purpose (there is a quote in the report about applying a template for a multi million/billion pound organisation to a three person outfit and that clearly makes no sense.)

    The regular reviews looking at both sides of the relationship would also check that sensible performance management was in place.

    We have a separate project on accountabilities at the moment and will feed in your comments to colleagues leading that.

    There seems to be a bit of a paradox. When we presented our findings to the Public Chairs Forum, the chairs said they felt MORE accountable than civil servants (I think Barbara Young commented when she was CEO of the Env Agency that she was accountable to “everyone”) – and there are multiple accountability routes – but this does not seem to be enough to satisfy people who are sceptical about the legitimacy of putting important government functions away from Ministerial control.

  4. Martin Clifford on 28 July 2010 at 6:43 am

    I welcome a typology that tries to navigate through the ‘tangled landscape’ of government entities. Here in Western Australia the same issues arise, normally the product of an ad hoc approach to the creation of entities given the demands (read politics) of the day and a lack of discipline in applying proper nomenclature. The confusion is often deep-rooted as over time organizations can develop into entities that were not as intended, including waywardness in institutional structure and performance. Clearly, the linkage to clarity on performance expectations would go a great way towards gaining proper understanding of institutional form to meet outcomes and impacts, but indicators can be manipulated and vague. I like the approach that by getting back to basics – following an established and accepted typology on institutional form, we create a stronger foundation to build government entities. I agree that the issues have far reaching implications; lack of clarity is a disservice to our communities.

Tags:

Blog: Permalink